There was a rumble of excitement on the exhibition floor from the start of the second day of Sibos, or maybe that was the thunder overhead.
A Spoiled Batch
Either way it promised to be a day full of discussion and explanation as to the future of payments and the role compliance will play. One major loser was made clear early in the day, batch-processing. The term was immediately tied with themes of ineffectiveness and being outmoded every time it was brought up.
The push towards reacting to the reality of real-time payments and being proactive where possible, dominated conversation. Industry leaders accept that customers now have an expectation of instant payments, of being served immediately and on a 24/7 basis.
Compliance needs to move to react to that and integrate with business data so it can protect customers. It extends to the issue of Open Banking, in fact Open Banking might be the reason why it’s so important. Businesses and compliance need to work together to try and solve the issues at hand.
How do you remediate when a payment takes a nanosecond? No human can intervene in that, no machine can either. So if the payment isn’t automatically stopped due to existing compliance procedure then what’s to be done with an alert after a payment has been made?
That was one of the key questions asked on stage early in the morning. And no-one seems to have an answer to hand just yet. But one thing did shine through, the need for human intervention in the process will always exist.
Payments and compliance are about meeting human needs. And that means protecting customers from the numerous highly sophisticated scams that create vulnerability. It’s an issue that’s existed since the implementation of Faster Payments in the UK back in 2009.
But perhaps Open Banking can learn from that mistake. By moving away from batch-processing to having real-time data of customers, potentially standardised across APIs, businesses can maintain a realistic picture of their customers at all times.
The Machines are Alright
Machine learning (ML) was another hot topic for the day. Mainly focusing on the fallibility of ML models are that over reliance is a bad thing. But there was also a notion of humans finding ways to trust ML. Because yes, the machine learning model may be fallible, but so are humans. And more importantly, the machines are less fallible than any human.
Trust needs to be built in to ML. But that trust should be baked in to any product that delivers data being used to execute compliance functions. You don’t want what one seminar audience members experienced, implementing ISO 20022 only to have compliance officers double check the data anyway against their existing lists.
And while that specific example wasn’t focused on ML it did raise an interesting point. How are you going to get your compliance officers to trust what’s being sent to them, regardless of how standardised the message is?
It goes back to the idea of a human element in the process, no matter what the solution is people aren’t the problem. Machines can solve tasks but it’s humans who’ll make sure everything’s right. To draw on some of the themes from day one, perhaps finding the right partner is all it’ll take so that your compliance teams can focus on solving the job that demands their expertise.
Caring About the Customer
‘Customer-obsessed’ is a phrase you’ll have heard a lot in the startup space. Some of that message is starting to hit senior leadership at tier one banks.
One of the more surprising messages from day two was a focus on delivering value for the customer.
That’s always been a concern of course, but now it’s rated above focusing on the profit margins. Profit still matters, obviously. However, that’s what it takes to protect payments from GAFA (Google, Apple, Facebook and Amazon).
Customers are so used to the hyperconnected environment that GAFA provides that they rightly demand the same from financial services. When you add to that a digital economy that means shifting service providers is nothing more than a simple press of the CASS (current account switch service) button, it’s understandable that banks are focused on putting the customer at the centre of business.
The team is still at Stand 32C by the Innotribe Stage, come say hello. We have chocolates.