So we just finished the day with the closing plenaries.
Yes, plenaries plural.
First there was the innotribe closure and then the SIBOS
closure, and these were very different affairs.
The two were very different as you can probably tell from
the innotribe opening where Innes Macleod of the innotribe team entertained us
with a soulful song at the start:
The innotribe attracted about 200 people to share on reminiscences
from the week, ably articulated by JP Rangasami of Salesforce.com and Andrew
Davis from HSBC.
The conversation covered many things from infrastructure is
now sourced from the crowd to the inclusion of everyone on the planet who is
unbanked thanks to mobile.
Although there is a disjoint between the innovation group
and the mainstream, there is also a conjoin as more and more of the mainstream
agenda reflects the dialogue of the extreme agenda: Big Data, Cloud, mobile and
I kind of summed it up as moving from the them and us to the thus. The thus is what
happens next, thus we move forward and onward.
Having said that, some of the innotribe team were obviously
feeling a little bit tired …
… so maybe we fall over and backward?
Either way, we then moved on to the mainstream plenary which
began with Stephan Zimmerman, Deputy
Chairman of the Board of SWIFT and Michael Fish, CIO, discussing the week’s highlights.
Michael related it to Charles Dickens’ Tale of Two Cities.
The book opens with the words: It was the best of times, the worst of times.
For Michael, this related to financial inclusion for the
wealthy in the banks and exclusion for those who aren’t banked, and how mobile technology
is bridging the gap.
It was the age of
wisdom, it was the age of foolishness is obviously about Big Data, and how
we may be fooling ourselves to think it is as powerful as we hope it is.
It was the epoch of
belief, it was the epoch of incredulity is all about cloud computing with
so many believers and disbelievers at the same time.
It was the season of
Light, it was the season of Darkness is all about cybersecurity. Money is just bits and bytes on a computer
and the darkness is the criminal fraternity trying to steal it.
It was the spring of
hope, it was the winter of despair, relates to the mobile workforce, where
the young with BYOD despair at the older brethren who give them desktops to
The hottest tech topic was apparently cybersecurity, with
everyone talking about it in the sessions, hallways and lunchrooms. This is the key topic of discussion because cyberwars
are escalating, with attacks increasing in frequency and severity. All of this contributes to making us feel unsafe
and, in an industry built on safety and trust, that makes us uncomfortable.
Regulators see it as systemic risk issue and everyone is
looking to their CIO to ensure they make infrastructures 100% safe. That’s the wrong view however, as we are
engineers in the IT engine rooms of banks. Engineers take things extremely
complex and make them safe and functional, like aeroplanes, bridges and
buildings. Then, once in a while, a
plane crashes or a bridge collapses or a building falls down. Then we have to ask what went wrong to make
sure they don’t go wrong again. That’s
what we need to do in the world of cybersecurity. The more we share information about cyberattacks
the stronger we will become.
Stephan backed up Michael’s summation, saying that there is
a recognition of past mistakes but, at this SIBOS, we are building for the future.
There has been five years of crisis and four years of
regulatory change, and those regulations are now kicking into implementation. The industry is reconstructing slowly but surely,
in a positive way.
Having said that, there is the fear that another big crash
could happen, and we are all looking at the technology to be that crash waiting
to happen. That’s why cybersecurity is
the top concern, and it’s about reliability, security, protection and privacy
of systems. Our concerns are that we
think that may fail. That’s our concern
and the question is then how much do you invest to make things more secure, and
what are the returns in doing so.
Mobile payments is the other big theme, as over a billion
people in Asia do not have bank accounts, but they do have mobile phones. About two and a half billion people worldwide
do not have bank accounts, and that is a big untapped market. Most of these people are in low income
countries but even in the developed world ,a lot of the population do not have
bank accounts. So how do you include all
of these people, especially as its low value, small transactions. The phone is helpful, but who enables and guarantees
the payments and the revocation and repudiation requirements therein. That’s still a gap that some firms are trying
to take, but not the established banks as it does not work at the margins we
seek in the established world. So how do
you create a service model that meets the needs of these clients?
Then there’s the new mobile workforce and an age
divide. We grew up in a world where businesses
had computers to automate everything and we accepted what we were given whilst
the new generation have grown up in a world where they automate everything and
are not happy to take a desktop or laptop when they do everything on their own
mobile devices far more effectively. There’s
a friction there between the Facebook and non-Facebook generations that needs
Finally, Big Data was discussed in many sessions and this
shows unfulfilled potential Put aside structured data and how that is organised,
but let’s talk about big unstructured data.
We all agree that if we could manage that data better we would have
better processes, better commercial opportunities and better internal
management. The problem is how do we get
there. We have different standards,
different business models and different technologies, many of which lag
behind. Then there are issues in
governance, custody and organisation that needs to catch up and, perhaps the
most important aspect of all, in an industry that is heavily regulated, how do
you share data across silo’s that have to be separated due to regulation?
Big data has therefore seen little progress. There’s a lot of hype and a lot of data
around, but we have not seized the opportunity yet. And the real question is: what can you derive
from all that unstructured data across all of those silos. Can we find patterns that have never been
seen before and what will they mean? I
hope it will mean that it will give us a
third eye to see the risks in the system that we didn’t see before 2008 when we
hit the wall.
Then Stephan introduced Ian Bremmer, President of the
Eurasia is a global political research firm founded in 1998,
and now has a network worldwide. Ian
has published many books, such as the end
of the free market, and was named young global leader by the World Economic
Here’s my summation of Ian’s message:
Politics around the world is not attractive.
Geopolitics is an issue and China is rapidly becoming the
world’s largest economy, with the state playing a far more important role in
Syria – how did we get in such a pickle?
America has no appetite for engagement and then the Brits
did not support action, so how could we get involved?
There are plenty of reasons why the USA does not want to be
the global policeman and maybe doesn’t want to make the occasional citizen’s
arrest. Why should America be the lender
of last resort or the fuel of globalisation?
But this issue is far broader than America.
It’s about all of us.
Angela Merkel has been trying to revive Europe, the Brits
are trying to turn around their economy and the Japanese have had 18 leaders in
the last 22 years, an Asian record.
So the old countries are distracted.
Then you have these new economies that are different. They have different values, systems, politics
That’s because they are at a different stage of development.
New Zealand has four million people whilst India has 1.2
billion, but they have the same number of diplomats. We don’t expect much from NZ, but expect a
lot from India. Maybe we shouldn’t?
China’s diplomatic background is nascent. They don’t have humanitarian
and infrastructure to be the world’s policeman.
It’s new for them.
You put all that together and you don’t have a functioning leadership,
but you have a G-zero, an absence of global leadership.
That is where we are with Syria.
This is a period therefore of geopolitical creative
That goes on all the time, as particularly demonstrated by
the financial systems,.
If you are a small bookstore and Barnes & Noble come
along, you adapt or die. If you are then
Barnes & Noble and Amazon comes along, you adapt and die. That’s creative distribution and we celebrate
that because it creates growth, unless you’re too big to fail,
That doesn’t happen often geopolitically and the last time
it happened was in World War II when we got the World Bank and United Nations
But then the World Series sounds global, and it’s not.
The World Bank is an American institution with American
allies and capital and priorities. It wasn’t’ bad but it is not global.
We lived with that for decades but are not in that situation
This G-Zero with America wanted to do less, the allies
distracted and the emerging markets different in processes and capabilities,
with lots of countries to co-ordinate with, delivers creative destruction due
to an absence of global leadership.
Do we despair?
No, but going forward you will no longer have US-led global institution.
You will have global institutions that have the leadership
or institutions with the leadership that are not global.
There are examples of both.
We love talking about climate change and have conferences
everywhere but have achieved nothing, so how many more global summits do we
need on climate change before we realise something wont’ happen?
Similarly we have lots of meetings on trade.
We will never get agreement on global trade but should we
stop having meetings about global trade therefore? No.
That’s because we do get progress, with regional pacts and agreements
in Africa and Asia.
You may not get all the countries in there, like China, but
you can get lots of the small countries together in those agreements.
Geopolitically, that’s where we are and geopolitically, that’s
why Syria is a humanitarian tragedy.
We agreed on Libya, because everyone hated Gadhafi. You don’t have that with Assad.
Then there are other factors we need to consider,
particularly the emerging markets.
When we think of emerging markets, we thank heaven that they
were there in this crisis because we could sell to them and their growth is
supporting our stability.
Turkey, Brazil, Cambodia, Russia, Mexico, Colombia … all are
helping us get through these tensions and some made it whilst others, like Egypt,
The world is vastly more unstable now, and becoming more so
however, because of this.
Does that make emerging markets less worthwhile to invest?
No, but it does mean you have to have far more risk
Finally, we have China, soon to be the world’s largest
When it is, it will still be poor.
It will still be authoritarian
It will still be run on state capital.
That has worked well for 35 years, with 10% growth
year-on-year because of the Chinese state and state capital.
I would not tell them to embrace the free market therefore.
Do not welcome Google, Facebook and Twitter.
You should have Chinese control of that data not be my
preference, but by their preference.
We have zero agreement between China and America therefore, because
of political differences.
Xi Jinping is the most popular leader of any world economy,
but no one voted for him.
China is not going to change it and they will continue to
move forward with their existing model.
The uncertainties about this economy will be greater than
any other economy too, but it will continue to grow and grow and that will not
easily co-exist with the economies that used to control the world.
Those are the three reasons – geopolitics, emerging markets
and China – why politics increasingly matters to outcomes in your sector.
There are three categories of countries that will do very well
in this new environment.
First, those that can work with many different political
models because they hedge and balance between all. Ukraine tires this, but fails between Russia
and Europe. The Emirates does this well,
as does Singapore, as odes Indonesia, Turkey, Brazil and more. They pivot geopolitically and hedge in this
Then there are groups that take advantage of crisis as they
occur. For example, Japan is in a
horrible geopolitical position with China.
They don’t trust each other and this is an environment that tis not good
for them, but because of the creative destruction taking place the Japanese are
moving. Due to the Chinese threat, it forced
Japan to move.
Finally, in an environment of greater risk and uncertainty, stability
really matters. You want to be large and
you want to be safe. You’ll take one but want both and, despite all the
problems in the USA and dysfunctions of Congress, in a G-Zero environment the
attraction of US real estate and markets will continue to be strong.
This is a dangerous moment as the world order is changing
and we don’t know what will come out the other side. That’s not good and makes us uncomfortable,
but you can do things to ensure success as you’ve just heard.
Gottfried then closed the conference and referenced the
famous tale that, before former US President Richard Nixon made his
groundbreaking visit to China in February 1972, Secretary of State Henry
Kissinger told him that Chou En-Lai, then the Chinese prime minister, was an
ardent student and expert on the French Revolution.
Nixon landed in China and, in an effort to break the ice,
asked Chou what he thought the French revolution’s impact was on western
civilization to which Chou replied: “It’s too early to tell.”
Five years after Lehmans the outcome is still too soon to
The world is changing, times are difficult and nothing is
It is the best of times for many and the worst of times for
That will only change if the planet includes everyone,
especially the millions of people living on less than a dollar a day.
Things can only get better when we all have a chance to
Or that would be our dream anyway, but world peace is only
ever going to happen if Miss World becomes President of the World.
In the meantime, we’ll all just do our best to get by.
Before I get too cheesy, it’s probably best to sign off for
the night and go and enjoy the end of SIBOS party.
A final summation from yours truly tomorrow then and now off
to the Arabian nights.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...