How Bankers See Digital Banking and Other Sibos Notes


For the 30 years I have been involved as a journalist and marketer in the industry, the message to banks has been all about the electronic future of banking customer relationships. At that time, we talked about electronic banking: now it’s digital banking.

“Digitization is increasingly an imperative. Banks must digitize how they interact with clients or they will be left behind,” said Jamie Forese, Co-President Citi, CEO Citi Institutional Clients Group, Citi, in his opening plenary talk.

I believe that. But I also believed it when I wrote it nearly 30 years ago about electronic banking and ACH-based corporate trade payments. It’s taking a long time. Even in today’s digital age, only 15 % of global consumer commerce is digital, he said, and that may even be high depending on what you count.

Yet the move from email to internet went pretty quickly once it got going, and if digital crypto-currencies move at internet speeds, who knows.

Digitization: Payments and Securities

“Banking is digitizing, and payments are the first to move,” reported McKinsey & Company Marc Niederkorn, in presenting the firm’s 2014 global payments report. Markets for other financial services may matter more in terms of profitability, but payments anchors the digital banking relationship to capture the customer.

As expected, the question arises whether banks will rise to the digital challenge or will the digitally savvy companies get their customers. Banks of all sizes do have a strategic advantage, noted Stefan Dab, in presenting the Boston Consulting Group’s 2014 global payments report. Apple, however, did not get into the payments business for the fees but for the customer experience.

Payments studies get a lot of attention. Both sessions were standing-room only.

Banks of all sizes have the advantage that they always have had: relationships and receivables. “It’s still back to what it’s always about,” Dab said. Own the household. Get them a credit card. Make the mortgage.

And sell securities on the receivables. In the seven years since Sibos was in Boston, the percentage of transactions in the securities sector has increased to 50%, up from 30%. The traders I know make a lot of SWIFT transactions.

They also use their own arcane computer codes for legal entities and other securities-related data. A number of participants mentioned the Legal Entity Identifier (LEI) initiative, another long-haul into a standardized digital future.

The Legacy of Legacy Systems

It’s a generally accepted truism–something said by enough people that it would be difficult to say who said it first–that the U.S. has never shut down a payment system.

A similar problem in for banks is reflected in their branches, drive throughs, ATMs, telephone banking centers, online banking systems, and mobile banking. Merchants face a similar situation with point-of-sale systems that manage cash and an increasing number of card and payment methods.

Digitization and B2B Financial Marketing

I tweeted a stream from this session:

“If you can get the content right and people know they can learn, social is straightforward,” Amanda Rendle, HSBC

“Nurturing relationships digitally? Social platform, media. Poor name in financial especially,” Social B2B panel

“Social media is one part of marketing mix. Face to face still powerful. Social reinforces,” Amanda Rendle, HSBC

“Social media fear: the potential for things to go wrong is worse but so is the potential to go right,” Andrew Carrier, Deutsche

“How to divorce personal profile from company profile on social? Big issue. You take contact with you,” Amanda, HSBC #compliance

“Engage with #compliance department. They are not foes. Eager to provide a framework for goals,” Andrew, Deutsche Bank

“Deutsch is clear about segmenting content, audience: target customer financial institutions-treasurers and media.”

“Social marketing has the potential to change balance of power and importance in marketing-media channels.”

“Social marketing can enable brands to be publishers, build an audience they previously paid for.”

“Content decisions can be driven by LinkedIn profile data, helping validate financial decisions,” Jennifer Grazel, LinkedIn

“HSBC running a pilot monitoring relationship managers’ LinkedIn profiles to maintain message, protect brand. Tough issue.”

That last one just appalled people who commented about it on my LinkedIn page. The challenges of regulated industries are difficult for people to understand. Banking does not change quickly, neither in systems nor in marketing.

The Rise and Rise of the Renminbi (and Bitcoin)

One of the comments on the evolution of Sibos in the last few years that caught my attention concerned the rise of the Chinese Renminbi (RMB). It first caught my attention as the example HSBC used in its social media marketing concerned a community it built on LinkedIn around RMB using social media.

I love these arcane, niche uses of social media. Actually, that’s what I thought about the Sibos Twitter feed I started in 2009. But that’s another story.

The comments and articles led me to look at the SWIFT Renminbi Tracker, where I see that RMB adoption is up 30% this year, with one-third of the world’s financial institutions using it. The tracker started in Nov. 2011, with more than 80% of RMB transactions processed in Hong Kong.

Here are a few other RMB resources:

RMB Marketing and Banking Services, from HSBC

Renmibni Internationalization: A Brief Guide to Offshore RMB, from Deutsche Bank

Internationalization of the Renminbi: The Role of Trade Settlement, from Peterson Institute for International Economics

I did get the subhead from viewing the first part of the movie “The Rise and Rise of Bitcoin,” part of the #innotribe track. I liked the character telling the story, an articulate techie geek that talks clearly and with passion, speaking about bitcoin as “global decentralized money” to provide “an alternative to the banking system” that “creates money where value cannot be manipulated by a central authority.”

Very Libertarian, as the movie points out. Well worth seeing.

The smartest people in the room are working on Bitcoin, if you believe the movie (I do). The smartest money is going into person-to-person and perhaps even international transfers (not sure).

My favorite coined phrase: “purpose driven consumer finance,” from McKinsey’s Marc Niederkorn.

My favorite quote: “The British Empire may be no more but London is still the center of the financial world,” from SWIFT CEO Gottfried Leibbrandt, in discussing “The Global Network of Payment Flows,” a study of the SWIFT traffic.

In walking to my hotel, across the river I thought it appropriate that I went past a timber loft in the process of remodeling into office space, like the neighboring buildings with app companies, architects, interior design studios, and trendy restaurants. Buildings like this in my hometown of Chicago hold digital startups now, building the digital future in the spaces of the manufacturing past.