Insights from Sibos 2024: Connecting the Future of Finance

At Sibos 2024, where the theme “Connecting the Future of Finance” set a forward-looking tone, I had the chance to explore firsthand the innovative trends reshaping our industry. Through insightful sessions and conversations with leaders, a clear message emerged: collaboration, agility, and customer-centered innovation are key to addressing the evolving demands of financial services.

As I pen down my thoughts below—from the transformative power of real-time payments to the vision of interconnected ecosystems—the discussions this year illuminated the strategies and technologies driving us toward a more inclusive, efficient, and resilient financial future.

1. Real-Time Payments: A Catalyst for Economic Growth

Real-time payments were prominently featured, demonstrating their significant impact on the global economy. A recent study highlighted that across all 40 countries involved, real-time payments boosted GDP by a total of $164.0 billion in 2023—equivalent to the labour output of 12 million workers. By 2028, the contributions from real-time payments are forecasted to increase to $285.8 billion, representing a 74.2% increase over five years and the equivalent of 16.9 million workers. This underscores the critical role of real-time payments in fostering financial inclusion and enhancing transactional efficiency.

2. The Finternet: Vision for Interconnected Financial Ecosystems

A pivotal discussion revolved around the Finternet, a visionary framework proposed by Augustín Carstens and Nandan Nilekani, which envisions interconnected financial ecosystems that empower individuals and businesses. Central to this vision are unified ledgers that leverage tokenization, enhancing existing transactions and facilitating new financial products. This framework outlines essential technical, regulatory, and legal considerations that will shape the future of finance.

3. Transaction Banking: Shaping the Bank of Tomorrow

Transaction banking emerged as a cornerstone of modern banking, emphasizing the need for a customer-centric approach. Manish Kohli , Global Head of Payments at HSBC, articulated this sentiment effectively, stating:

"It's not just about the few loans or the occasional M&A deal; it's the hundreds of payments processed every second that leave a lasting impact on our clients. The experiences we create and deliver are vital for driving their growth and managing risk."

This perspective aligns with broader industry insights regarding the evolution of banks into more agile and responsive entities. The focus is shifting towards embedded finance, where banks seamlessly integrate financial services into customer journeys, enhancing convenience and driving deeper engagement.

Additionally, transaction banking is increasingly about leveraging technology to optimize workflows, improve transparency, and enhance security. Innovations such as automated reconciliation and advanced analytics empower banks to provide more effective solutions, driving operational efficiency and client satisfaction.

4. Advancements in CBDCs: Paving the Path for Inclusion

The role of Central Bank Digital Currencies (CBDCs) in enhancing financial inclusion was a focal point at Sibos 2024. John O'Neill from HSBC emphasized that CBDCs are pivotal in driving innovation in cross-border payments, underscoring the necessity for adaptability in payment systems. The discussions revealed key projects aimed at fostering interoperability and enhancing transaction efficiency, including:

• Project Agora: Tokenizing central and commercial bank deposits to facilitate real-time settlements between corporates, thereby accelerating international transactions.
• Project Mandala: Focusing on digital identity solutions to tackle compliance and security challenges in global payments.
• Project Dynamo and Project Genesis: Pioneering efforts to integrate CBDCs into supply chains, showcasing the potential of digital assets to streamline cross-border transactions.
• Project Nexus: Connecting existing faster payment systems across borders.
• Project Aperta: Ensuring payment systems can communicate using APIs for real-time transactions across jurisdictions.

Jonathan Zhao from EY addressed the increasing regulatory demands as the industry adapts to these innovations. He emphasized that navigating compliance, liquidity management, and regulatory understanding are vital as technology continues to evolve. The consensus among panelists was clear: collaboration between central banks and private sector entities is crucial to fostering a secure and robust environment for these advancements.

5. The Role of Emerging Technologies

Emerging technologies such as AI, tokenization, and stablecoins were also discussed as critical components in enhancing operational efficiency and customer experience. The integration of AI in fraud detection and the programmability of tokenized assets present significant opportunities for financial institutions to deliver tailored services that meet evolving customer needs.

Naveen Mallela , Global Co-Head of J.P. 摩根 Onyx clearly stated that the technology has beyond experimental stages and solves three major problems:

a) Programmable Payments - e.g., triggering a syndicated loan payment or a payment on an invoice-due date based on invoice acceptance.

b) Liquidity Problem - where one can move from EOD cash concentration to real-time.

c) Synchronized Settlement across multiple ledgers

6. Emphasizing Inclusion and Accessibility

Throughout Sibos 2024, the importance of financial inclusion was underscored. The advancements in real-time payments and CBDCs were recognized as powerful tools for empowering individuals and businesses, with a unanimous agreement that collaboration is essential for creating a more equitable financial landscape that fosters broader economic growth.

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Meanwhile here are some of the conversations Intellect Design Arena Ltd had with bankers, analysts and finance gurus at SIBOS:

• Targeted Client Segments: Banks are increasingly focused on specific client segments and industry sectors, eager to explore how to launch tailored products using Supply Chain Finance or Virtual Accounts.
• Payments Pre-validation and STP Processing: There remains a significant gap in payments pre-validation and straight-through processing (STP), particularly in the cross-border space. Banks should consider exposing their account validation APIs to organizations like SWIFT.
• Monetizing Open Banking: Banks are facing challenges in monetizing Open Banking within corporate and transaction banking. There is a strong interest in solutions for real-time cash management and sweeps leveraging open APIs.
• Integration Challenges: Many banking leaders expressed difficulties in deploying new solutions due to the complexities of integrating them into their existing ecosystems.
• Focus on Trade Digitization: Trade digitization—such as e-bills of lading and the Electronic Trade Documents Act—will be a key area of focus in the coming years. Banks are looking into AI-based solutions to extract information contextually from trade documents, enhancing operational efficiency.

In addition to the invaluable insights from bankers, we had the privilege of hearing from Stefan Windisch from Roche. When asked “What does good look like for a corporate treasurer?“, he articulated a vision that resonates deeply in today’s fast-paced financial landscape:

• Trust: Treasurers seek transparency; they don’t want to pre-advice major expected payments or grapple with unnecessary requests for intraday lines.
• Speed: They demand swift account openings, accompanied by a streamlined KYC process
• Agility: They want the strength of a bank and the agility of a fintech.
• Solidity: Treasures want well-rated and healthy banks.
• And finally, Good coverage for global payables and receivables