Hedge Fund Annual 2019 Securities@Sibos 2019 - Page 9

[ T E C H N O L O G Y ] “It is important to remember that clients still incur liability whenever they outsource, so their providers need to be strong. As a result, a partnership approach is becoming more common between banks and those FinTechs offering innovative solutions.” JOHN VAN VERRE, HSBC A nother year, another Sibos. With the industry having recovered from the sheer intensity of the four-day marathon event, let-alone the jetlag upon returning from Sydney, some interesting themes did emerge out of the conference. Sitting through industry gath- erings has been a fairly depressing exer- cise for securities services professionals recently, not least because they have been constantly pumped with apocalyptic mis- sives from FinTech enthusiasts warning them that their days are numbered. Sibos Sydney, however, marked a dramatic change in tone, much to the relief of secu- rities services. Collaboration is in Rather than aggressively attempting to disrupt intermediary providers, the best FinTechs are now working with them. “There is a real opportunity for banks like ours to collaborate with FinTechs, as they are agile, innovative and unconstrained by complex processes,” said Margaret Har- wood-Jones, global head of securities ser- vices and transaction banking at Standard Chartered, speaking at Sibos. “However, FinTechs cannot disrupt the industry in isolation as they do not always have the clients, relationships with regulators or capital, which banks do have. This has created synergies for banks to work with FinTechs.” FinTech risk Other factors are also accelerating these partnerships, chiefly the general reluc- tance among many clients to outsource core operational activities to start-ups. “Clients’ primary concern is safety and they want to work with trusted counter- parties which have long, proven track records, robust asset safety provisions and the correct infrastructure from a risk management perspective,” said John van Verre, global head of custody at HSBC Securities Services. “It is important to remember that clients still incur liabil- ity whenever they outsource, so their providers need to be strong. As a result, a partnership approach is becoming more common between banks and those Fin- Techs offering innovative solutions.” Are we at peak blockchain? Roll back five years, blockchain was going to transform everything, be it clearing and settlement, corporate actions, report- ing and payments. While blockchain is certainly not a dud, the technology has not quite met expectations to date. Even its purported ability to facilitate instan- taneous cross-border payments has been met with short thrift from correspondent banking clients, who say they are more than happy for transactions to complete in several hours or on the same day. Van Verre acknowledged many banks were using the technology mostly to resolve internal issues involving duplication, adding that APIs now seem to be more of a business priority for them. Quantum computing in the limelight Just as the securities services industry had finally adjusted to the tsunami of blockchain verbiage like mining, nodes, hard forks, and soft forks, a new, even more mind-bending technology made headlines at Sibos. Quantum computing – depending on who you speak to – may or may not be genuine, but as a conjectural premise it could enable the industry to digest and disentangle the most byzantine problems and calculations well beyond the comfort zones of any existing technol- ogy. While some believe quantum com- puters could unravel blockchain encryp- tions, most experts are not flustered about it yet. As one seasoned securities industry veteran put it, “quantum computing is a long way off.” January 2019 Securities@Sibos 9