Sibos 23: treasurers, think differently

The shifting nature of financial services, particularly in the payments space, mean treasurers need to think differently to remain competitive. With the growth of 24/7 fast payments, rise of artificial intelligence, and the implications of the Silicon Valley Bank collapse still playing out today, innovation is more important than ever.

With these themes and more set to dominate discussion at the upcoming 2023 Sibos financial services conference, we sat down with Michael Lim, Head of TB Financial Institutions, and Mark Harding, Global Head of FIG at ANZ Institutional, to get a feel for what to expect at the event. Below is an edited transcript of that discussion.

We began by asking them what the big themes would be at this year’s Sibos in Toronto, Canada.       

ML: Last time Sibos was in Canada was in 2017. The focus at that time was around machine learning, the digitisation of trade, distributed ledger technology, that sort of stuff. It’s quite similar in 2023.

There will definitely be conversations around machine learning and artificial intelligence. You can see that everywhere, not just from a banking and trade perspective.

From an innovation perspective, I think there will be a lot of focus around stablecoin, including ANZ’s work with A$DC. It’s really interesting stuff.

MH: A key theme is sure to be the events around Silicon Valley Bank in March. It will be the first Sibos since the event, and I dare say there'll be discussions between many banking parties around that.

The key theme from the payments side is just how quickly deposits moved out of SVB and some US regional banks. I suspect there will be a focus around liquidity, and how banks manage deposits in the future, given payments are getting faster and faster.

I think as the world moves to 24/7 payments, and we're getting there quickly, how regulators react will be critical. In the US earlier this year after SVB, regulators were able to step in over weekends, when activity was much quieter. That's not going to be a thing anymore very soon, because the 24/7 payments cycle will remove the down time. Banks need to react to that - and be thinking about it now.

I think there will definitely be discussions on that at Sibos, as well as around shifting demographics and how people want to bank. Younger people are going to use digital bank accounts. The ability to move money via a click of a button is more attractive to these generations than depositing a cheque at a branch.

Changing demographics, the adoption of digital banking, faster payments coming in and faster payments going out – that’s a pretty big shift. That will be a big theme at Sibos.

As Australia moves into that 24/7 payments era, ANZ is moving to support our customers banks using our platforms and rails. It's therefore important for us to be at Sibos, explaining to our banking clients in other countries how Australia is moving, adapting and adopting - and what ANZ is doing to help provide that support. And our customers value that.

ML: Yes, faster payments continue to be a major theme. In Australia, the New Payments Platform’s International Payments System goes live in December. Work is well underway at ANZ to help our customers take advantage of this.

Right now, an ANZ customer in Singapore that wants to send money to, say, Sydney, Australia, currently has to make the payment by around midday if they want it to arrive in the destination account on the same day.

With NPP IPS, that gap will disappear. To be able to provide that 24/7 level service, treasuries, operations and service need to think differently about liquidity, about support and about their customers. There are so many things that need to move from traditional business hours to 24/7 online.

There are some great benefits to the tech, and we'll be talking a lot about that with customers at Sibos. But it also brings a number of unique challenges.

Your point around SVB, Mark, is a great example. It's going to be interesting as a sector, including regulators, to think about what additional processes or protections need to be in place in a 24/7 world to provide the ability to slow things down and add some friction to the process when we need to in order to manage risk better.

One of the things we will talk about at Sibos is the risk management side of 24/7 payments, and the potential for what we call ‘faster fraud’. In an always-online world, bad actors have all the time in the world to figure out how to scam you and defraud you. And we've got moments to solve for that at times. So upfront controls are critical.

All of these topics will be discussed at length. But that’s the beauty of Sibos - we get to go and speak to a lot of different customers, counterparties, and strategic partners, to hear how they're managing things. And we come away with ideas and best practice to implement ourselves.

MH: You mentioned artificial intelligence earlier. I think that has the potential to be an important tool in the future for understanding and managing liquidity balances in a 24/7 world. And that will get more sophisticated over time.

As a bank, ANZ sees a lot of data, and that will help fuel these AIs. That’s positive. But as a sector, we have to be really aware of customer privacy, and our competition requirements. It has to be done in the right way, in the right fashion.

There is also potential AI applications around monitoring financial crime and suspicious transactions. That's something many people in the industry are looking at.

We have to be realistic: it's not just banks that will be using AI. There’s going to bad actors out there using the technology to probe for weaknesses and vulnerabilities. These things will continue to evolve. And I’m sure this will be a big theme at Sibos in a few weeks.

ML: I agree Mark. At ANZ, our planning is already well underway. I know I say it every year, but our approach to the event as a bank is like a military operation, it really is.

We started planning in February. This year we’ll attend 300 or 400 meetings as an ANZ delegation over a space of four days, which is just a huge piece of organisation.

Last year was the first year hosted in person after COVID and the energy levels were brilliant, because people were just so excited to see each other face to face for the first time since 2019.

I think this year will be even bigger, without question. We're really looking forward to it, seeing our customers and being able to sit down and have some really good conversations about the year ahead.

MH: For several years ANZ has had the biggest presence of any Australian or New Zealand bank at Sibos, in terms of delegates. ANZ is also the largest bank for banks into Australia and New Zealand as well, so as delegates, we can have very valuable conversations about what's happening in our home markets.

Last year was my first year at Sibos and I agree Mike, there was a great energy. It's a really good opportunity to interact and speak to people about what's happening, what's important to them, what's important for us and how we can support our customers.

Michael Lim is Head of TB Financial Institutions & Mark Harding is Global Head of FIG at ANZ