The 24/7 demands of global e-commerce and the imperative to roll out resilient and efficient payments technology all helped to inform the banking modernisation agenda at 2023’s Sibos talks.

NAB’s Executive, Transaction Banking Product, Jon Adams was there and says the four-day event had provided an invaluable opportunity to absorb a “fire hydrant” of information alongside global banking peers as they work together to deliver these enhanced customer expectations.

“A drive for efficiency was a high priority for most banks there, with payments modernisation a real focus,” Adams says. “It was also about really getting the basics right and focusing on the core correspondent banking proposition, on how we can do more, better together.”

The annual conference, organised by the SWIFT global payment network, brought more than 9000 professionals in banking and financial services to Toronto in September to discuss industry developments and help drive the agenda for the future.

After 2022’s experimental fervour around topics including digital currencies, blockchain and open banking, this year’s theme of “Collaborative finance in a fragmented world” pointed to a more constrained environment amid ongoing geopolitical tensions.

Grounded discussions

Adams says the overall tone of discussions was firmly grounded in the realities of today, with delegates looking at incremental shifts to drive lower costs, speed up payments and remove barriers for customers rather than finding the next horizon for innovation.

“There was a lot of discussion of 24/7 currency clearing, particularly USD, to help improve the customer experience by eliminating the impact of public holidays and currency cut-offs,” he says.

“US banks are also now connecting domestic rails through the ACH [Automated Clearing House] network, with a similar service available in Europe next year via SEPA [Single Euro Payments Area]. This all aims to extend settlement windows and reduce costs for international payments.”

Another key development Adams noted this year was more banks going “cloud-native” as part of their payment modernisation roadmap, albeit with most in the early stages of the discussion.

“The more forward-thinking banks are migrating to cloud infrastructure to improve latency and scalability,” he says. “I took this as a real positive because this is something NAB has taken a lead globally on. It’s a good validation that we’re on the right path as a partner bank.”

Adams says it was apparent the thinking around international payments is rapidly moving towards the expectations that are taken for granted in domestic payments – enabled today in Australia through functionality rolled out on the Reserve Bank’s New Payments Platform (NPP).

He says the rise of global e-commerce was a strong driver in delivering reliable and secure 24/7 real-time payments infrastructure using cloud native modernisation rather than through traditional batched mainframe payments systems that need to be taken offline periodically.

“In a world of real time e-commerce you can’t have outages, you can’t have restrictions, so the importance of system resiliency, speed, and the ability to scale up and scale down becomes critical.”

The fact these sorts of developments for account-to-account payments platforms were being talked about at Sibos was “in some ways a revelation”, Adams says.

“I find this exciting because we’re very much on the leading edge of that journey,” he says.

Customer focus

NAB Executive, Client Coverage, Tom Mazzaferro was also there on the ground in Toronto and says the need to focus on customer experience (CX) while maintaining efficiency and meeting regulatory requirements was another key theme coming through in discussions with some of the largest banks from across the globe.

“Customer experience is becoming paramount today and the banks we spoke to acknowledged delivering on their customer expectations is enhanced by third-party partnerships rather than building it all in-house,” Mazzaferro says.

“For corporate customers, making payments to key suppliers in a timely manner is both important to their business and also to maintaining those supplier relationships. Banks can differentiate themselves with customers if they can deliver certainty and consistency in relation to the payment CX. This can lead to a potentially greater share of deposits and other business opportunities.”

Mazzaferro says corporates were still valuing certainty and efficiency over speed “although this is likely to evolve over time”.

He adds the experience at Sibos was important in helping cement relationships with the portfolio of banking customers NAB services globally: “We are really comfortable with our banking customers and see sustainable growth in this segment as the global volume of payments rises. What we are seeing for the future of payments is a real step-change that will allow for greater speed and efficiency and reconciliation. We are committed to growing NAB payments in this exciting new era.”

Harnessing ISO data and AI

NAB’s Adams says much of the modernisation agenda at Sibos was also linked to adopting the global ISO 20022 standard, with its richer structured data to be expanded and value-add services developed. However, he says banks at the event were still facing challenges in their ISO delivery.

With the ISO compliance date less than two years away, the leading banks have started to plan how to commercialise the richer data. Examples include enhancing remittance data for B2B payments to assist with reconciliation, ingesting more data into Financial Crime systems to improve monitoring and reduce false positives, and to improve cash management through virtual accounts.

Perhaps the biggest leap in innovation on show was the increased use of AI for operational efficiency, Adams says, particularly when using machine learning to improve payment repairs and straight through processing (STP) rates. Other AI developments involved using the technology to evolve payment scoring to help with fraud protection.

Another revelation which caused an initial stir among delegates was the day one announcement that fintech Wise had joined forces with SWIFT to expand cross-border payment options, with Visa announcing a similar move two days later.

Adams takes the move as a positive acceptance of how banks and fintech disruptors clearly now need to work together to provide the best experience for customers – a key takeout from Sibos.

“There are a huge number of delegates there at an enormous event, but all with a common purpose which is the use of the SWIFT rails for moving money. It’s rare you get a chance to speak to all of these banks in a short period of time. It’s like speed dating and it’s a wonderful opportunity to see and hear the global thematics coming through clearly.”

In line with the conference themes, businesses are set to save with NAB removing the $10 transaction fee for business customers making international payments with a currency conversion via NAB Connect and Direct Link.

The removal of the charge, which took effect on 1 October, 2023, will benefit more than 15,000 NAB business customers making cross-border payments via NAB’s online banking platforms every month. This initiative builds on the bank’s decision to remove the international money transfer fees for individual customers in 2022.

See NAB News for more here.