Covid-19 has seen financial institutions cooperate as they fight financial crime, support the real economy, provide ESG financial structures and work with regulators in a world of digital currencies.</p> A year ago, we gathered online for Sibos 2020 amid positive signs that Covid-19 vaccinations would form the basis for a strong global economic rebound in 2021. Many of the hopes raised by the mass jabs programme in Europe, North America and elsewhere have been borne out. Even those sectors hardest hit by the pandemic, such as retail, travel and leisure, are now on the path to recovery. </p> There is much to be optimistic about, yet the prevailing mood is decidedly downbeat. The geopolitics of trade are back in the headlines after a brief absence, although the focus has moved from trade wars to supply chain vulnerability and labour shortages for key industries, such as road haulage. </p> Working from home and the surge in sales of electronic devices during the pandemic has created a shortage of semi-conductor chips needed for hi-tech products, thereby undermining the recovery by limiting production in sectors such as the automotive industry. And as winter approaches, European and UK corporates face further difficulties as energy prices rise and fuel delivery issues dominate headlines; an uncomfortable reminder of our current dependence on fossil fuels. </p> The Three Rs</strong> </p> Given these distractions, it would be easy to lose our focus on the issues that make up the environmental, social and governance (ESG) agenda. But the ESG transition needs to remain front of mind and emphasis should remain on the interlinked ‘Three Rs’:</p> Redesigning</strong> the way in which our businesses operate and our assumptions about risk</li>Regionalisation</strong> when considering the impact of geopolitics on both our supply chains and ESG efforts</li>Recycling</strong> to limit CO2</sub> emissions and ‘do no harm’ by ensuring there is end-to-end sustainability across the business. For example, automotive manufacturers should question not just whether their vehicles are sustainable, but also recyclable?</li></ul> The green classification system introduced by the EU taxonomy should make the task clearer. Its mechanism will enable corporates to identify any point in their supply chain where damage is being inflicted on the climate, while regulation will ensure they take prompt action to rectify it. </p> The banking industry has an opportunity to support the taxonomy, providing both the financing for green deals and the much-needed investment that governments and industry need to undertake. It must also develop innovative tools to accelerate the process; that include everything from letters of credit and guarantees to supply chain finance and infrastructure financing that incorporate ESG.</p> Unlike the crisis of 2008, banks are integral to lifting the world out of the malign legacy of Covid-19 and have a positive role to play in what is likely to be a further period of intense regulatory activity. They must remain on top of these trends and encourage higher standards of compliance in supply chains, with financial incentives for companies that have taken on board the message of the Paris Climate Accord and COP26.</p> Looking back and looking ahead</strong></p> So what does Sibos mean for those of us that have, for years, run from meeting to meeting and conference to conference? Five years ago, the topic on everyone’s lips was Blockchain, and last year Central Bank Digital Currencies (CBDCs) sessions were extremely popular. As we head into Sibos 2021, conversations are intensifying around fintech activity, crypto currencies and the tokenisation of digital assets.</p> With the digitalisation of currencies comes the dilemma on how exactly regulators should address crypto and digital assets. In this environment, banks should regard good, robust regulation as something both necessary and positive. </p> And from an institutional cash management perspective, it remains vital for banks to invest time and resources into making sure they can support legitimate cash flows alongside supporting regulators and law enforcers to fight financial crime – such as money laundering and terrorist financing. We see banks increasingly deploying artificial intelligence (AI) to drive the fight against illicit flows.</p> While KYC utilities have done a great job, it’s unlikely we’ll see transaction monitoring utilities coming soon. Each bank has their own systems and processes and invests in specific training needs for their staff. Technology and AI is one defence, but a bank’s people must understand the inherent and emerging risks in the market.</p> All in it together</strong></p> Covid-19 has ushered in a new level of cooperation, with the call to keep the economy running providing the catalyst for many banks to begin working together. From a financing perspective, the support programmes launched during the last 18 months have shown how critical a bank is as an infrastructure provider to distribute and reach the real economy and those that desperately need liquidity. </p> We would urge delegates to use Sibos 2021 to decide how banking supports the much-debated goal of ‘building back better’. While we will all miss seeing colleagues, peers and friends in person this year, the digital tools at our disposal means we should all be ready to maximise the opportunities of the week ahead.</p>