The final sessions of the first digital Sibos assessed technological progress over the past 12 months, while reminding us of some of the challenges around artificial intelligence, cyber security and automating data processes.</em></p> Our final monthly Sibos opened with a guide to thriving in the pandemic. In a View from the Top interview, Vladimir Verkhoshinskiy, CEO of Alfa-Bank, explained how Russia’s largest private bank adapted to new circumstances, adopting practices that may become permanent. </p> </figure> In the modern world, where everything is digitised, speed and agility become more important than planning"</p></blockquote> Vladimir Verkhoshinskiy, CEO of Alfa-Bank </p> </div></div> “In the modern world, where everything is digitised, speed and agility become more important than planning,” said Verkhoshinskiy, admitting Alfa’s business continuity plans were quickly abandoned as the pandemic struck. </p> The bank quickly adapted its pricing, products and delivery channels, but did not cut staff, or close branches. As for many, the pandemic accelerated Alfa’s digital journey. Not only are mortgage applications fully digital now, recruitment and training have moved online, allowing Verkhoshinskiy to recruit from his home town. </p> “There are not only minuses from this crisis. There are also positive changes that will stay with us,” he said.</p> Alfa started from a healthy position, with an innovative culture and advanced digital platform. It offered Russia’s first digital banking app and 85% of its clients already used its digital channels pre-pandemic. Not resting on his laurels, Verkhoshinskiy is now implementing a new ‘phy-gital’ branch concept. “We’re combining the human touch with fast, efficient digital technologies,” he explained.</p> March’s Sibos Academy session ‘Scaling up artificial intelligence in finance’ considered AI adoption challenges via insights from the faculty of the Center for Finance, Technology and Entrepreneurship, a global education platform for finance professionals and technologists. </p> According to Ayesha Khanna, CEO of ADDO AI - an artificial intelligence (AI) solutions firm and incubator - banks’ adoption of AI is more hype than reality. Many are using AI to streamline KYC and compliance, but few have implemented an intelligent data platform on which AI-embedded products and services can be delivered. </p> “Scale is about reusability,” she said, noting that an AI function can quickly become “an unwieldy octopus”, if projects do not use repeatable data processes, infrastructure and governance. </p> Cultural and technological challenges</strong></p> Banks must also convince their stakeholders that AI can add value, said Shameek Kundu, ex-CDO at Standard Chartered and head of financial services at Truera. Concerns about AI ethics suggest the technology is not yet treated as business as usual. “It’s quite clear bad algos are bad for business,” he said. </p> </figure> If banks can overcome the lack of political will, they can rapidly move toward modernising their infrastructure and getting the benefits from AI.” </p></blockquote> Ayesha Khanna, CEO of ADDO AI </p> </div></div> Khanna remained optimistic about banks’ ability to transform, leveraging their deep experience of handling both regulation and data. But cultural and technological challenges must be tackled. </p> “There is a fear of automation and replacement of tasks,” she observed. “If banks can overcome the lack of political will, they can rapidly move toward modernising their infrastructure and getting the benefits from AI.”</p> In a Spotlight session, titled ‘COVID-19 recovery: having a master data strategy in financial services’, Suade Labs CEO Diana Paredes explained how the pandemic has increased the need for banks to respond quickly to regulators. </p> Deadlines were extended to help banks adjust to servicing customers digitally during the lockdown, but regulators still needed data. To ensure support for clients was not placing intolerable pressure on balance sheets – thus threatening the wider financial stability – regulators made many urgent, ad hoc requests. </p> But many banks struggled to conduct and share scenario-testing results on demand, especially if reliant on manual processes, which proved hard to replicate in WFH conditions. </p> </figure> Having a good handle on your data, to understand your scenarios better, and make decisions faster, is going to be essential for the finance sector to restart the economy” </p></blockquote> Diana Paredes, CEO of Suade Labs </p> </div></div> Banks should expect these requirements to continue. “Having a good handle on your data, to understand your scenarios better, and make decisions faster, is going to be essential for the finance sector to restart the economy,” said Paredes.</p> Legacy slowing adoption</strong></p> Regtech can automate these processes, she said, but legacy thinking is slowing adoption. Compliance and risk management staff are used to ‘fire-fighting’ and human-centric processes, but potentially could be more effective by equipping themselves with better data. </p> “Management want to reduce the risk of fines and costs, but there is friction. It’s difficult for experienced professionals to adjust to making decisions based on immediate data,” Paredes said. “With that power comes responsibility; it changes the way they work, and their role within the organisation.”</p> The impact of the pandemic is also influencing the evolution of cross-border payments, we learned in a fireside chat between Hays Littlejohn, CEO of EBA Group, and Russ Waterhouse, EVP of product and development at the US Clearing House. </p> Payment market infrastructures (PMIs) have played a major role in the successful introduction of instant payments schemes over the past decade. They can also support cross-border integration, thereby reducing friction and cost and improving transparency and choice, said Littlejohn, by helping the industry to coordinate and prioritise. </p> “We need to be careful not to dance at too many weddings,” he said. </p> Post-pandemic economic realities mean “the industry has to be selective about the bets it makes,” agreed Waterhouse, but said widespread adoption of ISO 20022 across instant payment platforms was “a great starting point to lever into a brave new world.”</p> Resources might be in shorter supply, but innovation and collaboration are abundant, he added, noting the advent of new digital platforms had led to banks and PMIs working cheek by jowl on new product development initiatives.</p> “Request-to-pay is a game-changer in terms or safety, transparency and consumer control,” added Waterhouse. </p> No one is safe unless everyone is safe</strong></p> The pandemic prompted a surge in e-commerce and digital payment volumes, but also a concomitant rise in cybercrime. In this month’s final session, ‘Bringing cybersecurity to the masses’, experts shared their thoughts on bolstering security for organisations large and small.</p> Starting from the principle that no one is safe unless everyone is safe, collaboration and information-sharing is critical to identifying and repelling threats, panellists said. Large banks have long shared cybersecurity intelligence with peers, but they also need to communicate effectively with suppliers, customers and other third parties. </p> “Whilst not targeted at financial services, the SolarWinds campaign clearly demonstrates the importance of ensuring the integrity of the full supply chain,” said William Hoffman, CISO, UK and Ireland, Deutsche Bank. </p> With so many different types of organisation at risk, added Hoffman, cybersecurity needs to be discussed in terms everyone can understand. Sharon Barber, chief security officer at Lloyds Banking Group, said the bank had taken this into consideration when developing its internal cybersecurity training programmes, offering a range of tools to staff, according to age, responsibility, seniority etc. </p> “You’ve got to connect emotionally with people. You need a suite of options to bring people on the journey. Everyone learns differently,” she said. </p>