Can banks move beyond the limitations of legacy?

Coming to Sibos for the last 10 years it tends to feel like Groundhog Day (weren't banks debating the same issues three or four Siboses ago?), but one good aspect of that is that you are able to pick up on how far the industry and therefore the debate has really moved on.

A good example of that was at this afternoon's corporates forum, where an old Sibos attendee, David Blair, former corporate treasurer at Nokia and now vice president, treasury, Huawei, appeared to adopt a less aggressive stance with the banks than he had at previous Siboses.

The forum's moderator kindly reminded Blair of what he had asked for from banks at Sibos in Singapore six years ago: an 18 character Universal Remittance Identifier (URI) that enabled corporates in the high-tech industry to reconcile an invoice with a payment. Sounds like a simple request, but having become somewhat of a Sibos mainstay myself, I know only too well how slowly banks move when corporates ask them for something.

Blair and other high-tech corporates went on to develop RosettaNet, the 18-character URI themselves, and perhaps if they had waited for the banks to come up with it they would still be debating the nuances of it at Sibos in Hong Kong.

Blair reminded the banks that sometimes their defensive stance means they can misinterpret what corporates are actually asking for and he said contrary to what banks thought, RosettaNet was not trying to replace SWIFT or compete with banks.

Another interesting attendee on the corporate panel was no other than Vipul Shah, senior director and head of financial services at PayPal/eBay; that company that banks spent many a Sibos accusing of stealing their business. Now PayPal is attending Sibos and talking about using SWIFT.

PayPal at Sibos? Well given that SWIFT chairman Yawar Shah said at the opening plenary that companies need to use SWIFT more, the Brussels-based banking co-operative eager to reverse the trend of declining wholesale volumes on its network is contemplating entering the retail space (more on that later).

As a global online payment provider, PayPal has its challenges when it comes to working with multiple clearing systems and banks. "Clearing systems are not able to accommodate a unique remittance identifier," said Shah.

It is not only the clearing systems that have their challenges. I left the corporate forum with the overarching impression that although corporates may demand a lot from their banks, the pace of change is significantly hampered by bank legacy infrastructure and inertia.

Not only are banks still trying to leverage next generation apps on legacy infrastructures that are at least 30 years old, but banks are also failing to uniformly apply standards that exist, which means the experience for the corporate customer is inconsistent from one banking provider to the next.

While we heard that there are opportunities for banks, for example in the cash flow forecasting space, to organise themselves and deliver a range of capabilities in an integrated way, the banks conceded it was not easy; not easy because of their legacy infrastructure which is "disaggregated."

Picking up on the theme that banks' payments and transaction banking infrastructure is outmoded and siloed, a number of software providers at Sibos are touting payment hub solutions or the next generation of payment platforms that integrate both wholesale and retail payments and aim to help banks overcome the limitations of their legacy siloed infrastructure by providing a "unified platform" whereby banks can deploy payments functionality (whether it is credit cards, ACH, cheques, mobile payments, real-time payments) as a service on a single platform using service-oriented architecture.