The current macroeconomic situation was on the mind of many of the keynote speakers and panel participants. Brexit, the situation in Hong Kong and the escalating trade war between the United States and China were just a few of the factors speakers cited as risks contributing to an unstable financial situation. Yet, rather than being paralysed by these events, speakers used them as a call to arms, stating that now, more than ever, financial institutions must be proactive, seizing the opportunity to future-proof their organisations. VP took note of three key recurring themes that dominated most presentations, and that we found of particular interest to our customers and partners.

Theme #1: Connecting the world through trade

Mr. Charles Li, quoted at the outset, was interviewed regarding his company’s latest venture, an attempt to connect the London Stock Exchange with the Chinese investment market . Mr. Li’s company uses network effects and connectivity to facilitate cross-border trading, giving investors unfettered access to the world’s financial markets. While attempts have been made before to unite Eastern and Western markets, Mr. Li has devised a model that would allow investors to play by their own market rules, staying in their home market, while still being able to trade in a global marketplace. He believes this will break the barrier of the global markets while respecting national sovereignty.

The VP view
“Mr. Li’s presentation was quite interesting, and many of his ideas echo what we are trying to accomplish with our harmonised settlement model,” comments VP Securities CEO, Niels Olsen. “While our sights are set a little closer to home, we see the advantages of facilitating a shared European market, where we make it easier for international investors to invest in Denmark, and for Danish investors to invest in other European markets. Mr. Li’s approach is quite inspirational, as he has to navigate an uncertain geopolitical situation, but has chosen to seize the day and try to make this happen. You can say that our situation in Europe is far more favourable for this type of endeavour.”

Note: Mr. Li announced after Sibos on 7 October 2019 that his company would not proceed with a firm offer for the London Stock Exchange Group.

Theme #2: Banks need to focus on their core business and reduce operating costs

The current macroeconomic climate creates an environment of unprecedented risk for financial institutions. Banks need to respond by ensuring their stability, focusing on their core business and reducing operating costs. Mr. Christian Sewing, CEO, Deutsche Bank presented the steps his financial institution has taken to ensure it can weather the current storm of uncertainty. “We have chosen areas to invest in, because they are the ones where we have depth of knowledge, the client base, scale, competitive advantage and therefore the strongest growth prospects,” Mr. Sewing stated.

This point was also emphasised by Mr. Jean-Pierre Mustier, CEO, UniCredit, who spoke about the need for his bank to automate processes, increase productivity and free up employees to spend more time with clients. “We need to be extremely focused, not doing too many things that will not yield the right returns,” commented Mr. Mustier.

The VP View
“The comments made by Sibos speakers reflect a wider sentiment in the banking industry,” Niels Olsen states. “Our ongoing dialogue with our customers also reveals that banks are under pressure to reduce costs and focus on their strengths. One of the goals with our new strategy, and the introduction of utility services as a product offering, is to help banks address some of these challenges. By working with our customers to help them identify back-office functions that can be supported by VP, we help them streamline their own operations, reduce costs and focus on their core business.”

“At the same time, you can say that VP are following the same pattern with our own strategy. We are playing to our strengths and growing our business responsibly, while staying true to our core business.”

Theme #3: Disruption needs to be embraced, not ignored

This returns to Sibos’ 2019 theme: “Thriving in a hyper-connected world.” Several speakers discussed the need for financial institutions to innovate and embrace digitisation. Mr. Sewing stated that one of the key ways for banks to respond to the current macroeconomic situation was to look inwards, examining their own attitude towards the technological disruption already shaping the global economy. The focus of this self-examination should not be on how to regulate this technology, but on how to use it to drive innovation. “This is crucial because the competition for technological supremacy will determine the future division of global economic power,” he stated. Mr. Mustier expressed a similar sentiment. “It’s better to lead the disruption, then to fight the disruption.”

Speakers highlighted the tremendous potential of big data and the importance of finding ways to ethically mine client data to provide them with relevant services. They also spoke about the importance of seeking partnerships in order to accelerate innovation.

The VP View
“We’re in a unique position to learn from the mistakes of other industries. We have seen how those who resist disruption do it to the detriment of their business. They end up playing catch up or simply ceasing to exist. So, it’s not about resistance, it’s about embracing technology and seeing how we can use it effectively,” says Niels Olsen.

“There are three elements at work: innovation and people; technology; and business acumen. The businesses that will succeed in this challenging marketplace are the ones who can unite these three elements, either on their own, or by working with partners who excel in one of these areas.”

“We need to innovate to stay relevant.”
- Christian Sewing, CEO, Deutsche Bank