Collaboration and standards key to FinTech development

Major financial institutions must come together to develop standards for financial technologies and their widespread implementation, according to an industry panel.

Banks are exploring new forms of disruptive technology through partnerships with FinTech firms and their own innovation, however there have been few implementations so far. Blockchain is a prime example of this, with plenty of industry discussion but only a handful of examples of the technology being rolled out.

“In the capital markets there are 15-20 large global banks with substantial investment banking operations who own 80-90% of the global revenue pool,” said PwC strategist Dr. Joerg Ruetschi.

“They need to co-operate to come up with certain standards and integrate the technology around this as it is much more complex, global and on a bigger scale than what we have seen from retail and commercial banks.

Panel moderator Sadiq Javeri, head of product strategy capital markets and risk at Misys also spoke of how challenges that the industry faces in implementing FinTech can be put down to a lack of standardisation and pinpointing blockchain as a prime example of this.

“One of the challenges that Misys has seen in generating past strategy is that FinTech firms didn’t have those connections to bring a community of banks together to solve a problem,” said Javeri.

“An example of this today is something like blockchain where the real benefits are getting a lot of people working on the same standard but the actual convergence to this standard will take some time,” said Javeri.

The panellists’ comments come at a time of intense focus on FinTech from major institutions, with this year’s SIBOS event centred around themes of disruptive technology and innovation hubs.

At the end of August, Swift helped spearhead a new Global FinTech Hubs Federation (GFHF) made up 20 members.
There is also an increasing amount of collaboration and collective work towards the progression of FinTech.

Earlier this month, The Hong Kong Monetary Authority (HKMA) has announced plans to launch a FinTech innovation hub and regulatory sandbox following in the footsteps of UK, Australia and Singapore in launching a FinTech hub.

In addition, the World Federation of Exchanges (WFE) called for a global approach to distributed ledger technology and for the introduction of regulatory sandboxes for distributed ledger technology, as the initiative had been “a useful tool for the wider FinTech industry”.