The Financial Services Club's Blog

Are we on or off the rails

At SIBOS 2012, I led a session on the future of money along with Udayan Goyal ...

... and asked the basic question: will the future still be built on the banking foundation?

I'm writing up the session again, as my original description left out a core conclusion about the need to adapt to the future and not let the future happen to you.

The man behind the mask

I’ve gotten into this habit of using the SIBOS closing party to do something a little bit on the edge.  Controversial, but meant to be funny.

Last year I was the world’s hottest banker …

… and this year I was anonymous …

The problem is that I wasn’t.

I was spotted and it didn’t take long before the party police closed in, asked me for my SIBOS id and then asked for the disguise to be removed.

I was surprised but not, as the mask is a bit of a shocker.

A mask hides your identity and turns you into someone else.

Unlike last year, where everyone thought the hottest bank rock star outfit was an amuse bouch, I walked around the Osaka-jo Hall and felt very uncomfortable.

Uncomfortable with the looks I was given by everyone in the room and uncomfortable in the mask.

Most turned their faces away, and I felt relegated to a new underclass, to be ignored and driven out.

A pariah.

The virus Anonymous had entered the room and needed to be driven out.

But I was only wearing a mask.

Just a $5 plastic mask from a joke shop.

Some joke.

It just made me realise how I was lucky to be able to remove the mask and revert to being Chris.

Same t-shirt but no mask, and instant acceptance.

It was an amazing experience, and it brought home to me how the Occupy movements’ bravado should be admired rather than admonished.

Or, as the Bank of England’s Andy Haldane put it:

It is now over a year since the Occupy movement commenced its journey and entered the collective conscience of the public and policymakers.  One year on, what has it achieved?

Some have suggested rather little, that Occupy’s voice has been loud but vague, long on problems, short on solutions.  Others have argued that the fault-lines in the global financial system, which chasmed during the crisis, are essentially unaltered, that reform has failed.

I wish to argue tonight that both are wrong – that Occupy’s voice has been both loud and persuasive and that policymakers have listened and are acting in ways which will close those fault-lines.  In fact, I want to argue that we are in the early stages of a reformation of finance, a reformation which Occupy has helped stir.

[For the full speech click here]

Bear in mind that these guys are now the industry’s regulators ... so stop being upset by a mask and go and talk to the people.

Just as I talked to the people last year about bankers, and they equally ignored my message, this rift of the bankers versus the people is caused more by prejudice than understanding.

Here’s to less prejudice about the colour of your skin, ethnicity, sex, religion ...

... oh yes, and plastic masks.

 

The Finanser's Week at #SIBOS

This week was dedicated to SIBOS, the annual SWIFT tradeshow, conference, exhibition and all around banker's jamboree.  Here's a summary of the whole week:

Welcome to SIBOS 2012

So here we are, a few of us anyway, at SIBOS 2012 in Osaka, Japan.

Morning impressions in the land of the rising sun

The theme of SIBOS this year is definitely going to be about Asia and, specifically, Japan.

The four principles of innovation for banks

The first main session of the day just finished and was entitled: “The Tribe on the Tatami”, which delivered a clear message about the key principles for innovation in banks.

#SIBOS 2012 - where are the people?

After a brief tour of the exhibit hall, it was clear that most people are not there ....

The future of money

Now I know where all the people are … they’re in the conference!

Are cyberthreats really a threat?

Summary of the panel discussion about cyberthreats to the banking system with:
David Bannatyne, Executive GM, Banking & Payments Systems, National Australia Bank;
Mark Clancy, MD, Technology Risk Management, DTCC; and
Srood Sherif, Group Chief Information Officer, National Bank of Abu Dhabi

The big growth markets are in Asia

Summary of the plenary debate about how power is shifting to Asia's emerging markets with:
Nobuyuki Hirano, Bank of Tokyo Mitsubishi UFJ
KV Kamath, Chairman, ICICI Bank Ltd
Simon Tay, Chairman , Singapore Institute of Intern. Affairs

Mourners and exhibitionists

A tour of the exhbition and a discovery of one stand that was mourning the exit of 10,000 colleagues.

Forget standards, you'll never have one

A non-banker looks at our industry, call us childish and relates a story about how we just can never agree so get over it.

What will the European markets infrastructures look like in 2020

A strong discussion about the implications of regulations on collateral management and clearing with:

Florence Fontan, Head of Public Affairs, BNP Paribas Securities Services;
Mark Gem, Member of the Executive Board, Clearstream Banking Luxembourg;
Joël Mérère, Executive Director, Euroclear France;
Jochen Metzger, and Member of the T2S Board and Head of the Department Payments and Settlement Department, Deutsche Bundesbank;
Takeshi Shirakami, Director, Head of BOJ-NET Service Design Group, Payment and Settlement Systems Division, Payment and Settlement Systems Department, Bank of Japan;
Coen Voormeulen, Division Director, De Nederlandsche Bank

Can transaction banking survive in this age of regulation?

A fantastic debate about regulatory change with:

David Wright, Secretary General of IOSCO, the International Organization of Securities Commissions.
Jaspal Singh Bindra, Group Executive Director & Chief Executive Officer, Asia, Standard Chartered
Barbara Ridpath, CEO, International Centre for Financial Regulation
Francesco Vanni d'Archirafi, CEO Transaction Services, Citi

Why SWIFT had to bring along 52 kilometres of cabling

The challenges of doing business in Japan.

NFC has been strangled at birth

A debate about mobile payments with

Kelly Bayer Rosmarin, Business Product and Development, Commonwealth Bank of Australia
Dan Schatt, GM Financial Innovations, PayPal
Dr Kiyoyuki Tsujimura, President and CEO, DOCOMO Engineering Inc
And chaired by the Asian Banker CEO, Emmanuel Daniel.

Banking for a better world

A discussion of how to make banking work for the good of the people and the economy with:

Professor Muhammad Yunus, Chairman of the Yunus Centre and the founder of Grameen Bank;
Julius O. Akinyemi, Entrepreneur-In-Residence, Massachusetts Institute of Technology;
Kartik Kaushik, Managing Director, Global Head of Business Development, Citi; and
Carolyn Stephens, Professor (PhD, FFPH, IFRSM) , Universidad Nacional de Tucuman/UCL.

The 15 most innovative firms providing banking solutions

The fifteen companies vying to win SWIFT's award for the most innovative financial technology of 2012.

Muhammad Yunus: how to end poverty forever

Professor Muhammad Yunus, the founder of microfinance with Grameen Bank, gives delegates an inspirational speech.  Here it is in full (near enough).

Can you imagine your bank advertising like this? 

Japan has so much culture, tradition, beauty and … downright weirdness. I spent the weekend in Tokyo and noticed lots of wonderful sights: kimonos, kabuki, maple trees and such like. Then there is the night life, the lights, the music and the karaoke. Then there are their banks ... 

Dodd-Frank (and EMIR): the unintended consequences 

I was going to write one final piece about Japan, on a more serious note, as the SIBOS week really brought home to me the fact that there is a two speed financial world being regulated under one regulatory agenda....

The lighter side of SIBOS Osaka

Some of the funnier moments of the week.

The best giveaways of SIBOS 2012

What goodies could you have bagged this week at SIBOS?

What really happened at the SIBOS closing party? 

I’ve gotten into this habit of using the SIBOS closing party to do something a little bit on the edge. Controversial, but meant to be funny. Last year I was the world’s hottest banker and this year I was...

Sayonara Osaka

The end of busy week in Japan, and a regulatory agenda is top of mind.

 

If you like the Finanser, check out the books of the blog: the Complete Banker Series

 

The Financial Services Club is sponsored by:

 

For details of sponsorship email us.

 

The Finanser's #SIBOS Week: 18th September - 25th September 2011

For those who are that interested, here are all the blog entries made during the week at SIBOS in one place ...

 

SIBOS 2011 - what will be the big themes? 
We should be talking about risk.

And so SIBOS begins 
First impressions.

Brett King launches Movenbank at #sibos #innotribe 
Brett King, author of Bank 2.0, is launching a new bank based upon facebook and gaming,

Gartner and #innotribe get social 
The key tech themes of mobile, social, big data and cloud are consistent.

Citigroup's keynote at #Sibos ... nil points 
Sorry to my friends at Citi, but I was seriously underwhelmed by John Havens, COO for Citigroup's speech.

I said RMB, not Rumba 
Lots of opening thoughts seem to be focused upon China and the importance of the Remnimbi.

Banks wasting billions on inefficient clearing 
In today's keynote plenary, it's clear that banks are spending at least $20bn on clearing and settlement ... and wasting a large part of it.

Rogue traders and big data 
The innotribe stream discussed lots of things, but the link between rogue traders and big data made me wake up.

Operatic arias and sigh boats 
A summary of the day two evening, including awaking to find the eurozone is melting down!

Video: the Future of Money 
The innotribe team made a special video on the future of money ... here it is.

Banks should build their business models as APIs 
According to one speaker at the morning session on new economies, banks should just throw their functionality out to the community as APIs.

Growth will come through regulatory arbitrage 
The second plenary big debate was a corker, especially when all the banks admitted that they would have to look for regulatory arbitrage as it's in their shareholder's interests.

The #innotribe startup challenge final - here we go! 
200 companies applied for the innotribe startup challenge.  The two winners get $50,000 each.  Here's a review of the ten finalists.

SWIFT's strong commitment to innovation 
Lazaro Campos is clearly 100% committed to innovation with SWIFT.

The Future of Facebook 
The premiere of a video and an amazing statistic that facebook credits are processing $50 billion a year.

Banks must learn how to do regulation and innovation 
Banks seem to focus more on regulation than innovation.  They must learn to deal with both in equal order.

#innotribe drums drown out short-sighted journo 
The funniest moment of SIBOS 2011 as the drums are told to keep quiet.

And so SIBOS ends ... until next year 
A closing session with Brett King, the SWIFT leadership and Osaka beckons.

Reflections on SIBOS 2011 
This year's SIBOS had a certain smell to it ... do you know what it is?

 

Meanwhile, in the rest of the world, here are all the top news stories ...

UBS's biggest investor attacks bank's lapses - The Independent
UBS's biggest shareholder heaped pressure on the Swiss bank yesterday by criticising it publicly over the £1.5bn loss inflicted by an alleged rogue trader.

Misys pay plan is 'wholly excessive' - The Independent
Misys investors should vote against the software company's pay plan, which could reap its chief executive a payday worth more than 900 per cent of his salary, Pirc said yesterday.

The domino effect in Europe's debt crisis - BBC
Which country could fall to the next downgrade?

Lloyds curtain call lines up final bow for Win Bischoff - The Telegraph
Exactly three years on from Lloyds TSB's acquisition of HBOS, the final curtain has fallen on the deal's management team.

Lloyds finance director resigns - reaction - The Telegraph
Lloyds Banking Group, the 41pc taxpayer-owned lender, is look for a new finance director after Tim Tookey quit to join the insurer Friends Life. This is how the industry reacted to the news:

Vickers reforms force banking industry to face reality - Financial Times
The UBS scandal has been taken as a powerful endorsement of proposals for reforming the UK banks but, in truth, no such endorsement was needed

Banks must 'more than double profits' to meet capital requirements - The Telegraph
Banks across Europe and North America must more than double their profits by 2015 if they are to meet the capital requirements likely to be imposed on them over the next few years, experts have warned.

Non execs have 'little idea' on risk - The Independent
Many non-executive directors have little idea about the risks in their companies and are not sufficiently independent of management, according to a survey of internal auditors.

Google Wallet Likely Launching Tomorrow - Techcrunch
Last week, Google posted an awesome teaser video for Google Wallet featuring George Costanza. The implication: Google Wallet would finally be launching soon. Now we think we know when: tomorrow. As you can see in the above image, documentation is being sent around to partners stating a September 19 launch

String of fake UBS trades uncovered, says bank - Financial Times
Fuller picture emerges of how accused trader Kweku Adoboli trader could have allegedly racked up $2.3bn in losses.

 

If you like the Finanser, check out the books of the blog: the new Complete Banker Series

The Financial Services Club is sponsored by:

    

For details of sponsorship email us.

 

The Finanser's Week: 25th October - 31st October 2010

 

Our biggest stories of the week are all about SIBOS, the annual tradeshow run by SWIFT ...

Top Tips for Tradeshows
This year’s SIBOS has three themes: regulation, recovery and rebuilding trust.  So, let’s explore these briefly.

Chew lips from Amsterdam 
A discussion with the market infrastructures for clearing and settlement.

Banks are just safe keepers of data 
Innotribe's discussions of the Long Finance.

"Social media will bring banks to their knees" 
The first plenary session where ING say that social media could destroy a bank.

An interview with Stephen Hester 
The CEO of Royal Bank of Scotland talking about how the bank has restructured.

A real tulip in Amsterdam 
An amuse-bouche introduction to day two, including McKinsey's top six trends in global payments.

The days of self-regulation are over 
Summary of the main plenary that focused upon how to rebuild trust in banks.

The Long Now: 2015? or 2115? 
SWIFT's strategy for 2015 and some discussions around innotribe of how long is long?

Chinese Banking and the 200,000 1RMB notes 
Have you noticed how many Chinese banks are at SIBOS ... read this to see how they think!

Asian banks are going to head West 
We've heard this for a while now, but the plenary on recovering trust had the theme that Chinese Remnimbi is the next reserve currency and China's banks are going to head West.

Small is less than $5 billion 
Ever tried to get a small asset manager to throw out their fax machine?

She popped her clogs 
All things Dutch at the start of Day Four.

And SWIFT's next big innovation will be ... 
The innovation stream and why Moneyforce won the week.

China and India or ... 
A big debate about the trends for transaction banking in Asia.

Using whales to fish for minnows 
Summary of Paul Saffo's closing keynote plenary speech.

And now, the end is here ... 
A short view of the whole week here in Amsterdam.

The major general news stories of the week include ...

More cash points dispense £5 notes - The Independent

The number of £5 notes dispensed from cash machines will have soared five-fold by Easter next year, the Bank of England said today.

Learning the lessons of AIG's fall - Financial Times

The bitter irony for the rest of the insurance industry is that the US company's traditional insurance businesses had nothing to do with its failure

PayPal X Innovate 2010 Developers Conference - Payments News

At its PayPal X Innovate 2010 developer conference today, PayPal unveiled "new technologies and partnerships that will allow people to change the way they pay – accessing their digital wallets from more devices to shop, browse and pay anytime, anywhere." PayPal Announcements: PayPal Showcases the Future of Money at Its

Bankers derived 'erotic thrill from credit crunch' - The Telegraph

Bankers derived an erotic thrill from the losses suffered during the credit crunch, according to a new academic study.

Buffett anoints successor to manage his billions - The Independent

Warren Buffett, who heads the beloved American conglomerate Berkshire Hathaway, has named an obscure 39-year-old hedge fund manager to oversee much of the company's money, making him the favourite to succeed the billionaire investment guru. For the past five years, Todd Combs has run a Connecticut hedge fund called Castle

Banks should be broken up, Bank of England Governor Mervyn King warns - The Telegraph

The Bank of England Governor has backed breaking up the banks as part of wider reforms to protect the taxpayer from another meltdown.

Speech Gertrude Tumpel-Gugerell: The Single Euro Payments Area - where do we stand? - ECB

City fears new Bank of England powers will hit democracy - The Telegraph

The increasing powers of the Bank of England are being called into question amid fears that its looming regulatory remit could lead to a "democratic deficit" in the way the City of London is governed.

A better approach to risk management - Financial Times

Risk management is a key source of added value but it is frequently misunderstood

BNP Paribas: Stop. Think. Act - The Economist

The secret of a French bank’s success.

 

If you like the Finanser, check out the books of the blog: the new Complete Banker Series

 

The Financial Services Club is sponsored by:

   

For details of sponsorship email us.

 

Which nation will be next global superpower?

As mentioned the other day, we are asking some big ticket long-term questions at SIBOS this year, such as:

• When will we know that financial systems work?
• How will we know when financial risk is not an issue anymore?
• What will America and Europe be doing when the economic power balance has shifted to Asia?
• Can we confidently create a way of investing for the long-term instead of our net present value short term view of today?
• Can we foretell a future where a human right includes "to not be poor", and what happens to work, life and war if there is no poverty?
• If money is just a way of exchanging value, and it's all now digitised, can we create digital money without the need for real money? How do virtual exchanges and virtual currencies change the commercial infrastructure?
• Could we create a world where financial transactions are sponsored, for example by Google ads, so that they are free? If so, what is the role of a bank and how will it make money, if all financial transactions are free?

This is all part of the focus upon the work of the Long Now Foundation and Long Finance group, of which I’m a part.

Long Now looks out at what will change over the next ten millennia, whilst the Long Finance looks out at a financial lifetime and how to build a financial system that could last 100 years.

In this series of discussions, I thought I would tackle one of the big questions we are considering: What will America and Europe be doing when the economic power balance has shifted to Asia?

Regarding the shift to the East, this is not a Long question, as the shift has already happened, if you listen to some folks.But does it matter?If America is no longer the great superpower but just a power, does it matter?If Europe has zero competitiveness due to its fragemented structures, does it matter?And what about Latin America and Brazil, don’t they matter?And Russia?And the Middle East?The answer to all of the above is that of course it matters.Any shift of economic or military power matters.For example, we could pose a different view to the above if we really want to be Long, and ask: what happens when the balance of economic power is determined by Africa?When we think of our land masses and populations, the real matters are determined by commodities, capabilities, processes and capital.So let’s look at these areas, and then consider who has the balance of power and who will get it.When we think of commodities, we think of oil, metals, cocoa, gold and similar.Those who have an abundance of scarce commodities that have value are naturally going to be richer than those who have none but need them. The Middle East has lived on their oil riches for long and will do so for the near future but, in the Long Now, some will fail.This is because the oil riches are a finite resource, and will eventually be drilled to extinction.The illustration of this issue is no better exemplified by Yemen, where poverty is rife having squandered away millions in oil revenues years ago, and being unable to create any substitute.This is unlike the Emirates, who ballooned into a prosperous construction, tourism and trading centre, built upon sand.So when we talk about commodities we are talking about a finite property, which is why there is scarcity and value. From a Long Now viewpoint, it must beg the question: what are you investing your finite billions in today for the infinite post-commodity years later?The answer is that these nations should be investing in education, knowledge, brains and science, as these capabilities build a sustainable future.The capability battle is one that Britain used well to build an empire a century ago, and that America used well to create prosperity through the twentieth century. It’s also what other nations, such as Singapore and India have realised in building their empires of today.It’s all about looking at things that humans can create that are of value and, by building leadership in this area, it means that your nation can stay ahead of the world when it comes to technological, scientific or commercial scarcity.Britain had that scarcity during Queen Victoria’s reign, with a technological leadership based upon naval and military strength. This allowed one small nation to colonise many other nations. By doing so, the strength of the nation increased by being able to access commodities of those nations, and gain commercial value, capital and further technological strengths which became a virtuous circle.This leadership faded as the industrial revolution led to America, with its vast swathes of land and resources, to take over as the manufacturing engine of the world.In America, that leadership came from building cars and computers, creating value through innovation, and through using knowledge to gain power over capital, commodities and resources.Today, this is the piece that is shifting to the East. China’s leadership is based upon people, processes, resources and investment in capabilities for building cheaper, faster and better. China’s a nation that saw the weakness in the model of the world – the cost of manufacturing – and exploited it to gain growth. Now, having gained that edge, they are investing in all the other things to generate wealth from science and knowledge, and to maintain and sustain future growth.

This is why China has a space mission, as does India.

These are indicators of building capability leadership through scientific and technological research.

India saw a different weakness in the world’s model – the cost of service – and their strategy was therefore to invest in knowledge, and specifically to use their brainpower to gain economic growth. The use of English language and investment in technology skills, restructured the world’s knowledge chains in the same way as China re-engineered the world’s supply chains.It is these investments in human capabilities that led to other nations, who had the commodity resources to support the wealth of manufacturing and services growth in China and India, to also enter a growth phase, particularly Brazil and Russia.Now, Brazil has invested in human capabilities to sustain their growth, whilst Russia is still a fragile economy due to a lesser focus on building such a sustainable future.So that outlines two cycles of economic power shifts: commodities and capabilities.The thing that now makes the difference is that, if you start with an abundance of resources and use the investment capability of such resources to create capabilities, which nations get the Long Win, as in they become a superpower.This is all down to processes.The two go hand-in-hand, and are easily reflected by Germany and Japan.Since the 1970s, we all say that Germany and Japan are the world’s leading nations in terms of their excellence in making cars and electronics.This is because Germany and Japan had a huge squeeze on capital after the War, and therefore had to create efficiency and effectiveness in processes. Luckily they could do that, thanks to a clean spread of land and knowledge that had a focus upon creating processes that maximised the efficiency and effectiveness of manufacturing.Just look at the work of W. Edwards Deming in post-War Japan to see how Just-in-Time manufacturing re-engineered the world.So where does this lead us to, in thinking of the Long Now future world?Who will be the future superpower?Not Europe, if the region continues in its current form.This is because Europe has a problem with managing the four dimensions of commodities, capabilities, processes and capital, mainly because Europe is a grouping of 27 individual nations rather than a singular whole. This is why Europe is bad at dealing with these, although some nations within Europe excel, as in Germany. This is why Europe is grappling with the question right now as to whether the Union can survive long-term if one or two nations are good at building a sustainable model of wealth, whilst having to give it all away to support the nations that aren’t.China and America are different as they are a nation and not a region. Admittedly, they are not a singular whole either – China and America are a formation of many individual states, like Europe – but they do have centralised governance for strategic planning and control, as well as a common language and currency. Again, I know some will be tutting at this point, saying that Mandarin and Cantonese are different languages and almost half of America speaks Spanish, but it is fundamentally different. This is because these nations do have a cohesive structure for planning, investment and management of commodities, capabilities, processes and capital, whereas Europe does not. Europe may in the future but, right now, it does not.Equally, many claim that Europe fails due to disparate and historical legacy infrastructures, whilst America succeeds by starting as a new Nation, with a new currency and agenda. China’s a new nation, in terms of infrastructure, and again can exploit and leverage that capability.So when we look at the capabilities criteria, China and America are the two large nations that both fit. Russia, Brazil, India and Africa would be the other contenders.We can leave Africa off the list for the moment, as they suffer the same paranoia and fragmentation as Europe. Similarly with Russia, for they need some serious investment in people and capability if they are ever to maximise their resources and opportunities.So, America, China, Brazil and India are the four Long Finance nations on the radar.They are all single nations with central planning structures and a relatively new Nation mentality, which means that they are not bogged down by legacy infrastructures from an economic viewpoint.They all have strong capabilities and access to resources, so we don’t need to think of these as an issue.Therefore, for the next century, the superpower from these four will be based upon processes.And here’s where it gets radical.America has been very good on process, and India is very good on process.Everything is in signed off in triplicate, checked, double-checked and authorised.The thing is that this procedural approach to processes is not adept for the new millennia process, where the fast beat the slow.Today’s globalised world works in seconds, not years, and the heavy-duty processes and rigid disciplines of the twentieth century will fail in the twenty first.So, for these reasons, America and India may be hindered culturally in the Long Finance twenty-first century, which leaves Brazil and China.You probably think it’s China, don’t you?China will be the Big Superpower of the twenty-first century.Well, maybe not.Maybe Brazil holds the balance of power for the Long Finance world.The reason for this conclusion is that China will be contracting in power in 2050-2060, due to their single child policy.The lack of new blood and an aging population could drag China’s economic tiger into a toothless and clawless sloth in the Long View.Meanwhile, Brazil has the commodities, capabilities, processes and capital to be the world’s largest economic force in the next century.If that’s the case, North America will feed off South America, and will be the subservient economy to Brazil. It will be a reverse relationship to the structure of the twentieth century, where you had the poor South and rich North.Similarly, Africa will have been raised from poverty, and India and China will still be forces of power, but not necessarily THE force of power.Europe will still be fragmented, with member states fighting for capital and control just as they are today, and Russia will still be tipped as the next big economy and, if the government does invest more strategically in commercial capabilities and processes, it just might make it.Meanwhile, I’m moving to Australia as, in the picture I’ve just painted, the world has turned upside down. All the wealth and control that was in the Northern Hemisphere has moved to the South, and so the natural juxtaposition of London will to live in Sydney.Interesting.Instead of coming from a land down-under, I’ll come from a land up-over ... G’day mates.

SIBOS: the end is nigh ... but only until next year

The end of SIBOS 2008 or almost. The party is to come and I think folks a finally cheering up a bit. The weather is clear and sunny, the work is done, the markets are still turbulent but more stable and we are beginning to relax. Not with complacency, but with relief.

After running around for four days trying to keep up with the breaking news and SIBOS news, it’s been a brain strain to say the least.

As one speaker said tonight, “I’m sure you are tired physically, from walking, and mentally”. That’s an understatement.

The closing session of SIBOS this year also touched a vein that I have been talking around for over two years: Web 2.0 and the way that the internet is changing our lives.

I am surprised that SWIFT have embraced this theme as much as they have this year, but everywhere we look – once you get past the credit crisis issues and the financial shockwaves it created – there’s internet and Web 2.0 dialogues taking place.

This dialogue culminates with the arrival of Don Tapscott, author of Wikinomics as our final plenary speaker. Don delivers a consummate presentation for around fifty minutes of all the tech trends and how collaboration is key. He finishes with an interesting note though.

Everyone has been asking all week about the role of regulators in creating and enabling this financial crisis. Certainly the Fed had a role in money supply in circulation that enabled the massive leveraged positions of Bear Stearns, Lehmans and Merrills, and Greenspan and company are also culpable for the unravelling of the Glass-Steagall Act that allowed US commercial banks to get into investment banking big time. This has come up several times in the past week.

So Don says that in the spirit of collaborative commerce, regulators and banks should be honest. Admit it. The risk models and regulations were a mess. They were wrong. We screwed up.

He didn’t quite say it that way, but I take poetic licence.

And the solution is a simple one.

Or it could be.

The solution would be that, in the same way we open source systems and development work these days, and in the same way that Linux, Wikipedia and more are created by the users, open source the regulatory frameworks.

Create a global portal, where everyone can collaborate on the wordings , rules, procedures, processes and structures for the future supervisory framework and regulatory and prudential organisation for the banking industry.

At least that way, it might be more robust and reliable than the untransparent, secretive and unreliable framework we have today that is broken.

I like it.

Finally, Lazaro Campos, CEO of SWIFT and Gottfried Leibbrandt, Head of SWIFT Markets, summarise this week with a variety of commentary.

From the reunification of Germany at SIBOS Berlin 1990 to the cancellation of SIBOS Singapore after 9/11 in 2001, we have rarely seen such a turbulent SIBOS.

This SIBOS will probably be remembered as “SIBOS Monday”. SIBOS Monday was when the banking system exploded globally and imploded in America.

As Lazaro said, “we are living through history”.

This week, 23 speakers had to be replaced at very short notice due to the crisis back home, and Robert Close of CLS said that, “we’ve seen the financial world change beyond recognition this week. However, the back office risk management systems are now seen as more important than ever before. We can see that there could have been a meltdown in the financial markets if those back office systems had not worked and were not robust. For example, CLS process over 5 million FX instructions valued at over $30 trillion this week alone. The fact that those systems work saved us.”

Or words to that effect.

And I agree with him. The fact we have a globally connected market that can move risk in nanoseconds globally with robust infrastructures does help. That’s why you can unravel a Lehmans overnight, or you can at least try (we are still trying).

The big questions and themes remain though:

* how can banks regain trust and confidence?

* what is the future of OTC Derivatives?

* what should be the new regulatory rules

* what is the role of new technology and current technologies in adapting?

And more.

The themes of SIBOS 2008 have been mainly the shockwaves of the credit crisis rippling through our system, the shift of economic power from America and Europe to the BRIC economies, the role of Web 2.0 and other disruptive technologies on our business models and the important of standards and interoperability.

SIBOS always comes back to standards and interoperability as that’s the reason why SWIFT exists isn’t it? As well as throwing a darn good conference and party of course.

So, as Denmark was all about SEPA and the EU, Sydney was all about the changing role of SWIFT and the widening of SWIFT to include new markets and geographies (the BRICs), Boston was all about bringing on the corporates, Vienna has been all about getting back to basics.

Sort out this mess, work collaboratively on risk models that work, focus upon resilience, reliability and robustness, and keep the business going.

Next year’s Hong Kong and I’m guessing we’ll all be wondering how the world will have changed by then. I’m not sure, but my one thought is a line used today that I heard ten years ago, and will hear ten years from now.

“In a world that needs banking, do we need banks?”

Maybe that should be the theme of SIBOS next year in Hong Kong.

If the current model of banking continues to mess itself up with bad decision making and poor risk management, then we need a different form of banking.

What that will be remains to be seen, but it will be clearer by September 2009 with SIBOS, Hong Kong.

Meanwhile, I’ve had a tough week, so I’m off to party at the Habsburg Palace with a few thousand other poor souls who have had a shaky week and will no doubt have shaking evening.

See you around.

Europe's annual drinks festival moves to Boston

Europe's greatest export to promote the art of strong drinking opens next week in one of America's oldest cities, Boston. 

SIBOS, an acronym for Standing In Buckets Of Slop, was created by the Belgians as a way to promote wine and beer drinking and is normally held in the Autumn to pre-empt Germany's October Beerfest and France's Beaujolais Nouveau day. The Slop in the acronym refers to the grape crushing by peasants in barrels of fermenting wine (or the participants lying in it during this trade show), and was the Belgians method of poking fun at their German and French counterparts.

However, this year being a year in which Europe comes together to celebrate fifty years of union, the show has become almost an Olympics for drinking and the European's, especially the British, usually win the drinks final that takes place on the Thursday evening at a secret venue that only paying attendees are able to be involved in.

Moving each year between Europe, Asia and America, the show really has become the finest display of holding one's drink around the world.  Last year for example, the Show took place in Australia and had the theme "Raising Ambitions".  This referred to the raising of glasses to higher levels.

This year, the theme is "Gaining Momentum", which is quite hard to do after you've had a few, and goes with the overall by-line of "More Together" which we all share as a vision - more drink together that is.

Funnily enough, the attendance at the SIBOS show is normally represented by only the most drink-hardy industries, such as banking and technology. These hearty souls are able to really take more than the average barrel of brew and still remain standing.

The organisers of the show - a firm called SWIFT which I think stands for Some Wine Imbibed For Tea - have this year tried to extend the attraction of the show to other industries, which they have called 'corporates'.  Corporates have apparently stayed away from SIBOS historically because they prefer drinks with meals in nice restaurants, rather than late night clubbing in great warehouses full of wine and beer.  Even so, and even with Boston being the home of the Samuel Adams brewery, it appears that over 100 of these corporates are likely to come along this year, which is no small achievement.

Now, for those virgin corporate drinkers coming to the throng, a word of advice.

Many of the people at the show talk about payments.  Avoid those people, as they're generally trying to work out how to lumber you with the bill for the round of drinks.

On the other hand, if you hear people talking about  supply chain, get in there early as this normally refers to the order of who pays for which round of drinks and, if you are there are the start, it means you can position yourself at the end of the chain.  Hence, when it comes to your round, most of your chain will be so blotted that they'll have forgotten you have to pay and you will get away with drinking all night for free.

Finally, the worst people to mix with are those who talk about messages.  This is because it is a colloquial SIBOS phrase derived from the Scottish meaning of messages, as in to 'get the groceries'. In SIBOS parlance, it means that if you get stuck with the messages then you not only have to buy all the drinks that night, but you have to give everyone a large double Scotch to finish off the evening too. That can be very expensive, so keep away from that lot.

Anyway, I've been at SIBOS for several years now.  Can't remember a thing about them but luckily I kept a blog in 2006, so I can remind myself what the hell I did. 

Pass the port old boy.