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.