Event highlights

June 20-21, 2023

"ARE YOU AWAKE YET??" EBAday 2023 opened with a spectacular drumming and lightshow session and a plan to advance next generation payments – ‘a quest for global interoperability’. In his introductory address, EBA board chairman Wolfgang Ehrmann noted his appreciation and suggested the drumming could be a standing item at board meetings.

Ehrmann's keynote session banged the payments drum. We are driven by evolution, he stated, and the essential function of payments in the global economy - allowing money to fulfil its function as a driver of change – is one that is evolving along with us.

Financial Institutions as a backbone

Following this rousing opener may have been a challenge for anyone else, but Anita Hawser from the Financial Times took it in her stride. Hosting an articulate and informed panel that included J.P. Morgan, BBVA and Deutsche Bank, she challenged “How can FIs thrive in a rapidly evolving global payments and transaction banking environment?”.

J.P. Morgan’s Renata Vilanova Lobo summed it up best:

• Resiliency becomes critical, from a financial and an operational standpoint.
• Having a clear and well defined strategy – making sure that is visible across your organization. Decisions you are making today should be fully aligned with that long term strategy. 
• That ties to prioritization. Prioritize your investment, and make sure you are properly allocating time and budget to things that are aligned to that long term strategy.
• Liquidity management – having a well-defined strategy to manage your liquidity and the proper tools in place is critical, but also make sure you’re acting fast.

“There are so things many going on – so many different initiatives, technologies… and possibilities. It is very easy to get lost among all of those and lose sight of your long term strategy – prioritization is key. That also comes with balancing how much you are investing in new technologies and disruptive ideas, and how much you are investing in your core. Finding that proper balance is fundamental. Also allowing some room for failure – if something fails, especially if it’s a new, disruptive idea – then it will not compromise the ability to continue driving with your core business.”

Getting political

Another element the session touched on was the topical one of sanctions. Renata explained: “The role of technology is critical in sanctions, especially in situations where the sanctions are not straightforward. In some cases, it required a systematic implementation overnight. We process nearly $10 trillion a day – it may have been impossible to keep up with all of the sanctions without technology. It’s an environment that will continue to increase in complexity, and protecting real time payments will require a lot of technology and data structure. If ISO 20022 was implemented for sanctions earlier this year the process could have been a lot easier for all of us – so, while the complexity may be increasing it is regulations like these that will help increase our efficiency”.

Solving problems

Katja Lehr from J.P. Morgan joined Javier Santamaría Navarrete, Rafael Linde Castillo, Steve Naudé, Simon Wilson and Petra Plompen as they narrowly edged the prize for best exchange on instant cross-border payments. "How do we resolve the differences between regulatory schemes in various countries? How do we approach the legal differences in different countries? Managing risk, whether local or cross border, is huge concern," said Katja.

Indicating herself and her fellow panellists she added "The most important thing is not to lose the client in all this complexity and challenges - we will all be without a job if we are not solving their problems first and foremost."

Deposit tokens

Closing out the first day, with a focus on the outlook on CBDCs in Europe were Emma Landriault from Onyx, alongside panellist from Nexi Group, Deutsche Bank, Quant and the European Central Bank.

The panel heard that deposit tokens can help provide a more holistic and stable settlement mechanism, more efficiently settling flows that are traditionally settled in commercial bank monies and maintaining strong off-ramps to central bank monies which can be fulfilled by CBDC. It would work alongside central bank digital currencies that settle systemically important flows, eventually leading to faster, more efficient, and resilient end-to-end payments

Other key messages from the session included:

• Monetary policy efficacy: If we have a tool where digital money can be more audited, it leads to proof of provenance of where these tokens are and that will benefit central banks
• Digital euro needs to be accessible to all - let's learn from previous experiences and meet the needs of the financially underserved
• Retail banks and wholesale banks have different models but both benefit from transparency

The upshot: we're not buying coffee with our crypto...yet

Liquidity trends

Liquidity management 4.0 kicked off the second day, as J.P. Morgan’s Martijn Stoker was joined by Deutsche Bank, iGTB, SmartStream and CoCoNet. Martijn gave us a rundown of the three key trends to watch:

1. The macroeconomic framework: inflation is going up, rates are going up… the big question is still around what more are central banks going to do for tightening liquidity, and once they do, what’s the impact on the business environment?
2. Technology – we have a lot of questions here. How technology is changing the way clients operate and how that impacts us as a bank, how can we support them and what kind of expertise can we provide them?
3. Changing business models, and those changing business models also impact the way liquidity management needs to be dealt with, whereas in the past it was much more B2B transactions, going to B2C whereas now it’s actually going C2C where it collates up and you have banks actually settling those transactions.

EVERYONE’S TALKING ABOUT

•  EBAday is 18 years old this year. A show of hands calling for ‘survivors’ from the original in Frankfurt revealed a fairly impressive 5 hands out of 2,000
• We're on the search for the solution to instant cross-border payments with the finest payments detectives on the planet.

Get the full story on EBAday ‘23

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