Costs and Control: Key Takeaway from SIBOS 2022

26 October 2022

By all accounts, Sibos 2022 was a success.

Over 8,000 people met in Amsterdam last week to discuss Progressive Finance for a Changing World. For many of us, the conference offered a chance to meet face-to-face with industry colleagues, clients and partners for the first time since 2019 – and we took full advantage of the opportunity to make up for lost time. My colleagues and I met with many different clients and stakeholders from across the banking industry and the same themes kept popping up throughout all our conversations.

While Queen Máxima of the Netherlands opened the conference by highlighting the importance of financial inclusion and other sessions explored big, bold issues like ESG in payments or moving operations to the Metaverse, my colleagues and I had conversations that focused more on the day-to-day concerns experienced by payments players.

For starters, nearly everyone we spoke with noted the increasing challenge of keeping payments processing costs down and maintaining profit margins. Unlike three years ago – at Sibos 2019 in London – a growing number of banks described significant hurdles to moving their payments ecosystem into the 21st century. Skyrocketing costs, shifting regulatory requirements, legacy infrastructure that hinders innovation and new entrants into the marketplace are all placing pressure on payments. And banks are starting to feel the burn. (This tracks with recent research conducted by Celent that found that 86% of Tier 1 banks say that margins on their payments business are getting more difficult to maintain. This represents a jump from 59% in 2021).

Another theme raised throughout the conference is the growing concern many banks are experiencing about the role cloud should play in creating payments infrastructure. Between the risk of regulatory noncompliance and the lack of control over data, banks are starting to realise that relying on the cloud alone to power innovation might not be the best strategy. But what’s the alternative? Building cloud environments in-house offers more control, certainly, but can be seriously cost prohibitive and difficult to manage – shrinking margins and stifling innovation further. It’s a vicious cycle.

Despite the significant setbacks associated with controlling costs and retaining control – a theme we explore more in our latest animation – Sibos 2022 highlighted plenty of reasons to be optimistic about the future of payments. Payments processing is one of the most dynamic areas in the banking industry today; new opportunities are emerging all the time. And for banks that are willing to consider new models and platforms that enable agility and control, like our IPF solution, innovation and growth for payments processing is still very much within reach.

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