The financial services industry is not immune to the digital revolution that has profoundly affected other industries, and it should start facing up to the innovation challenge. This was the premise of for the Swift Business Forum, which gathered over 1,000 corporates, bankers, fintech and alternative finance professionals in London, under the theme “harnessing change in financial services”.

The warning signs that something is amiss are there: “The business model of the financial industry is in trouble,” said Arun Aggarwal, Swift’s managing director UK & Ireland, in his opening remarks. At the forum, corporates voiced their concern with the pace of change. Neil Garrod, treasurer at Vodafone, complained: “The banking sector is not innovating at the necessary pace to meet customers’ demands.” Usama Fayyad, chief data officer at Barclays, with a past at Microsoft and Yahoo, brought refreshing insight into the state of bank innovation: “The way we [as banks] do things is outdated. It’s crazy. It needs to be changed.”

In responding to the challenges posed by regulatory control and technological development, Aggarwal warned against sticking one’s head in the sand, and recommended instead to institutionalise efficiency and control, and to rediscover simplicity.

Models based on price alone are dangerous. Sir David Clementi, Virgin Money

This message was reinforced by Sir David Clementi, chairman of Virgin Money and former deputy governor of the Bank of England. In his keynote speech, he remarked that “small and good is better than big and large”, as the smallest the structure is, the faster it can adapt. According to him, there is a need for a business model that is “ruthless in putting customers and their needs first”, as “models based on price alone are dangerous”. He invited companies to see compliance as an opportunity rather than a handicap.

Seeing opportunities in challenges was a major takeaway from the conference. David Marovitz, president, Europe at Earthport, suggested that banks could use regulatory requirements as an “excuse to collect data” about their customers. According to him, using the data collected could be a way to rebuild banks’ internal infrastructure to become more customer-centric.

“The most innovative companies stay close to customers and their needs,” echoed Craig Donaldson, CEO of Metro Bank, one of the UK’s challenger banks. The banks seem to be aware of this, as Charles-Henry Dubarry de Lassale, head of corporate innovation and solutions for global payments and cash management at HSBC, proposed a stronger co-operation between banks and corporates in matching products to demand. Now more than ever, co-operation is key to implement innovation in a cost-efficient way.