By Richard Crook, Head of Emerging Technology, RBS.
Richard, can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?
I have been in the banking industry for over 20 years, where I’ve focussed on banking technology and specialised in the building of financial ledgers and regulatory reporting. At present I am enjoying heading up a team of engineers and innovators at RBS, where our primary focus is distributed ledger technology. Over the past 2 years we have also delved into a number of emerging technologies, such as Artificial Intelligence, Machine Learning, Virtual and Augmented Reality, and will soon be looking into Quantum computing.
At the Technology & Innovation Risk Summit in September 2018, you discussed ‘Filtering new technology: Navigating the waters of new opportunities and making strategic business decisions to leverage technology’. Why is this a key talking point in the industry right now?
This will always be a key talking point, but now we are seeing more than ever, a demand for faster reactions to emerging technologies. The introduction of innovative and disruptive technology startups to the market is driving industry competition and forcing the bigger players to act fast or be left behind. This competition is accelerated by open banking and a preference for open source protocols. And so naturally the talk of navigating around the available opportunities becomes a hot talking point and something organisations are trying to be able to do quicker and more efficiently.
Can you provide some insight into the process of filtering new technologies, weighing the opportunities and knowing where best to apply them?
Always start with an open mind and a mixture of people and experts. Understanding where best to apply technologies comes from thorough research, an understanding of the market landscape and most importantly having the right support, resources and governance. Another distinction I’d like to draw here, is the difference between real value and the appearance of value. For example in the DLT space, we often see the adoption of blockchain technology simply for the sake of using a buzz word, or from fear of missing out. Something we have been clear to point out at RBS, is that there is no point in adopting a distributed ledger if you still want there to be a centralised body controlling it. A database will suffice in this case and you can save yourself the efforts and the costs.
Without giving too much away, how can financial institutions manage the maturity of different technologies? What impact can this have on the organisation?
A lot of this stems from the attitudes an institution adopts. You need an organisation to continue to think creatively and to be ambitious. It is also important that these attitudes permeate throughout the whole business and not just the innovation or technology team, else you will find yourself with bottle necks in the progress. Most importantly, throughout the whole maturity of a technology, you must ensure the customer or user remains the central focal point. It doesn’t matter how flashy your new tech is, if you lose sight of this.
What regulatory changes do you foresee in the industry over the next year?
The financial regulators have been fast to react and keep up with the pace of changing technologies as well as supportive. What is becoming apparent, is the need for financial institutions to work closely with regulators like the FCA, especially as with some of the emerging technologies such as DLT, it is uncertain what role the regulator will play. The absence of a central party in a distributed ledger has raised significant concerns for financial institutions such as banks who rely heavily on existing laws and regulations. We will need new legal structures to be defined and it is going to be collaboration that will get us to an answer quicker.
How do you see financial technology evolving over the next 6-12 months?
We will definitely see more convergence of emerging technologies such as AI and data science to bring new opportunities to the surface. And technology that boost connectivity, such as DLT and IOT will continue to speed up the delivery of exciting new applications. But for any of this evolution to really take shape, we will need new business models and governance to support the underlying technology. Another key message we keep supporting at RBS, is that for the benefits of a decentralised application like blockchain to be realised, you need a decentralised business model too.