It is the most difficult investment case to put to the board. The bank needs to invest millions of dollars in the payments business and, by the way, the margins and fees are being squeezed by new players and more transparency.
There is every prospect that a bank invests all that money and ends up earning less than it does now. Alternatively, the bank could stick with the existing system and lose the business altogether.
Central to where payments is headed is Swift's global payments innovation (GPI) initiative that enables faster, tracked and transparent (in fee terms) payments. It also generates a lot of data that banks can roll out to corporate customers.
At one Sibos session, BNY Mellon payments executive Edmund Esch quipped that it was a pity GPI was not a regulation and so compulsory – it would make it easier to get funding from the board. ANZ's Shane Marsh, who looks after transaction banking for financial institutions, says that with revenue streams under threat, banks that take no action will lose the business. He argues that early movers in upgrading will capture growth even if fees are lower.
But if that base case doesn't convince the board best, it will be to revert to paranoia. It sometimes seems as if the politicians, Silicon Valley and the cyber hackers were all conspiring against the finance industry, said Swift CEO Gottfried Liebbrandt in his opening speech. If only the paranoid will survive then best to stay paranoid, he said.
Maybe that is the best weapon when all other facets of your investment case collapse. If we don't do it...
Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen
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