We may live in a globalised world, but global integration within the financial sector is, ironically, at increasing risk. According to a study titled “Growth at a crossroads: measuring the cost of financial fragmentation” from Economist Impact supported by Swift, financial fragmentation is diminishing cross-border capital flows, which could result in a reduction of global GDP by up to six per cent by 2030. How should this challenge be tackled? Four experts took a deep look in the session titled “What’s next for market infrastructure interoperability” at Sibos 2025.
“The key thing we are really asking ourselves is, what is market interoperability and what does it mean for us?” says Michael Eganza, director of the Banking and Payment Services Department at the Central Bank of Kenya. “It’s not about just the technology but also how we take into account the legal and regulatory frameworks that support the operational standards.”
Take it slow(er)
For many, interoperability is synonymous with 24/7 operations, but David Renault, country representative for France at EBA Clearing, begs to differ. “It’s a question of use case – we don’t need everything to be 24/7.” He believes that each use case should be considered individually before the best solution for it can be found.
As an example, Renault shared an observation from his conversations with banks within EBA Clearing’s community. “The topic that comes on the table very frequently is the access to liquidity rather than the hours of RTGS (real-time gross settlement). Maybe the issue is the fact that the access to liquidity is conditioned by RTGS, so there might be a more efficient way to look at the question and see how liquidity can be made available so that the banks can use it when it is needed and where it is needed.”
A common language
Interoperability does not have to mean complete standardisation either. “I think several models can coexist as long as they speak the same language,” says Renault, referring to ISO 20022. He cautioned, however, that even with standards, “harmonisation is an ongoing task that you can never really put an end on, because the standard itself is evolving”.
Application programming interfaces (APIs) is another theme that he has observed emerging within the topic of interoperability. “There are more services based on APIs that are more time and mission critical. An example of that is the deployment of the Verification of Payee (VoP) scheme in Europe. It is an API-based service with more than 50 routing and verification mechanisms so that it is an interoperability challenge in itself.”
Building blocks
At times, Renault has noticed that interoperability (or the lack thereof) is “more cultural than technical”. This is where vendors come in. “What they can bring is to ensure pan-European interoperability by design, which means creating solutions that are flexible and scalable. That helps the industry as a whole to move forward to innovate.”
Eganza agreed, saying that he views vendors as standard enablers and capacity builders. “They build and design solutions for, for example, ISO 20022 so that many of the softwares that we are now deploying in our market infrastructures come already ISO compliant. It makes the adoption journey much easier.”
Network of networks
To conclude, the panellists shared their vision for the future of interoperability. Renault says, “I would like to put in place a type of rulebook for cross-border transfers so that we have as a basis, a common set of rules to exchange cross-border payments. We still have a certain question mark on FX because we’re all talking about 24/7… The best solution would be that someone invents a stablecoin that would be stable across a pair of currencies but that is of course extremely complicated to do… If it (stablecoins and DLT) can help with speed, costs, and transparency – all the things that we are trying to achieve and improve – then it’s a technology that we should definitely look into.”
Eganza shares, “What I see in the future is what I would call a network of networks where the domestic RTGS schemes, instant payment schemes, and regional schemes are all able to interact and interconnect seamlessly even as they operate independently. Having one unified platform may not be feasible in the near term or even in the near long term, so this would therefore be enabled by a lot of the modernisation that are currently happening. Global standards such as ISO 20022 are, to me, precursors of the network of networks.”
Sibos 2025 plays out in Frankfurt from 29 September to 2 October, with about 12,000 registered delegates. We are there, overview our coverage here.
