IBS Journal January 2018
35
machine learning. This function will work with business leaders to understand how to best serve its clients in becoming a digitally focused organization.”
As Bellacos says: “The big banks have adopted a whole range of new strategies to tap into the fintech scene, including venture capital-style investment and incubator and accelerator programmes. This is as well as setting up numerous innovation centres with the aim of working with both fintechs and clients on new ideas and concepts that are planned to enrich business processes and the entire transaction experience.
This close collaboration with the fintech community has not only enabled banks to become involved in developments and get down to the nitty-gritty of understanding how fintechs are impacting the industry but has also helped to affirm banks’ role in delivering the future of payments. As a recent BNY Mellon white paper said: “Indeed, the value of bank-fintech partnerships is very much reciprocal.
“Fintechs benefit from banks’ existing, extensive pool of clients, their established trust and security about cash and transactions, as well as their ingrained knowledge of the practicalities of functioning payment systems and industry requirements regarding regulation and risk mitigation. These are – areas in which fintechs have insufficient experience.
Rethinking payments for the client
BNY Mellon believes that the growth of market forces from the retail industry to corporate and institutional banking make it imperative for all existing service providers to rethink the payments experience.
Banks have to identify the critical solutions that will help provide timely information to end clients and to simplify the payment process. It also has to be made more cost-efficient and resilient. In the longer term, the initiatives of open banking will transform and redefine the entire relationship between banks and their clients. Banks need to anticipate and prepare for this, to position themselves properly, if they are to remain players in a business whose changes may not be driven or mandated by banks.
Only days after I spoke to Bellacosa the 2017 Global Consumer Pulse Research, published by Accenture, landed on my desk. It makes fascinating reading and bears out everything Bellacosa says. The research unearthed that 48% of consumers expect specialised treatment for merely being ‘good customers’, and 33% of consumers who abandoned a relationship did it because that ‘personal’ was lacking.
Despite every firm under the sun saying that ‘improving the customer experience’ and ‘delivering customised experiences’ is one of their top priorities, only 22% of consumers surveyed said that the companies they do business with properly tailor-make experiences based on their needs or preferences or
even past interactions. As far as digital currencies go Bellacosa sees them as part of the long journey that payment development is undergoing. “There is a pathway that starts with core functionality and then doing real-time payments that arrives at a point where banks are able, through use of the emerging technologies, to execute and support digital currency services. “I mean providing the digital wallet and the tracking components, the introduction of payments from a cross-border perspective that customers will want with these new financial initiatives. The most likely path for digital currencies is for them to be government- issued. But different countries, and even within those, different regulatory bodies, have different views on where we are in that cycle. There is a lot of concern, but I can see a path which leads us to support an even broader set of clients because the more technical their banking becomes, the more technical help people will need.”
What we are doing for our clients
“As a bank provider, we want to be in the position where we have the expertise, the controls and the knowledge to be ready for the next generation of users who will take to the water with ease. Our clients will need us to help them through the thickets of new technology, and that’s just talking about what we know is coming at us – there is more technology to come that we can’t know anything about at the moment.
“As that complexity grows, BNY Mellon has to be the intermediary between the banks and customers. For our clients we are offering services which say: ‘Don’t worry about that technical complexity out there – we are dealing with it for you. ”
Mike Bellacosa is responsible in his role as head of the company’s Global Payments Product Group for managing strategy, financial performance, product development and industry issues for USD, EUR, and GBP direct clearing services.
THE PAYMENTS PATH
BNY Mellon believes that there are three paths toward this end, depending on the case and situation.
1 Use cases that require only an internal development effort (BNY Mellon NEXENSM, Global Payment infrastructure modernisation)
2. Use cases best accomplished through industry-driven initiatives (SWIFT gpi, Real Time Payments)
3.Use cases accomplished through partnerships with fintech and other third-party providers (BNY Mellon Tokenized Payments now available with Zelle).
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