Mike Bellacosa, BNY Mellon, global payments

Michael Bellacosa is a managing director at BNY Mellon and head of the Bank’s global payments product management group. He talked to IBS Journal about developments in the payments world.

There is a vast amount going on in the payments arena at the moment, and Michael Bellacosa of BNY Mellon is sitting in the eye of the storm. I sat down with him to find out what initiatives BNY Mellon has been working on during this year and what they are preparing for: “Regulation is playing a large part about what payments can and cannot do. We see increased competition from non-traditional entrants, and that has changed the environment and what we have to do to support our client base which is made up of the big global financial institutions and US corporate clients. There are a couple of routes which we are taking – we are looking to how we help clients and how well we supply them with support in their local jurisdictions in all matters which affect payments.”

For Bellacosa the journey has been about building the right ecosystem: “We ended up creating an enterprise payment hub. We recognised that there were so many things going on in the marketplace that we needed a central view and central place where our payment processes were taking place, and we constructed around it the architecture, components and services which would give us great flexibility. As new technologies come on board, our client needs are continually changing and are being identified from a strategic perspective. That is the first major initiative we have been working on, and by 2018 we will have the last components of this project in place – It has taken several years.

Change to adapt

“From a market perspective we have been pretty heavily involved in some of the newer initiatives that are just coming out such as real-time payments, and we have been one of the first banks to get a real-time payment across this new system.”

The Executive Committee of BNY Melon recently announced, but has not yet appointed, a new Head of Digital. As is the case with most businesses today, the announcement in November 2017 noted, technology provides BNY Mellon with more ways than ever to provide advanced services to its clients and drive improved quality and efficiency. The statement accepted that the bank has to try harder: “While there are many efforts across the company, BNY Mellon has an opportunity to be bolder in its approach and more consistent in its work in an aggressive pursuit of better solutions for its clients.

“The company, and ultimately its clients, will benefit from expert leadership with deep knowledge of the business application of data management and analytics, artificial intelligence and 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.

by Bill Boyle
IBS Intelligence Senior Editor
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