In 2016, I co-authored a white paper with my colleague Christopher Mager entitled Reinventing Payments in an Era of Modernization. Much of the focus was on the potential challenge from fintechs, the disruptions born of new technologies—blockchain, artificial intelligence, big data, digitization in general—and how banks might respond to stay relevant. Today, many of those technologies are no longer on the horizon; we are using them, or actively working on engineering and imbedding them into our products: Real-Time Payments, SWIFT gpi, tokenized payments, APIs, and distributed ledger-based settlement. The issues now are: How do we maximize their potential? How do we achieve economies of scale and cost? How do we move these transformative technologies toward true global ubiquity, linking similar solutions across borders, and constructing the regulatory frameworks to make such ubiquity possible? These questions face all banks but the questions are most immediate for global banks that have assumed the mantle of technology innovators.
If there is one clear trend in the future of payments it is toward delivering a global, real-time payments experience. Not only domestic real-time payments systems, such as that rolled out in the United States in 2017, but capabilities that deliver vast, global real-time connectivity and transparency.
This is the grail, but it is not clear yet which technologies, platforms, and institutions will finally enable it. It might be legacy capabilities transformed for a digital world, or one or another of new platforms operated by legacy players. There is also the possibility of disruption by late entrants to the payments space, leveraging new technologies. Not all will prevail, but not knowing the future is no excuse for inaction. We must take risks, make bets and drive the payments industry in a direction that we believe creates optimal outcomes for clients. Global innovation is what our clients expect us to deliver and, in doing so, we need to be guided by the following imperatives.
Focus on the Client. Just as the payments industry is transforming, our clients are going through their own digital transformation. We need to understand and appreciate their journeys, and be ready to plug our services into their value chains and client experiences easily and efficiently. Rather than being enamored of technology and what it’s capable of, we need to focus on what our clients want us to provide, and ensure our services are easily accessible to them. An example is APIs: how we allow clients to explore, subscribe, test, integrate, and monitor APIs is as important as how an API itself functions.
Understand the Levers. Transformation in the payments industry requires three levers: leveraging of standards, building sufficient network effect, and regulatory engagement. We need to focus our efforts on developments that exhibit these characteristics.
Embrace Flexibility. It is no longer the case that a few static payment channels carry the bulk of our transactions. The regulatory environment, the pace of technology advancement, the demand for new and intelligent client interaction schemes, and the increased level and sophistication of competition in the payments industry guarantee that existing channels will evolve quickly and new ones will be added. Banks need payment technologies that are flexible, adaptable, and easily updated for the new channels and increasing complexity of a changed environment.
Actively Participate. Banks must, as BNY Mellon does, actively participate with the industry groups – e.g., SWIFT, The Clearing House – that are forging the new payments ecosystem, and helping to shape that environment in a way that is beneficial to our clients.
Taking a lead role in the transformation of the payments industry is not enough: we must assess the entirety of the client experience we provide and work to improve it. No one would consider a car with a state-of-the-art engine but with a radio, car body, and safety features from the 1980s. As we think about the future of digital technologies and tools, we need to think more broadly about their deployment, not just in payment-related interactions; we need to consider how they can be leveraged for the support functions that are also critical to client experience.
Client Inquiry Management. A combination of sophisticated workflow, knowledge management, case management, machine learning, natural language processing, and other technologies can help reduce our clients’ questions and dramatically accelerate responsiveness when they do need our help. It can improve the discipline with which we build our product enhancement roadmaps and help us share horizontal views of client inquiry status internally.
Onboarding. We can use our knowledge of clients, gathered over time, to accelerate our onboarding activities and screen out unnecessary steps. We can make it easier to self-onboard and to try our solutions before purchase.
Business Intelligence. Once treated as a byproduct of the provision of our services, data and analytics are quickly becoming a foundation of our business, unlocking opportunities to better understand clients and their needs, giving us the ability to suggest alternatives and recommend actions, and to improve the speed of exceptions resolution. The challenge is to rethink how data is collected, stored, managed, and transformed so that it can be readily available.
These transformations in what might be considered adjacencies to payment systems themselves are no less important and ensure that the entire client experience meets the expectations that digitally-native companies continue to set.
As we continue to help our clients navigate the digital future, it will be important for our industry to continue to listen to them and observe the structural and competitive changes in their industries. We need to cooperatively develop new infrastructures that address real issues and build the flexibility into our services required for the increasingly complex ecosystems of the future. At the same time, we have a responsibility to digitally enable the entire client experience, giving our clients the tools to be more efficient and effective in serving their clients.
BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally and may include The Bank of New York Mellon, 240 Greenwich Street, New York, New York 10286, a banking corporation organized and existing pursuant to the laws of the State of New York and operating in England through its branch at One Canada Square, London E14 5AL, England. The information contained in this material is for use by wholesale clients only and is not to be relied upon by retail clients. Not all products and services are offered at all locations.
This material, which may be considered advertising, is for general information and reference purposes only and is not intended to provide legal, tax, accounting, investment, financial or other professional advice on any matter, and is not to be used as such. BNY Mellon does not warrant or guarantee the accuracy or completeness of, nor undertake to update or amend the information or data contained herein. We expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon any of this information or data. Trademarks and logos belong to their respective owners.
© 2019 The Bank of New York Mellon Corporation. All rights reserved.
Managing Director and Digital Platform Officer, BNY Mellon Treasury Services
Anthony (Tony) Brady is a Managing Director and Digital Platform Officer (DPO) for the Treasury Services business. In this role, he manages the Digital Platform team, who partners with the business, technology and operations leadership groups to advance the BNYMellon NEXENSM strategy and Treasury Services’ digital transformation.View Profile