EXCLUSIVE: “Restyling corporate banking’ – Steve Wojciechowicz, BNY Mellon in ‘The Fintech Magazine’

The changing role of the corporate treasurer has resulted in new demands on their bank. Steve Wojciechowicz from BNY Mellon spoke to us about what life is like on the other end of that relationship

The digital landscape has changed certain expectations in corporate banking. Treasurers are looking for greater assistance with optimising their liquidity in a challenging market, and they’re looking to banks to help shoulder the load. It’s a big task, even for a financial juggernaut like BNY Mellon.

Steve Wojciechowicz, who heads up direct clearing and is senior principal of product management at the bank, is finely attuned to the growing demand for enhanced data-based treasury services. He says treasurers are being driven to demand the most from their banking provider by a number of factors.

“They’ve got to worry about technology, service providers, the global marketplace, jurisdictions that have different rules than them, and different processes,” he says.

It’s a lot. And they’re also being influenced by changing consumer norms, which are increasingly defined by instantaneous service, frictionless interfacing and personalisation – and expect the same of their bank in a corporate setting.

A recent McKinsey report highlighted how corporate treasury is an area where fintechs and banks are in alignment.

“As corporations become more global, we’re seeing changes in the way they interpret account analysis, and in their expectations of the bank”

“Historically, bank-provided treasury platforms have focussed on core transaction execution, central to their corporate relationships. The advent of software-as-a-service and API connectivity has made robust, multifunctional workstations far more feasible; in response, software firms and other third-party providers have grasped this opportunity to create solutions that are gaining ground with corporate clients of all sizes across an array of sectors,” the report said.

“With speed to market a unifying objective, bank distribution paired with software-firm agility has proven to be a potent combination.”

BNY Mellon has itself fostered an open ecosystem in which it has collaborated with technology service providers that make the corporate treasurer’s life easier.

It’s backed by networks such as Paymode-X and Zelle in order to improve payment validation and authentication at every stage of the payment chain, helping to reduce the risk of fraud. It’s applied optical character recognition (OCR) technology to digitally convert print to machine-encoded text, and natural language processing (NLP) technologies to automate manual tasks for trade collection services and trade document discrepancy reviews.

Three years ago, it began deploying a custom-built sanctions compliance API, which utilises machine learning to assist compliance professionals with screenings. E-signature technology has reduced the paper trail and significantly sped up trade transactions and its FileAct adapter to transfer files and information electronically instead of exchanging traditional paper trade documents has achieved similar efficiencies.

Much of this has been achieved with technology collaborations and alliances and it offers a number of outsourced solutions for corporates.

“There aren’t as many [banks] that can provide the services that a corporate needs, as readily as they could in the past,” says Wojciechowicz.

BNY Mellon is filling those gaps. Its strategy has been to not just provide raw data to clients, but to also give them outcome-inspired analytics across liquidity, trade, and payments. It’s even helping them initiate their own treasury transformations. They are services designed to make the bank indispensable to corporate clients.

“As corporations become more global, we’re seeing changes in the way they interpret account analysis, and in their expectations of the bank,” continues Wojciechowicz. “As interest rates have been driven up, there is less of an emphasis on the way the service worked traditionally, and more on ‘how much can I get for my money?’ So, we need new, innovative ways to provide a client with the best use of their funds.”

In an interview with Bloomberg recently, BNY Mellon’s CEO Robin Vince pointed out that such was the bank’s breadth of services that, as an organisation, it touched 20 per cent of the world’s assets – and yet a single corporate was probably only making use of a fraction of those services.

Introducing them to those services was a priority, he said, adding that, for the bank, ‘resilience is commercial.’

He went on to say that, in a time of high inflation, there was, rightly, an expectation that there would be a ‘transfer of savings’ in that extended relationship, as both banks and corporates partner in striving for efficiency. One driver for that efficiency is adoption of the ISO 20022 payments messaging standard.

“ISO 20022 will make us more efficient. Not only from being able to achieve straight-through processing, without anybody looking at it, but also because we’ll be able to hire people who can take this technology and build new services on top of it more easily,” says Wojciechowicz. “ Yes, some of our clients are still making preparations for the ISO standard,” he continues.

“The technology they use speaks what it speaks and it can’t adapt to ISO. For those, we have the capability to continue to accept what they had before, take in that other standard, convert it to what we need, and still be able to grant the efficiency that we get from ISO 20022.”

LEVERAGING PARTNERSHIPS

Rather than choose between becoming an integrator/orchestrator of a full suite of services, a background service provider, or building proprietary front-end services in-house, BNY Mellon has instead chosen a comprehensive technology strategy.

The bank’s treasury services business provides domestic and international payments, US dollar clearing, foreign exchange, trade finance and liquidity management services to clients, but it also works with a wide range of smaller players to offer a variety of newer niche services.

“There aren’t as many banks that can provide the services that a corporate needs as readily as they could in the past”

For example, it collaborated with Early Warning to enable real-time security within payments, meaning payments would be validated and authenticated at various stages of the payment chain.

Optical character recognition technology was used to digitally convert print to machine-encoded text. Meanwhile, in May, BNY Mellon expanded access to products via its LiquidityDirect platform – a portal for institutional investors that integrates with SAPs Treasury Management, Indus Valley Partners, G Treasury and Hazeltree – with offerings geared to corporate treasurers looking to maximise liquidity and mitigate counterparty credit risk.

The LiquidityDirect platform plays a key role in realising BNY Mellon’s ambition to create a frictionless environment for clients who are faced with managing data across multiple banking providers, regions, systems, and accounts. It can now also support them in navigating the investment decision process with comprehensive access to deposits, enhanced focussed investing options and mutual funds, supported by, for example, ESG analytics and mandates.

Developing these and other tech-driven services for clients involves ‘working at their pace,’ Wojciechowicz says.

“We bring in the client at the beginning, take in their feedback, and can adjust the development in real time. It makes us much more efficient, from a technology deployment standpoint.”

A particular focus for that is managing fraud risk and anti-money laundering where technology is enhancing the bank’s service to corporates.

“We want to provide a sender with insight about their endpoint before we make the transaction,” says Wojciechowicz.

For fraud detection and AML monitoring, the bank is using partners to help it gain greater transparency about the transactions taking place. The goal with AML is to prevent things going wrong at source rather than responding afterwards.

By identifying historical patterns in transactions, such as when payments are sent, it can flag potential fraudulent behaviour and act when suspicious activity arises, whilst giving the sender an opportunity to override a decision.

Whilst the bank is doing its best to identify patterns of fraud, the reality is that one bank’s dataset alone is never big enough to create truly intelligent models.

“So, we certainly want to work with other banks and share records, but, of course, sharing raises privacy concerns,” Wojciechowicz says.

BNY Mellon has tried to overcome that by collaborating with a technology provider to develop a way to do it anonymously. “We can gain enough information to make a decision – we get the insights without having to share the data itself,” explains Wojciechowicz.

Digital advances have no doubt contributed to payment fraud.

“Technology is just going to keep getting faster. We can’t resist it,” acknowledges Wojciechowicz. “So, we’ve got to embrace it and figure out how to make our system better through it.

This article was published in The Fintech Magazine Issue 29, Page 11-12