In this interview, Adriana Pierelli, Managing Director, Global Client Management at BNY Mellon, shares her perspective on how corporate banks are approaching transformation.
From fintech collaboration to ISO20022 and predictions for the future, Adriana gives a brilliant, in-depth perspective of what she’s seeing today in her role at BNY Mellon.
For more on transformation in corporate banking, check out our latest report, How Corporate Banks can Transform the Treasury, which you can read here.
Can you share your views on the transformation you're seeing with your clients in the institutional banking space?
AP: I think there is an enormous amount of work happening to all our institutional clients, and the focus is very much on ensuring that there is a client-centricity to everything they do. Is that perfect? Clearly not. It's a journey, but we can see a number of institutions moving away from pure banking services to create e-monetary institutions to serve their clients better in a different manner, not necessarily through traditional banking channels. Some others also partner with Fintechs to support pieces of the value chain and ensure they have the capabilities their clients need.
I think there is a lot of work going on with all our clients to change the end clients' perception and support them in cash management across legal entities and geographies. We're trying to be very close to our clients and serve their needs with a focus on value creation and global coverage.
How does BNY Mellon support these transformation programs they are taking up?
AP: We're trying to be very close to our clients and serve their needs with a focus on value creation and global coverage. The most important aspect is to maximize what they can keep as part of the value chain within the banking system. One of the issues that I think our clients report – and I'm not surprised about – is that they see more and more of the value creation taken away. This is definitely true in retail banking, but also with corporates. Some parts of the value chain are being taken away from traditional banks and moved to Fintechs, and what stays with the banks is just the settlement piece which consumes capital and liquidity. We help banks augment as much value creation as possible to their clients and retain activity and profitability. Now, of course, with corporates, it's a little bit easier because there is a lending component that our institutional clients can offer.
There are also required capabilities to support payments that go everywhere in the world. At BNY Mellon, we have a very large custody franchise, giving us the liquidity and the capability to support payments in every single market you can possibly think of. And that is something our clients increasingly need. It's less and less valuable for them to develop and maintain the payment infrastructure they need in smaller markets where they can leverage well-developed existing infrastructures such as BNY Mellon's.
As an orchestrator of global financial markets, we were among the first providers of real-time payments in the US, and our clients need to have that capability provided to them at scale.
Data is an interesting element because we're trying to provide the data necessary for our clients in each region where they are active. Our clients need to receive and be able to provide their end clients with full transparency so that they can see end-to-end where the payment has gone, how it was processed, whether it has arrived, and all other critical elements they would expect to receive from Fintechs. Banks can do absolutely the same to the extent they can leverage APIs facilitating the processing of data all the way. In the banking sector, trust is everything. We strongly believe that trust is created over a long period but can be lost quickly. Key elements to build and maintain trust are information transparency and just being there when a problem arises. That's absolutely critical.
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What are some of the challenges you have as a global, multijurisdictional player?
AP: We definitely have a global approach. We have global systems and infrastructure operating close to 24/7 across all markets, and this is across all our businesses. However, many of our clients don't have that. They have evolved with separate legal entities in multiple countries with multiple systems. Due to local regulatory requirements and client preferences, those systems often become more disparate over time and may not support information moving freely between them.
Does standardization help your clients, especially with ISO 20022? How are you facilitating the shift towards an ecosystem model within the industry?
AP: For sure. It does help ultimately, but the difficult thing is putting it in place. It is certainly much more costly to run a standardization project across multiple systems than when you can leverage a global infrastructure. We are strong believers in ecosystems. We may not be the sole owners of all the pieces of the solution, but there will be areas of value creation that some of the Fintechs can provide us with, which become part of our ecosystem.
We believe in open platforms, APIs, and a modular approach that allows our customers to select the capabilities they need and want. Being able to offer data and analytics very easily is a huge help for Fintechs and our clients who need access to countries that are more rigid. This makes it much more difficult for our clients to take advantage of Fintechs. They see Fintechs displacing them. So it's a very different discussion I'm having with some clients. They are trying to protect what they have in the best possible way, and I find that it's difficult for them to have that level of client-centricity.
What global trends do you predict for this space?
AP: What I certainly see is that people who are now leading the corporate investment banking business are no longer coming primarily from a traditional banking/ lending background. The heads of Global Transaction Banking are increasingly more open-minded, driven by analytics-based solutions, and focused on open architecture and consortiums. They are certainly interested in a high level of interconnectivity and solutions that work across banks to maximize the opportunities within the banking system.
I'm also seeing Fintechs getting brought in to augment banking capabilities. Banks are trying to replicate some of the same capabilities in a different manner, not using the technologies for the sake of it but trying to bring the user experience of the retail space into the corporate banking arena. I also see private banking and corporate banking coming together as they are solving common needs. And that creates value for the company, and it allows us to provide better services and better quality at better prices for the corporate side of things - which, again, is a key trend. It's going to be very, very critical to have the right level of capital and liquidity strength, the trust of your customers, and continued technology investments to continue operating in these fast-evolving markets and take advantage of current trends.
For more information on the changing face of corproate banking, check out our report, How Corporate Banks can transform the Treasury.