Exclusive: ‘Seize the day’ – Michael Bellacosa, BNY Mellon in “The Paytech Magazine”
As the lead for Global Payments and Transaction Services at BNY Mellon, Michael Bellacosa believes it’s up to the industry to set the pace on crossborder payments through collaboration
In a sign of these more collaborative times, rather than build its own account validation software, global banking giant BNY Mellon decided to cherry-pick what it rated as the US market’s best.
It forged a deal with fintech Early Warning Services earlier this year to deliver real-time account validation to BNY Mellon’s clients and those of banks with which it has white-label relationships, helping to stem both its own and their fraud exposure.
Working together like this is increasingly the industry norm, says Michael Bellacosa, who heads up global payments and transaction services at BNY Mellon. It gets results faster than each bank ploughing its own furrow or, in the case of crossborder payments, waiting for countries’ regulatory stars to align.
Cooperation has been a necessity for some time for global transactions. The most outstanding and enduring example is the co-operative global messaging service SWIFT, on which most of the world’s banks rely to disperse funds globally.
The introduction of SWIFT gpi in 2017, which has developed to allow for the tracking of transactions and the identification of pinchpoints delaying their completion, has been a game changer in that regard, says Bellacosa.
“We’ve moved from a world that was a black hole of crossborder payments – you initiated the transaction and it went into the deep, dark black hole, where nobody knew what was happening to it – to one where it’s exposed to the client.
“For instance, I might want to be alerted when any item over $1million is paid to a beneficiary. We can also alert them, via various channels, if something hasn’t occurred. So, it’s not just used in the backend anymore, it’s something that we’ve exposed to the client, which can make for a better experience.”
The bank is the first in the US, and only the fifth globally, to collaborate with SWIFT to offer gpi Case Resolution. The Cloud-based payment investigation and resolution service allows for dynamic query handling between banks on the SWIFT network, and enables banks to create efficiencies by quickly resolving inquiries where operational, regulatory or compliance information is incorrect or missing from payment instructions.
Particularly useful to the bank and the wider industry, gpi allows it to focus on where there is a systemic problem that’s preventing the straight-through processing of a persistent, if relatively-small number of outliers, and find ways to address it.
“SWIFT gpi has shown us that, at the backend, there are about eight per cent of transactions that are held up, and those are almost always driven by regulatory and compliance pressures, like specific sanctions scanning requirements, where additional information is required about the remitter or the beneficiary to complete the transaction,” says Bellacosa. “That can take time. In some markets, currency restrictions and controls mean providing additional documentation. Working closely with the industry, we are trying to automate how we get and share that information, and agree service levels between participants, so that those outlier transactions don’t take as long to resolve.”
The rollout of the ISO 20022 universal messaging standard on the SWIFT network is another example of decisive industry action, says Bellacosa.
“This standardisation of how we structure data in messages to be more comprehensive, eliminates some questions about who’s paying who if properly completed,” he explains. “So, there are things we banks can really do to improve. It’s a lot and it’s complex, but it’s probably less complex than getting governments to change their regulatory views and align.”
Clients clearly want more visibility of the payments journey, says Bellacosa. The proof is there with the impact of the Real-Time Payments network in the US, which was devised and developed by The Clearing House three years ago. Many of the bank’s business clients are now running the RTP Bill Pay API (application programming interface), which allows them to constantly monitor payments received, therefore helping to dramatically speed up the release of goods. With better visibility of crossborder payments, global trade could be transformed in the same way, says Bellacosa, while prevalidation will both reduce costs for banks and speed up delivery so crossborder payments are instant.
“I think we will get there with the structures we have, though they will be improved. That then leaves other pieces of deep digitisation and, as each government considers its vision of the future, it will be interesting to see what that evolves into.”