industry transformation via the digital revolution
TRANSCRIPT
Industry Transformation via the Digital Revolution: Parallels with European Open Banking (Payment Services Directive
[PSD2])
Moderator:
Laura McGortey
Director Strategic Partnership Solutions
BNY Mellon Treasury Services
Panel:
Wayne Bognar
Treasury Manager
Evoqua Water Technologies, LLC
Lisa Akahoshi
Payments Strategy Lead
Verizon
Jeremy Ordone
Director, Banking and Cash Management
Marriott International Inc.
Polling Question #1
What type of organization are you representing? (Please select one response):A. Agriculture and Forestry
B. Mining
C. Construction
D. Manufacturing
E. Transportation, Communications, Electric, Gas and Sanitary
F. Wholesale and Retail Trade
G. Finance, Insurance and Real-Estate
H. Services
I. Public Administration
J. Other
The Digital Revolution
Polling Question #2
In what ways has your organization responded to this “Fourth industrial
revolution”? (Please select all that apply):
A. Created a Chief Digital Officer role or a Digital Department
B. Mandated each organizational unit to disrupt itself with investment in new
technologies and re-envisioned solutions and services
C. Created a Digital Operating Unit to function in parallel to our traditional organization
D. All of the above
E. None of the above
The Digital Revolution -- Banking Transactions
Attribute Digital Example Traditional ExampleIntegrated into a website, App or business
process flow
USD Real-Time Payments are created for a
1 x 1 initiation via Application Programming
Interface (API) and embedded into Apps,
websites or workflows.
Automated Clearing House (ACH) or card
initiated 1 x 1 via API can be embedded into
Apps, websites or workflows,
however (see box below):
Settlement Immediate and irrevocable settlement
eliminates counterparty risk.
Final settlement between the clearing
channels occurs after the fact and is not
irrevocable.
Amount of data included with the
transaction
USD Real-Time Payments via an ISO 20022
format – no need for additional remittance
information via separate channels.
Limited information with card and ACH
payments.
EXAMPLE:Moving money from a digital wallet
to a physical bank account
USD RTP - instant and
irrevocable
USD ACH 1-2+ davs to
settle
Card rails - $ instant
settlement for wallet
holder
not instant settlement
to wallet provider
Polling Question #3
My organization’s perspective on digital payments is closest to (please
select one):
A. We are looking to be first to market/cutting edge or an early adopter in all we do.
Therefore, we are currently working with our banking providers to implement digital
payment and receivables (billing) solutions wherever possible.
B. Our method of paying and or receiving funds from our stakeholders is working well;
there is no need to make changes at this time.
C. We are interested in enabling new technologies to speed collections, streamline
transaction reconcilement and/or improve our clients’ experience. However, we are
not sure where to start or how to fund these changes.
D. None of the above
Sender:
Time lag between debit from account to
acknowledgement of receipt from receiver
Checks, ACH
Receiver:
Time lag from presentment of invoice/bill to
receipt of funds from sender
Traditional bill pay or
P2P wallet solutions
Sender:
Generally solved with current payment methods
Checks, ACH, cards
Receiver:
Card-based transactions are very costly.
Virtually all methods require additional services,
technology or labor to identify and reconcile.
All traditional options
Sender:
Visibility and timing of account debits
Checks, ACH
Receiver:
Remittance data
Traditional bill pay or
P2P wallet solutions
Speed Transparency Cost
Traditional Banking Transaction Pain Points
EuroZone – PSD2 – Open Banking
Defined security parameters
Defined roles
Defined ecosystem governance
Mandate for consumer banks to enable open access to bank
accounts at a consumer’s request.
No regulated API (connectivity) format standards, many
participants utilize ‘industry’ standards.
Adoption for consumer accounts enhanced through
regulatory drivers.
Adoption for business accounts based on market interest.
United States – Market-driven Open Banking
Security parameters are defined for banks but not fintechs.
No regulatory defined roles.
No regulatory ecosystem governance.
No mandate for banks to enable access to bank accounts.
No regulated API (connectivity) format standards, many
participants utilize ‘industry’ standards.
Adoption happening across consumer and business accounts
based on market interest.
Open Banking – A Tale of Two Markets
Polling Question #4
My perspective on open banking is closest to (please select all that
apply):
A. Open banking as a consumer – YES
B. Open banking as a consumer – NO
C. Open banking as a consumer – IT DEPENDS
D. Open banking as a professional – YES
E. Open banking as a professional – NO
F. Open banking as a professional – IT DEPENDS
Open Banking Examples
BEFORE AFTER
Consumer or
Business
Consumer or
Business
Bank A
Bank B
Bank C
Bank A
Bank B
Bank C
APP
• Enabled by APIs
• Access to bank accounts, across banks
• Allows broader view of accounts and new value added
solutions
– Money Movement
– Liquidity Management
– Lending
– Payments
– Examples include:
> Account verification
> Account aggregation
> Lending
> Payment initiation
Enabling Digital Journeys – Enhancing Client Satisfaction
Open Banking + Digital Payments – Payables Example
Consumer
Company’s Bank
Consumer’s Bank
Before After
Company
Mailed Supporting
Documents
Printed and Mailed
Check
Check to Bank
Payment Process Typically Takes 7-10 Days Payment Process Completed in Seconds
Significantly
Improved
Experience
Consumer
Company’s
Bank
Consumer’s
Bank
Company
App
Enabling Digital Journeys – Enhancing Client Satisfaction
Open Banking + Digital Payments – Receivables Example
Consumer
Company’s Bank
Before After
Company
Print and Mail BillCheck to Bank
Consumer’s
Bank
Payment Process Typically Takes 7-10 Days, or More Payment Process Can Be Completed in Seconds
Mail Check
Check Cleared, Credited
to Company’s Account
Customer’s
Receivable
Closed Out
Company’s
BankCompany
Consumer’s
Online Banking
App ✓ Consumer Receives
Digital Bill
✓ Accepts Payment
Request
✓ Credit Transfer Pushed
to Company in Seconds
✓ Consumer’s Account
Debited in Real-Time
✓ Consumer’s Receivable
Closed out with
Company in Real-Time
✓ Funds are Irrevocable
Significantly
Improved
Experience
Final Thoughts
Attendees will:
• Hear insights connecting the “Fourth Industrial Revolution”* to potential implications for
corporate treasurers.
• Navigate the plethora of digital payment options and the distinction between those based
on traditional, versus new and “digitally-born”, payment channels.
• Gain perspective on how adoption of the Open Banking model is market- and (in some
markets) regulatory-driven, enabling new consumer-focused solutions and services that
promise new opportunity (and considerations) for corporate treasurers.
*World Economic Forum: Weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
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©2019 The Bank of New York Mellon Corporation. All rights reserved.
Moderator:Laura McGortey
Director Strategic Partnership Solutions
BNY Mellon Treasury Services
(m) 412-400-1088
Panel:Wayne Bognar
Treasury Manager
Evoqua Water Technologies, LLC
(o) 724-772-1291
Lisa Akahoshi
Payments Strategy Lead
Verizon
(o) 949-246-1449
Jeremy Ordone
Director, Banking and Cash Management
Marriott International Inc.
(o) 865-980-4044