Filling out a simple online form without populating all the required fields correctly can be a minor annoyance. That’s because you’re unable to submit the form until you get everything right – and I have no doubt it’s happened to all of us. But the stop-gaps built into those forms nevertheless remind me of an enormous issue facing the payments industry: friction. Think about it: A straightforward online form that allows you to buy tickets to, say, a local jazz festival won’t let you complete your transaction unless you fill in every last piece of information.
So why would a financial institution allow itself to get bogged down by clients who try sending multi million-dollar payments around the globe without providing the full details needed to ensure the frictionless completion of that payment?
Each business day it’s not uncommon for BNY Mellon to flag thousands of payments because we need more information (like a recipient bank’s address or the purpose of payment) for the transaction to proceed. The result is friction – and it’s the kind of friction that can create drag on global payments. It’s high time that we as an industry grasp how and why this friction can ruin those two important letters: UX. The User Experience.
Part of the answer comes from the retail industry, which has elevated UX to a high art. We live in an age when retailers can deliver everything from books to flatware to your front door in less than a day. Their customers don’t know or care much about the intricate, behind-the-scenes logistics, arrays of algorithms, and technological platforms that are fundamental to satisfying them. They just know that when that flatware is delivered to their front door on time, they’re likely to shop with the same retailer time and again.
Some might argue that wiring a million-dollar payment to another country is a far more important undertaking than delivering a paperback book to your next-door neighbor’s doorstep. From my perspective that’s certainly the case. The SWIFT “gpi” cross-border system, for instance, transferred more than $40 trillion last year alone.1 Companies and governments need money to get to them in a timely – and dare I say frictionless – manner so that vital systems can run properly and institutions can operate. This is why BNY Mellon is transforming the way money moves around the world – and we’re using the same kinds of tools and UX focus that retailers have mastered. We’re removing friction by ending old, outdated processes so instead clients get their funds in the blink of an eye. It’s a matter of making the payments process simpler, smarter, and safer.
Up until very recently, interbank payments that were flagged for security concerns (e.g., suspected terrorist activity) or insufficient information (e.g., no recipient address) were placed on the desktops, as it were, of people like me. Think about the time, manpower, and utter inefficiency of manually sifting through tens of thousands of flagged payments every day when, at the end of each day, about five flagged payments out of the initial thousands were truly stopped.
Rest assured, a payment won’t go anywhere until the bank sending the funds is completely comfortable about its destination. Yet what happens in the time it takes for an intermediary like our firm to reconcile the required information, the intended recipient of an electronic payment – a digitally savvy institution, mind you– is wondering where that money is.
“Our focus … is on achieving end-to-end transparency so that clients know exactly where their payments are…”— MATT WELLS, HEAD OF GLOBAL PAYMENTS & TREASURY SERVICES DELIVERY OPERATIONS
Think about the mobile phone you have in your pocket right now. When you think of the value of your phone, you don’t celebrate its existence because you can make a phone call. That’s the expectation; the phone had better work.
What you celebrate about your phone is that when you need information, the User Experience is painless and efficient. I recommend my mobile carrier to friends because the User Experience is frictionless. If I have an issue with my calling plan, it’s resolved in real-time using chat-bots and self-service. It couldn’t be easier from a consumer perspective. Now translate mobile telephony into treasury services. In the payments business, our clients don’t celebrate because they can send money from one institution to another. They celebrate the extent to which the payment is efficient and frictionless. They celebrate because they know where their payment is at any moment and that it got to the beneficiary, right down to the very second it got there.
Our focus at BNY Mellon is on achieving end-to-end transparency so that clients know exactly where their payments are by using the same kinds of apps that let shipping company customers know instantly where their packages are anywhere on earth. But transparency is only one half of the solution. The other, as I’ve mentioned, involves removing friction. The good news, borne of the kind of vision that people like me have for this bank and for the future of global payments, is that the same technology that enhances transparency can remove friction. The end result? As quickly as a client can input the information about the money transfer – the transfer happens. The money is there, safe, on the other side of the world, and all of that screening, approval processes, and other components – although very necessary – has already occurred. A utopian vision? Maybe for right now. But transforming the way the world does business can’t be achieved with half-hearted ideas or underwhelming technology.
We’re already on our way. Recall that on any given day BNY Mellon flags thousands of payments (and of those, the bank stops just five dead in their tracks). We’re using machine learning to identify over a thousand of those flagged payments. And that number should continue to grow. So instead of the payments hitting a bottleneck, our computers are learning and getting smarter every day. What was once a flagged payment waiting in a queue for manual inspection is increasingly identified by an ever-smarter computer platform and waived through the system, getting to the recipient much faster, with increasingly less friction.
For as much as I am impressed by and admire my fellow innovators in the retail industry, the stakes in the world of payments are much higher. Something the most prominent online retailers do really well is to use Artificial Intelligence that gets to know you as a customer better with every purchase or page view you make. If the retailer suggests that you buy a whisk because you recently bought a cookbook, but you don’t want a whisk, no harm done. The retailer is still lauded for being fairly spot-on with its AI-generated suggestions.
If BNY Mellon’s AI operates at a success rate that would normally be any retailer’s dream – that’s not good enough. In the payments industry, BNY Mellon’s AI has to be as frictionless as possible. And with our AI-enabled payments technology, we’re getting closer.
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 of Global Payments & Treasury Services Operations
Matt Wells is Managing Director, Head of Global Payments and Treasury Services Operations. He is responsible for the enterprise-wide services that support our clients’ payments, trade finance and treasury services needs. Strategically located across the globe, Matt’s nearly 3,000-strong team leverages industry-leading solutions to deliver seamless, around-the-clock coverage for our clients.View Profile