It is hardly news that the credit crisis has changed the landscape for financial institutions. But David Cruikshank, CEO of treasury services at BNY Mellon, isn’t only focusing on the requirements for more responsibility, he’s looking at the opportunities that mobile phones and the emerging markets offer.
Q: The Sibos conference has presented a number of running themes but on your panel there was an interesting take on the developments within treasury services. What shifts have you noticed within your sector?
A: The main theme was the changing nature of the correspondent bank market and the move away from reciprocity and more fiduciary responsibility.
Since the credit crisis there has been much more focus on finding sound partners and this has somewhat forced collaboration between many partners, such as mobile phone companies, corporate partners, end users and banks.
It is now more important than ever to know who your business partner is, whether through credit ratings or relationship development, and how mutually sound they are in their compliance.
Some 10 years ago we would have asked only three questions when entering a business relationship; now we send a book’s worth of checks.
Q: With this shift between these business relationships have you seen increased costs for yourself or clients in order to accommodate the change in infrastructure?
A: I have not seen an increase in spending or direct spending, however I suppose there is just a redirection in investment or costs in the business cycle. Investment in technology is a perennial spend and is always part of the budget.
Q: In terms of the changing landscape in the way treasury service providers do business, there has been a number of non-traditional participants offering services, such as clearing in the market. Do you see a rise in these non-traditional entities and do you see it as a threat to market share?
A: I haven’t seen an increase in the number of these firms offering these services, but I suppose there is more awareness due to press releases or media coverage. I don’t see it as a threat; there is a void in the market that banks haven’t stepped into, so it may add extra benefit to the market. For instance, some mobile phone companies will be able to offer some technological services that may help the value chain.
Q: You have mentioned mobile phone companies a few times, what role does the mobile phone industry play in treasury services?
A: The mobile phone industry is a good example for illustrating the changing landscape for treasury services. In India for instance, there are 10 times more mobile phone owners than bank account owners, so the way payments and notifications are delivered has to be tailored to this market.
So, for example, even just looking at delivering more information via the mobile phone through SMS rather than traditional banking routes will address the needs of a unique market. In some other countries post offices are a sector where partnerships can be forged as a way of broadening services. While some competitors have been surprised, it is actually a way of addressing the unique needs of different regions – just like mobile phone use in India.
Q: Is India the main market that BNY Mellon treasury services is looking to expand in?
A: It is clear that growth will not come out of the US or Europe, but mainly from the emerging markets for a number of years.
While India is a focus, it is not our only focus. When we set up basic services over in India – planting a flag in treasury, trade finance, partnerships and transactions – it was clear that India was developing very quickly and was more mature, which led to us broadening our presence there.
There are continual opportunities there and, like China, it is experiencing rapid growth in population, value and return.
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