How has regulation changed correspondent banking?</h3> The payments business, particularly the correspondent banking business, has always been deemed to have risk areas that need to be managed. What’s changed in the last 10 to 15 years is that the focus has suddenly gone from operational and credit risk to financial crime, such as know-your-customer regulation. That has driven two changes. Firstly, those wanting to stay in the correspondent banking business have had to raise the bar considerably in both technology and process; and secondly, increased regulation has caused some players to question whether it’s really worth staying in this space. It’s clear that the new regulatory environment is here to stay, so banks need to make regulatory conformity a core part of who they are. It’s not about reacting to regulatory requirements, but actually taking hold of them and building them into the bank’s capabilities. There are far fewer players in the market and those who are staying are spending more time, money and intellectual capital to make sure they are not only managing their operational and credit risks, but also general financial crime and reputational risks.</p> What should be the focus going forward?</h3> The critical thing is not to bury your head in the sand. Make sure you are fully engaged with the various industry bodies that exist. It’s also important to be transparent with other players in the market too. One of the interesting trends I’ve seen over the last five years is how the key correspondent banking players are now working together much more effectively. The collaboration between the banks is necessarily limited to matters operational and risk-oriented in nature, and of course does not include any elements which are client-specific or related to the competitive business activities of those institutions.But years ago, there was little dialogue between these banks. We all tended to do our own thing, trying to outsmart each other, and there was relatively little sharing of information between organisations. That’s changed a great deal, as it’s now in our interest to make sure the industry as a whole gets regulatory compliance right.</p> How will your recently announced global payments infrastructure take your business forward?</h3> We’re creating a new global payment infrastructure that will be applied to all clients irrespective of currency. BNY Mellon will be migrating to a single platform, which is a big step forward for us. It doesn’t matter where our clients sit, what currency they use or where their liquidity is held, they will be able to process payments through our new infrastructure. We’re starting with euro clearing capabilities, but in time, we’re looking to add other currencies. This will not only make it easier for the client, but will also enhance our ability to manage risks associated with our business. A single platform is easier to manage in terms of risk, liquidity and credit management. Financial institutions are also focused on liquidity management, making sure both they and their clients understand where liquidity is, at any point of the day. Where is your organisation exposed? Where are your clients exposed? This is a huge area of focus for the central banks and regulators. Moving towards a single platform allows us to more comfortably manage the liquidity and the associated exposures minute by minute.</p> What are your plans going forward?</h3> We are constantly reviewing our infrastructure from a risk management and compliance perspective. We do this to make sure that we sit comfortably with regulators by meeting the requirements that have been imposed, but we're also doing it for our clients. We proactively go out to our clients and let them know what’s coming down the pipeline, and what standards we’ll adhere to. That way they know everything they need to know to process transactions through BNY Mellon. This process is very challenging and demanding, but it’s incumbent upon correspondent banks to understand key global regulatory developments that are going to impact their activities.</p>