A B2B Frame of Mind

Many banks talk about becoming major players in the emerging business-to-business (B2B) marketplace. Few,however, currently offer the products and services needed to make e-commerce transactions easy, convenient and safe.

The Bank of New York (BoNY) is one of those exceptions. The venerable Manhattan-based institution has become a pioneer in the B2B arena, already marketing a number of Web-friendly payment, cash management and settlement solutions. Last year, the company unveiled CA$H-Register PlusSM, a Web-browser based cash management product. INFORM, its securities settlement system, has carved out a niche in the global custody business. BoNY is also helping a host of firms "e-enable" existing financial systems.

Donald R. Monks, senior executive vice president and manager of banking operations and technology sector for BoNY, has over 30 years experience in the payments business. He took some time at the recent SIBOS convention in San Francisco to talk about his bank's B2B strategy and other banking-related issues with BS+T editor Paul Doocey.

BS+T: Bank of New York claims to be a leader in the B2B financial solutions marketplace. How does the bank back that statement up?

MONKS: We introduced an Internet-based, browser-enabled cash management product CA$H-Register PlusSM over a year ago, well ahead of the competition, many of whom are still trying to come forward with similar product. It is a complete cash management system for banks and U.S. corporate clients, and offers a full breadth of financial functions such as payment services, information reporting, letter of credit and so on.

BS+T: What are you doing to stay ahead in the constantly evolving e-commerce environment?

MONKS: It's no secret that other banks want to exploit the B2B space, but where are their products? We've had systems on the market now for more than a year, and I have yet to see anything that can compete with them.

But we realize there are some emerging products in either pilot or test phase that could potentially compete with us. I think we stay ahead of them by continuing to be innovative. Our CA$H-Register PlusSM Web-browser product already has letter of credit and image-based check replication capabilities. Not many others can claim to have these features right now.

In addition to our cash management product, we also market INFORM, a Web-based browser system that services the securities processing industry. BS+T: Why did BoNY decide to target the securities industry for B2B product?

MONKS: We've been very good at focusing on industries where there is huge growth potential for electronic payments. We recognized fairly early on that the brokerage business was fertile ground for electronic payments. Their retail customers have the money and the need for speed that make electronic payment options viable. So we have become a major electronic money mover for large mutual funds and brokerage firms.

BS+T: What other financial markets are you targeting with B2B products?

MONKS: Another adjunct to the B2B business is e-enabling legacy systems at financial entities. We are currently working on several projects that are in various stages of completion.

BS+T: Disintermediation has been a hot topic at this conference. What are your views?

MONKS: We recognize it as something we do not want to happen to us, and I'm sure it's something our customers don't want to have happen to them.

When people talk about disintermediation in the payment business, they are actually talking about non-banks coming in and providing payment services.

How do we avoid this? By emphasizing our franchise. What are the components of this franchise? It is trust. It is settlement services. It is access to the global payments systems.

Others have tried to get into these businesses, primarily through the purchase of small banks. Most have found the going difficult. For example, brokerage firms have established trust banks. But they aren't necessarily using them to service their very high- tech payment processing needs. They found that these banks don't have the infrastructure or the capital to be a member of most payment settlement systems.

BS+T: What is your opinion of the S.W.I.F.T./Identrus partnership for the creation of a universal channel for secure B2B traffic?

MONKS: I am in favor of standards, even if they are not always the absolute best technical solution. Standards save time, and a common way to do things always beats out a perfect technical solution not in wide use. I would rather have one mediocre standard than three perfect solutions still being debated.