Gregory Malosh, managing director and head of information and liquidity products, BNY Mellon, explains why banks find outsourcing good business.
Global Finance: What generally prompts companies to outsource treasury functions?
Gregory Malosh: As the cost to maintain systems internally increases, not just from a functionality perspective but also from a support perspective, it makes sense to look at outsourcing. For instance, fraud prevention and resiliency architecture increase the cost involved in supporting the systems. These costs contribute to the overall design, deployment and maintenance cost assessment for service delivery systems and platforms. That prompts some banks to consider outsourcing.
GF: How does technology play into it?
Malosh: Technology continues to evolve at a lightning pace. We’re seeing more demand and acceptance of mobile technology as a business continuity tool. It’s not usually used for data-intensive activities but, for instance, to release a wire or check a spot balance—specific, quick activities that are time sensitive.
We’re also moving to more powerful reporting and analytic tools. Our approach to technology emphasizes the importance of leveraging technology to make better data-based decisions. Our focus is on“decision science,” rather than just big data.
GF: How can technology help companies address financial risk?
Malosh: We’ve automated so much, and we’ve become so sophisticated in the technology that keeps businesses running, but this also makes us vulnerable. The whole concept of business continuity, not just in finance, but also technology and operations, is a core concern for treasurers. Clients want “anywhere, anytime” access to make sure they can review and, if necessary, initiate transactions even when they’re out of the office.
GF: How do increased government oversight and globalization affect the decision to outsource treasury processes?
Malosh: The global banking system is changing markedly as a result of new banking regulations—notably Dodd-Frank and Basel III—and the effects of economic developments like the turmoil in Greece. Corporates are reviewing their banking relationships to make sure they’re receiving treasury services attuned to the new ecosystem.