The remittance service Bank of New York Mellon Corp. developed for other banks to offer under their own brands is part of an effort to beef up such white-label offerings, particularly those involving small-dollar transactions.
The Remit Worldwide service, which the New York company made available to its 1,600 correspondent banks around the world last week, is "just the start," said Alphonse J. Briand, a managing director and the head of product management and business strategy for its treasury services division.
Examples of other white-label services that Bank of New York Mellon would like to offer, Mr. Briand said, include providing letters of credit and allowing banks to send pension fund payments or share dividends on behalf of companies to recipients living in foreign countries.
The remittance service dovetails with chief executive Bob Kelly's stated goal of making Bank of New York Mellon more of an international company. In July, shortly after the merger of Bank of New York Co. Inc. and Mellon Financial Corp. closed, Mr. Kelly said his company had "a serious competitive advantage globally," and that international business could generate half its revenue and earnings in five to 10 years, versus about 25% at the time.
Though wealth management and asset management remain the "pinnacle bases of the bank," Mr. Briand said, his company has identified its white-label services for domestic and international correspondent banks as a fertile growth opportunity. Those banks "don't have as much of the technology, investment opportunity, and global expertise" that Bank of New York Mellon has, but they would like it to "build a product that they can use."
The company says focusing on outsourced services for correspondent banks is a logical step after combining Mellon's domestic white-label business with Bank of New York's international payment network.
"We have done a yeoman's task in terms of building this franchise of providing global payments internationally," Mr. Briand said. "There is a tremendous opportunity to use the infrastructure we built."
Bank of New York Mellon is not alone in harboring such ambitions. Last month Citigroup Inc. purchased PayQuik Inc., a Philadelphia outfit that runs online and retail remittance platforms for banks and other financial services companies. The company is rolling out the white-label service to its 3,000 correspondent banks around the globe.
Mike Bellacosa, a vice president of payment services for Bank of New York Mellon's treasury division, said the opportunity in small-dollar payments lies in capturing some of the sheer volume in global remittance and other cash transaction services.
Three years ago Bank of New York introduced a service that let foreign banks receive remittances from the United States. Remit Worldwide, which was built on that service, allows the money to be sent directly to the intended recipients in foreign countries.
Remittance providers like Western Union Co. tend to offer a "relatively high-cost solution for their remitters" and are geared more to underbanked consumers than to account holders, Mr. Bellacosa said. "There are other segments of the market — banked individuals — that if they could be served by their banks, they would prefer that."
Gerard Cassidy, an analyst at Royal Bank of Canada's RBC Capital Markets, said the increased focus looked like an attempt by Bank of New York Mellon to breathe fresh life into a treasury services business that has had little growth over the past five years, "rather than just have that business sit on a shelf and atrophy."
