BNY and Mizuho Bank, the oldest banks in the US and Japan respectively, announced an agreement on Sunday to expand their correspondent banking network to facilitate international trade.
The agreement, based on BNY’s merchant access service, allows both banks to access each other’s relationship management applications (RMA).
“We have heard from some of our clients who have limited infrastructure but have had to issue one letter of credit every three years for a given bank,” says Jennifer Barker, global head of treasury services and depositary receipts, BNY. “So we came up with the idea of the RMA-as-a-service concept so they don’t have to put their own capital into it.”
“Using RMA BNY, we have access to more than 4,000 bank branches,” explains Tsutomu Yamamoto, Managing Director, Head of Global Banking Transactions at Mizuho Bank. “Creating an RMA on our own is costly and time consuming, so it makes much more sense for us to set up this collaboration.”
In addition to cost savings, Mizuho also allows Mizuho to connect its customers with many other counterparties, according to Ashutosh Kumar, co-head of global transaction banking for Asia and Oceania. “Traditionally most banks have an RMA with X number of banks, but by combining both of our networks we can connect to many more, and BNY has created a very good online portal where you can easily find available banks.”
The RMA is just one component, and Joon Kim, global head of trade finance and portfolio management at BNY, says that once the RMA for letter of credit advice is in place, BNY will work on ways to improve efficiency. as it remains a labor-intensive manual process.
GenAI, for example, will help banks not just connect, but also move letters of credit faster. For the two legacy banks, this is an exciting step towards digitalization of trade.