CORPORATE PAYMENTS FEATURE NAME
IBS Journal October 2017
31
Seven key trends in corporate payments technology
Corporate payments have evolved significantly over the past few years, enabled by modernised technology platforms. These developments are helping corporate payments get close to real time, while improving transparency and compliance
Sudeep Nair
Senior director, Cedar Management Consulting International LLC
B
anks are expected to make significant investments in corporate payment technology to remain relevant for corporate customers and ward off the threat from upstart
fintechs that offer disruptive innovations. The payment services offered by banks globally are becoming the most important source of revenue for them, as well as drivers for customer retention. While the advancement in digital payments, including mobile wallets and contactless cards, has revolutionised the experience for a retail consumer, the corporate set-up is not far behind, with increasing focus on real-time integration and improved efficiency of corporate payments.
While the consumer payments domain has seen rapid innovation, driven by fintech companies that increasingly focus on addressing only one problem statement at a time, the corporate payment landscape is still evolving, with advancements in payment integration capabilities, regulatory compliances and greater security. Banking for corporate customers has transformed over the years, but some inherent challenges remain. Banks and other financial institutions are in dire need of upgrading their relationships with corporate customers by putting technological innovation in the field of payments space at the forefront.
Banks – having seen innovation in the field of retail payments – forge ahead at a pace that was unimaginable 10 years ago and are therefore increasingly directing their focus on aligning their corporate banking infrastructure to keep up with this pace. If banks themselves do not act fast to snatch the opportunities in the corporate payments space, some of the emerging start-ups in the financial technology space will, leaving banks behing.
There are seven key trends globally, that are reshaping the corporate payments space.
1. Payment hubs
A legacy of disparate IT systems running across departments coupled with the need for data integration for real-time reporting purposes, is driving the banks to adopt the Payment Hub as a solution. Most Banks rely on standalone transaction processing systems that are confined to specific capabilities such as wire transfer, EFT, cheques and so on. These systems usually work in silos using obsolete or ageing technologies, making the support and maintenance expensive by the day. This eventually restricts banks to respond swiftly and efficiently to changing corporate and market condition. Also, it not only hinders efficient payment processing but makes data collection and processing a mammoth task. Payment hubs, which are a first-hand implementation of a Service Oriented Architecture (SOA) concept, allow consolidation of services into clusters, thus providing unified and standardised interfaces. It moves away from a silo view to a single consolidated view for the end consumer. Migration to payment hubs allows banks to move to industry-standard messaging interfaces, allowing integration with different channels and vendors.
2. ERP integration
Manual payments across channels and disparate systems can lead to inefficient processes, which could lead to consolidation efforts, delayed payments and increased business opportunity costs. Integration of the Enterprise Resource planning (ERP) system of an organisation leads to significant time saving and efficiency of operations spent in processing payments. Integration of the ERP systems with the bank services essentially eliminates the need to manually track and reconcile payments and receivables with the account statements. Since such an integration is an end-to- end Business Process Engineering (BPE) cycle, the hidden costs
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