Technology

Ahead in the cloud: Technology driving payments innovation

Published: Jul 2019

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The adoption of technology in corporate treasury is reaching a tipping point. Bottomline’s latest podcast with Treasury Today unveils the meaning of payments innovation.

Listen to the podcast

The way corporate treasurers pay and get paid has evolved rapidly in recent years; enabling this change is cloud technology, says Bottomline’s Marcus Hughes.

The widespread use of data transformation, and the growing adoption of APIs, are making it easier for systems to communicate. This alone is resulting in the highest levels of straight through processing. But new regulations, compliance requirements and payment instruments and formats are further encouraging innovation and competition so that real-time payment systems are now a reality.

“Such progress is also helping treasurers to reduce complexity and enhance visibility, security, speed, connectivity and efficiency,” notes Hughes. “Opportunities abound for treasurers, enhancing their role and relationship within their organisations.” Cloud, he believes, is at the forefront of treasury progress.

Single view

Improving cash visibility remains a top priority for treasurers, having assumed greater strategic importance. Cloud-based technology accelerates this goal, providing accurate, up to date often real-time information, supporting enhanced decision-making.

In creating a single, cloud-based payment and cash management platform, treasurers can streamline processing across all applications, payment types and banks, explains Hughes. A treasury management system could do this, but even the best are not designed to handle large bulk payment files and Direct Debits. “A more practical solution is a separate payments and cash management platform, designed for the full range of payments, and accessible by a wider group of users,” he offers.

Cloud-based payment and cash management platforms are particularly well suited to organisations with multiple ERP/TMS systems, he adds. “Creating a central hub with multi-bank connectivity is quicker and cheaper than trying to migrate all systems onto a single ERP.”

Payments is perhaps the area most disrupted by technology. With Request to Pay, new ways of forwarding remittance data, and payment status checking coming on-stream, the shift to real-time payments means real-time cash management is now possible.

Cyber fraud and financial crime are a constant threat here. But there is considerable progress in developing technology to detect and prevent fraud, and even identify AML breaches. Machine learning, advanced analytics and profiling payment patterns, for example, enable systems to capture, learn and distinguish between normal and suspect activities, flagging and blocking potentially fraudulent payments in real-time. Just knowing this system is in place is a powerful deterrent, says Hughes.

Helping hands

Regulation is helping treasuries to benefit from technology. PSD2 enables open banking through APIs, creating a more competitive payments landscape. A business can instruct its bank to share balance and transaction data with regulated Account Information Service Providers. These can aggregate that data across multiple banks, making multi-bank cash visibility easier.

Businesses can also require their banks to accept payment instructions via regulated Payment Initiation Service Providers. With functionality like cash flow forecasting, bank-fee analysis and cash allocation, managing payments across multiple banks also becomes easier.

However, says Hughes, the roll-out of APIs under PSD2 only covers the EEA. Other regions are announcing initiatives, but progress is slow. In response, Bottomline offers a hybrid solution, combining PSD2 APIs with its own SWIFT BIC capability. Designed for mid-sized corporates which do not want SWIFT membership, he says this solution offers “significant advantages” over fintechs restricted by the slow roll-out of APIs.

Cloud peace of mind

Cloud-based technology means treasury peace of mind, says Hughes. “Provided the right technology partner is selected, their platform offers lower TCO and future-proofs against regulatory change and new payment schemes. Cloud also ensures reduced operational risk, with proven resilience and Disaster Recovery, and 24/7 support.”

Selecting a software partner which is also an accredited SWIFT service bureau gives access to value-adding services like data transformation and reconciliation, removes the need for internal SWIFT expertise, and future-proofs connectivity, he continues. “It also makes sense to leverage access to multiple protocols and connectivity options – such as host-to-host, EBICS, Bacs and Faster Payments – from a single provider, rather than a separate bureau, software provider and third-party hosting provider.”

Future days

“I’m confident it will be a more efficient business world, with more secure and smarter payments and intelligent cash management,” predicts Hughes. “This will come from technology providers listening to their customers and delivering solutions that solve their real-world pain points.”

Wider adoption of Distributed Ledger Technology (DLT) is on his specific technological horizon, especially where current processes are slow, complex and manually intensive. Use of tokenisation and DLT, as in Visa’s B2B Connect, has potential to make cross-border payments in conventional currencies more efficient and trackable.

Across the podcast, Hughes’ ultimate message is this: treasury technology is rapidly evolving, and treasurers need to consider how best to leverage innovation. “Only by doing so, will you be able to play an even greater role in helping your organisation capture new growth and investment opportunities.”

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