This whitepaper explores how businesses are experiencing the changing state of corporate payments today, the challenges faced as they seek to enter this ever-evolving space going forward, and what the developments mean for the payment industry’s collective future.
The payments industry has transformed — in the space of several years — from one of stagnancy to one of radical, sweeping change. New technologies, and innovative solutions spawned from these new capabilities, have surfaced in a space that hasn’t progressed in nearly 80 years, particularly in the U.S. The result of these changes has been one of upheaval for all parties involved — and primarily for the corporate space. With payments systems facing a variety of challenges, businesses are confronting a new set of options and capabilities that are compelling them to adjust and move with the changes if they are to grow and continue to succeed.
But such change comes at a price. At this juncture in time, entire corporate industry segments realize that now — as these new offerings are coming to the forefront — is the time to address the many pain points rife in payments operations that their industries have been encountering for decades.
This paper shows how businesses are experiencing the state of corporate payments today, the challenges they are facing as they seek to enter this burgeoning space going forward, and consequences for their industries and the payments industry as a whole.
To derive an accurate view of the state of corporate payments today, the report combines the results of a BNY Mellon in-depth industry survey on the subject, along with payment-industry insights gleaned from more than a dozen comprehensive interviews of industry leaders — chosen among a select group of large U.S. domestic and multinational companies — who possess in-depth knowledge of and opinions about the evolving payments space.
These insights, along with those derived from our experience in the payments market, combine in this paper to represent a referendum on the current effects of the radical changes that have been sweeping the payments industry on corporations today, and their vision for a dynamic and exciting payments future.
Download: [wp_otfd id=”4″ title=”The Future of Payments: A Corporate Perspective” class=””]. Survey Insight: Survey respondents and payment experts we interviewed indicated that increased reliability, security and information richness are the top areas for payment enhancements today.
Reliability was referred to most often, with more than half of respondents noting that the certainty of knowing that their domestic as well as international payments — for their particular industry and the payments space overall — were accurate and cleared is of the highest concern for transacting in today’s space. While banks are generally perceived as providing acceptable levels of reliability around payments — and our respondents expressed that level of confidence — maintaining high levels of certainty around transactions remains a concern going forward as new technologies are introduced. And as third-party operators (fintechs, etc.) move into the space, that level of confidence will continue to be the number-one concern for payments practitioners today, regardless of which party operates those systems into the future.
Payments’ security and wealth of information (“information rich”) tied as the second most important areas for improvement when thinking about new payment technologies in practitioners’ payments processes. Industry experts we spoke with agreed, noting that payment security remains top of mind.
For businesses right now, a lack of payment information (on the customer and payer side) can cause rampant problems through the payments cycle. From payers lacking a mechanism to tell businesses or their banks how they want payments applied (leaving the servicer to often make an educated guess about where to correctly apply a payment), to wire payment receivers not always knowing who sent a payment or what it’s for, the lack of clarity around a payment can create much internal backtracking and customer service work. The result is increased time and cost across the entire payments workflow. From the practitioners’ viewpoint, higher visibility into bank accounts would offer fast knowledge about the settlement of a payment, reducing the risk for the business by allowing for quicker decisioning.
Download: [wp_otfd id=”4″ title=”The Future of Payments: A Corporate Perspective” class=””]. Survey Insight: Availability of IT resources was cited as the biggest challenge in achieving an ideal future payment experience.
The New Frontier: APIs, Robotics, AI and Blockchain (DLT)
The latest wave of payments technologies, in their infancy of industry development and initial offerings, are promising even further efficiencies, streamlined capabilities and cost savings that aim to speed payments operations of the future.
Survey findings included the following:
- Roughly half of respondents think APIs will bring a fundamental shift in how corporations communicate with banking partners, and 54% believe their company’s first API interaction will be within one to three years.
- Only 5% of respondents are not looking to their bank providers to integrate and facilitate API services.
- More than half of respondents said their companies will be ready to implement bots for payment and/or reporting within the next three years.
- Blockchain was cited as the most impactful payment initiative within the next five years or more, with bots and AI for payments tied for second place.
Education and Guidance are Needed Through this Time of Change
Many of the company pain points highlighted in our research—and throughout this paper—such as the need for increased transparency, reduced risk and increased security for payments, are being addressed by the new solutions that have most recently been introduced to the marketplace. Whether companies take up the mantle to implement these new options depends on many factors. While companies are ready for the improvements that the new solutions promise, many have questions that need to be addressed before fully embarking upon the formidable journey required to experience the benefits the changes pledge. These include a need for:
Continuing, In-depth Education — The sheer number of new options creates confusion for practitioners. While many are closely following industry advancements, the need for guidance around what the many options mean for their particular payments circumstance is crucial. The extent that providers can help practitioners define new terms, interpret how solutions actually translate into benefits, and provide full disclosure on which option would work best for their specific operations is what is needed now. With education, guidance and clarification around these points, companies will be ready to embrace the changes necessary to move their operations into the next era of operability.
Increased Technology Resources — Many businesses are dealing with legacy payment systems that necessitate an extensive and often costly commitment from internal system development teams and resources to accommodate the new solutions. With their stated need for platform support, opportunities exist for corporations to work with providers to help develop those systems in a timely and cost-efficient manner—under expert guidance—or to use outsourced solutions to bridge the gap where possible.
Access to API-ready Solutions — As many companies look to embrace their first API interaction within one to three years, they acknowledge that this technology heralds a fundamental shift in how corporations communicate with banking partners. As APIs expand their access to financial service features and capabilities, many look forward to extended integrations across provider platforms, cohesive user experiences and faster access to critical information. Their goals include using the technology to access a wide array of payment management solutions and to keep pace with emerging payment trends and options.
“Companies want providers to say to them, ‘Because we understand your business, here is the customized payments solution you need. And here is how you need to move forward.’ That’s how we create value for them in this evolving space.”
Download: [wp_otfd id=”4″ title=”The Future of Payments: A Corporate Perspective” class=””]