Insights from Sibos 2017: It’s time to think about the corporate
At the recent Sibos 2017 conference in Toronto, one theme rang out loud and clear – it’s time to think about the corporate. The common thread throughout the four-day conference was the fact that whilst there has been a heavy focus on the needs of the retail customer when thinking about payments innovation, that focus is starting to shift to those of the corporate client. The discussions around real time payments (RTP) are over a decade long. The industry has well-rehearsed the benefits, drivers for change and potential new business models of RTP when discussing retail consumers. But this is not the only customer segment that stands to benefit.
The expectations of corporates are evolving rapidly. The combination of RTP and open banking has huge potential for the corporate community, both large and SME. RTP can provide solutions to many pain points in business payments, including better invoice management, reduction in manual processes and reconciliation, as well as enhanced liquidity visibility and cash management.
The view from corporates such as Viacom and Booking.com at Sibos was that the biggest challenge was lack of transparency. And this ambiguity comes in many forms, from not knowing “did they get the money”? (when talking about their suppliers), to trying to understand the additional fees banks may pass on. Corporates want to be able to answer these questions but instead “spend hours looking for payments”.
Diluting this fog could be facilitated by open banking and more effective use of APIs. APIs themselves are not particularly interesting; they have been around for decades and are just a means for machines to talk to each other. The real value lies in having a better understanding of the data a bank holds about its client and more importantly making this data transparent and available in a way that clients are able to use easily and meaningfully.
Brooke Tilton of Viacom warned that “banks can have the greatest information in the world, but if corporates can’t use it or understand it, then it is useless.” Banks need to spend time and resource in understanding how to cultivate appropriate corporate solutions as they start to refresh or rebuild payments platforms to accommodate these new payment innovations.
Large multinational corporates can take advantage of increased harmonisation around standards to deploy a more concise treasury and payments operation within their organisation. Efforts are being made to ensure there is as much harmonisation as possible when it comes to ISO 20022 implementation for real time payments. Corporates can also take advantage of this.
There is work underway in the US, Canada and Australia to build flexible payments infrastructure. The US RTP system via The Clearing House is building in business and corporate use cases in from the start. This gives wholesale banks an opportunity to learn how these use cases can be adapted for their own customer base. As new entrant banks are focusing on light weight solutions to challenges within the industry, traditional wholesale banks need to open their eyes when it comes to leveraging RTP and other innovations to nurture their corporate banking proposition. One thing is clear, if banks don’t start to ease some of these pain points, someone else will.
New Research coming soon
Upcoming new research on the topic by Icon Solutions and analysts Ovum is long overdue. A strategic view of how banks can take advantage of RTP and open banking to enhance their corporate customer proposition is extremely powerful. The corporate treasurer is noticing that retail customers are enjoying a quicker, more efficient payments experience, often with mobile functionality, and they want the same. Whilst the focus of the summary is on the US and Canada, this is a good litmus test for other markets. I am looking forward to seeing the full report when it is published.
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