In all the excitement about consumer payments innovation, are businesses being left behind? Their payments teams stuck with clunky, ill-designed user interfaces and processing times laughable by contrast with mobile apps and Faster Payments?
Sadly yes, to a point, concluded panelists during the closing session of Bottomline Technologies' recent customer conference in Birmingham in the UK. The panel – featuring Maurice Cleaves from Payments UK, freelance public sector specialist Phil Pettit,
Chris Jackson from Lloyds, Richard Ransom from Bottomline Technologies and moderated by Finextra – agreed that less political interest and greater stickiness among corporate customers have conspired to leave businesses lagging in the payments innovation stakes
– though that is changing.
Technology evolution is certainly having an impact on the corporates in attendance at the event – titled "Powering and Protecting your Payments" - if the results of polling carried out on the day are anything to go by. For example, a massive 89% said they
were either actively moving to the cloud or had at least one cloud deployment and were looking to do more.
But on the flip side, despite all the technology-driven alternatives, the use of cheques for business payments still persists. With reports of their imminent death in the UK in 2018 turning out to have been greatly exaggerated there is – ironically perhaps
– a fair amount of innovation going into the future clearing model, based on cheque imaging, to try to drag these outmoded payment mechanisms into the current century. The panelists were divided on the validity of investing precious innovation energy on cheques
– although it has to be recognised that while they are there, some will use them and indeed continue to favour them over other methods, not least for their reassuring 'physicality'.
One real standout concern for the corporates at the event, according to the polling data, was security – hardly surprising given the escalating challenge of cybercrime. The biggest bogeyman is external fraud – 73% said this was their greatest worry – and
as one panelist said, tackling security threats is like playing a giant game of Whack-A-Mole: as soon as you quash one challenge, another pops up.
The experts could offer only the obvious advice, to be vigilant, to get your best brains on the problem to stay one step ahead, to demand that your banks do the same, and to contribute to and work with the many agencies and industry groups seeking to co-ordinate
the response to cybercrime - though of course not all fraud is cyber-fraud: other less sophisticated but equally effective scams like invoice fraud also require constant vigilance. Additionally, though internal fraud was lower on the radar according to the
polling, it should probably be higher given the high incidence of cases of payment file tampering, ghost employee fraud and internal invoice fraud.
Interestingly – perhaps worryingly – given its imminent impact, levels of awareness of forthcoming mandatory changes to the security requirements of Bacs (TLS and SHA-2 to those in the know) among attendees were on the low side: asked the question, "How
ready are you for TLS compliance?" 40% opted for the answer "What is TLS?"
More positively, 25% said they knew of the deadline and had started to prepare, and 4% claimed to be compliant already. As one panelist quipped, if the 40% who don't know what TLS is today continue in that state, they will certainly have their eyes opened
when 1 June 2016 rolls around and they can't pay their staff.
Compliance of all stripes was clearly on the minds of the corporates at the event, but as an answer to the question "What is your top priority to address over the next 12 months?" it played second fiddle to "process optimisation" – good old operational efficiency.
Under this banner the panelists traded thoughts on a number of initiatives including:
- E-invoicing: this works best when mandated by governments, standards and interoperability are crucial and improvements in direct debits/alignment with the SEPA direct debit scheme would really help
- E-billing: why, oh why when they are under such cost pressure do local governments insist on sending out so many council tax bills on paper? Huge efficiency potential here
- Enhanced data: how can we link data (eg complex billing or invoice information) to a payment and store it so everyone who needs to can access it but it's not clogging up the payment system? Standards and use cases needed to progress
- Documents: there will always be a 5-10% who like human readable documents and who don't have the volume to justify automation, ergo the true paperless office will always be a pipe dream, though of course there are many efficiencies to be derived on the journey
In closing, the panelists in ruminative mode predicted more of the same for the future. In 12 months PSD2 and the PSR's Payment Strategy Forum are likely to be higher on the agenda and (hopefully) TLS will not be on it at all – but compliance, operational efficiency
and of course innovation will still be squarely in the frame.
"God forbid we ever stop innovating," said one panelist. "Innovation is great – but it also needs perspective. Just because there are 101 ways to move money doesn't mean your payments strategy needs to include all of them. We need innovation, but couched in
a way that makes sense for each individual business." Wise words.