Automation and Data & Analytics

Automation

70 per cent of corporate treasury and payments professionals list manual and inefficient processes among their top challenges. In addition to their high costs, manual processes are also error-prone, difficult to scale in response to variable volumes, and increasingly susceptible to fraud.

Process simplification and automation opportunities extend across the value chain – from establishing the payment exchange with suppliers (B2B) and consumers (B2C) to creating a variety of services around three-way (PO, invoice and receipt) matching, and all the way to the disbursement of funds through different digital payment channels. Several fintechs see this as a big area of opportunity and are building to this end auxiliary platforms that can integrate with corporate systems and automate the end-to-end processes.

Bank treasury services offer a slew of products and services – from cheque processing to ACH/Wire – to their corporate clients. For instance, a large bank helps one of the largest healthcare providers in the US process over 4 million transactions on an annual basis, covering their entire value chain, from providers – corporate hospitals (B2B) and individual doctors (B2C) – to pharmaceuticals (B2B).

• There is a clear opportunity to digitally onboard these entities onto the payments network in a rapid, secure manner using DIY portals as well as create an ‘omni-channel’ like experience that minimizes onboarding friction.
• Automating a payment network of this size and complexity is undoubtedly an integration challenge, given the multiple legacy systems at enterprises and, increasingly, ERP systems. With the increasing adoption of API (application programming interface)-based data exchanges, end-to-end automation with multiple payment rails is a necessary building block for digital payments.

Data and analytics

Payment processing through digital channels is data rich: strategies and execution led by analytics on the transaction data can help in a variety of ways: improving revenues, cutting operating costs, detect fraud and other anomalous behaviour.

Risk and fraud analytics: As payments migrate to digital platforms, it is almost inevitable that fraud becomes more sophisticated too. And, as the volume and complexity of payments grow, fraud is becoming just as hard to track, identify and prevent. Fraud prevention will have to move beyond transaction-centric assessment to leveraging AI for detection and prevention of emerging fraud. Broadly speaking, organizations need to think of payments fraud at two levels:

• Account fraud: Digital identity theft is a leading cause of fraud. Methods like ATO (account takeover) and synthetic identity creation can be used to gain access into accounts and siphon funds. Tracking and preventing this requires going beyond the traditional knowledge-based authentication methods to monitor authentication journeys, looking for anomalous patterns.
• Phantom payments: Businesses lose significant amounts to fraudulent payments, triggered both by employees (e.g., initiating a phantom payment) or payees (e.g., creating double invoices). Monitoring and flagging them requires a range of methods, starting from rule-based systems (e.g. proximity of transaction requests) to more sophisticated machine learning methods (e.g., payee behaviour risk-scoring and setting of guard-rails sensitive to each risk segment).

Data monetization: A bank managing the payment flows between its corporate clients and their network of suppliers and customers has the unique ability to understand the financial behaviour of all the firms in this network. This can be a powerful tool for the bank to develop targeted strategies to drive superior experience and value for its clients:

• Working capital optimization: Banks can help their clients optimize their working capital by forecasting fund flows and using that to transfer the optimal funds into their payment accounts.
• Service bundling: Using a combination of behavioural and transactional patterns, banks can help define optimal service bundles for their clients. For example, corporate payments that span multiple countries can be optimized with a combination of exchange-rate hedging and currency-float solutions.