Fintech Insights

Making the Move Toward Global, Corporate Payments Process Transformation

Luc Belpaire | Product and Pre-Sales Director, Trax

September 27, 2019

As a treasury or finance pro, you know that payments aren’t just a part of your daily life, they’re an ongoing journey. You need to adapt to challenges like rising fraud risk as well as new opportunities like real-time payments.

The trouble is, many companies still grapple with familiar payments challenges: too much complexity, too-high costs, limited control and unacceptable fraud risk. That unfortunate reality is made plain in the recently released 2019 FISTM Corporate Payments and Bank Connectivity Market Report.

But the report also shows that there’s a clear business case and ROI for a payment factory or bank integration solution. Such a centralized, standardized payment factory simplifies processes, lowers cost, improves control and reduces fraud risk.

Continuing Payments Complexity

Complexity remains a payment constant. The FIS report shows that 34 percent of corporations use five to 10 cash management banks, and another 18 percent use 11 or more banks. Forty-eight percent manage more than 100 bank accounts.

Similarly, 48 percent issued payments to more than 1,000 suppliers in the past 12 months – with 14 percent topping 10,000.

That’s not to say companies haven’t made some progress. A healthy 84 percent have some kind of centralization in place, and 6 percent more will move in that direction in the next two years. Likewise, 43 percent have largely or fully standardized a controlled payment management workflow for legal entities, and 47 percent have done so for payment volumes.

But organizations still use a wide range of bank connections, including host-to-host, e-banking, SWIFTNet, EBICs, BACS gateway, cloud-based third-party solutions and bank APIs.

And their success with payments projects has been mixed. For instance, just 50 percent have been able to reduce internal costs, and only 46 percent have reduced external costs.

The Payment Factory Promise

So clearly, incremental improvements aren’t enough. You need to think big and transform your payment processes. And more enterprises are recognizing that a payment factory can take payments to the next level

Of course, an initiative as transformational as a payment factory isn’t trivial. It calls for commitment of focus, time and resources. And like any technology project, it requires a detailed business case for how it will deliver ROI for your particular needs.

But if you maintain the payments status quo, you aren’t doing yourself any favors. You’ll continue to struggle with familiar problems: lack of visibility and control, high costs and risk of fraud.

And such a payments project can deliver measurable results. Our research finds that more than one-half of companies that implemented a payment factory have achieved annual cost savings of $100,000 to $1 million. And 79 percent that implemented a payment factory achieved ROI in two years or less.

A payment factory can help you achieve specific payments goals. But it can also position your business for success and growth. FIS experience shows that organizations with the vision to invest in a payment factory reap measurable rewards. They reduce complexity, lower costs, gain control, mitigate fraud and optimize their payment processes.