Model Behavior – Make Best Practice Pay Off for Payment Integrity

The convergence of retail and enterprise payments enables organizations to capitalize on common processes and controls across widely varying payment types. Just as these complex payment flows differ, so too do the reconciliation and data integrity processes that support them. But as with the payments themselves, forward-thinking organizations can exploit commonalities in these processes to drive efficiency, best practice and control – and get the ultimate payment integrity payoff.

On the retail side of the bank, payments are usually high in volume, low in value and complex to reconcile. A typical ATM transaction, for example, will require three-way validation between the machine’s electronic journal, a switch system and the general ledger. As well as reconciling data from all these sources, you’ll need to validate the replenishment cycle and check for any cash retractions.

Meanwhile, back in the branch, where tellers both collect and disburse cash, a similar process must take place at the end of every day to reconcile teller systems with item processing and the general ledger.

It’s an even more complicated, multi-directional story for card and digital payments. In these cases, as with retail bank transactions, poor validation processes, exceptions and disputes can have a negative impact on customer service, internal efficiency and company reputation.

And as digital innovation continues to revolutionize the retail payments space, the data flows that need reconciling will only become more complex and varied.

Enterprise payments, however, are undergoing a major transformation, too, and introducing their own new payment integrity challenges. Around the world, a fast-growing range of national faster payment schemes require intraday interbank settlement – and daily or intraday reconciliation of high-value payment flows against scheme statements, bank accounts and the general ledger.

Here, efficiency, cashflows and compliance are all at stake, as treasurers strive to meet not only intraday settlement and funding obligations, but also the liquidity monitoring guidelines of BCBS 248.

But despite their different motivations and operational priorities, retail and enterprise payments share a lot in common. Break down their respective processes and you’ll soon find similar elements that add up to describe their behavior.

Now, you can use this common ground to develop best practice models for all your validation processes, while allowing for the individual nuances of different payment types.

The reconciliation model is a revolutionary concept that gives you a new language for validation, with the same vocabulary to define each reconciliation process. It’s simple enough for reconcilers across the whole business to use and understand but has the flexibility and sophistication you need to speak to varied, complex process requirements.

What’s more, when you apply your model to every type of reconciliation, you also develop and establish common standards. So, looking ahead, you can help create a library of reconciliation processes that others in the industry might adopt to adapt rapidly to new payment channels, payment schemes or regulatory mandates.

At the very least, you’ll be in a stronger position to centralize and standardize your reconciliation processes and accelerate time to value.

With better service, lower costs and a clearer view of liquidity as the payoff, isn’t it time to make your validation framework a model of payment integrity?