USING NEXT GENERATION PAYMENT SOLUTIONS to SOLVE OLD-SCHOOL PROBLEMSHOW NEXT-GEN PAYMENT TECHNOLOGY CAN SET THE STAGE FOR NEW CUTTING-EDGE SOLUTIONS

1

THESE DAYS, the buzz around cutting-edge technology — from real-time payments and distributed ledgers to AI and predictive analytics — can seem irresistable. Then you remember why your business hasn’t embraced them: Time-consuming and inefficient manual processes and legacy systems that still govern key functions.

SO HOW DO YOU TURN THE BUZZ INTO A REALITY? By leveraging next-generation payment technology that solves old problems and paves the way to embrace innovative new solutions.

Cutting-edge technology holds the key to escaping the legacy burden, but those same legacy systems and processes often make new technology seem too costly and complex to implement.

It’s a CATCH-22:

Let’s look at three common problems that exemplify this approach.

52%of surveyed companies are strategically planning to stay aware of new payments innovation to be better prepared. 24% are adopting a “wait-and-see” approach.1

2

Real-Time Payments (RTP) and Same-Day ACH

3

THE BUZZ INTO A REALITY?

THE PROBLEMMany accounts-payable and treasury teams handle payments the old-fashioned way, using manual or cumbersome processes that are inefficient, costly, and slow.

THE SOLUTIONIn order for organizations to improve their efficiency, moving away from paper-based, manual processes is critical. There are multiple payment-type options to help with this migration, two of the most exciting being the increasing availability of Real Time Payments (RTP) and same-day ACH. RTP offers a versatile, highly secure, electronic payment option with a two-to-three-day improvement over typical ACH payment windows for payments that need to happen quickly. Payments happen in seconds rather than days or, in the case of some cross-border payments, weeks. In addition, the ability to tokenize payment recipient information greatly reduces the time and cost of onboarding vendors. For those organizations looking for same-day settlement at a lower cost than wires, same-day ACH is a new and ideal option that also accelerates payments processing.

The increased efficiency of these payment types improves your relationships with vendors, sets you up for early-payment discounts and better negotiated rates, while also optimizing cash flow.

How to Get Started

12 3

4

Analyze your systems and processes. Take a deep dive into what you have and retain only the legacy processes that still bring more value than change would provide.

Consolidate what you can. Mulitple payment streams make it difficult to provide centralized control and visibility of enterprise-wide payment and cash management processes. It’s more efficient to consolidate these disparate streams in a “paymment hub.” This will accelerate the elimination of manual intervention to better facilitate the move to straight-through processing.

Determine the best use case. Evaluate where real-time payments can have maximum impact on your customer and vendor relationships and maximize available cash.

Give training and change management the attention it deserves. RTP applications may be simple to propose, but finance and treasury organizations need extra time and attention to embrace new technology.

WHAT IS RTP?RTP uses modern networks and open standards to enable nearly instant payments 24/7/365: During a recent test, funds transfers occurred in just three seconds.2

Each transfer includes payment and remittance data, and is vetted against fraud prevention processes within the payment scheme. To further enhance fraud protection, only the established account owner can initiate payments.

The Clearing House (TCH) launched RTP in November 2017, with a goal of reaching ubiquity across the U.S. by 2020.3

4

Distributed Ledger Technology (DLT)

5

THE PROBLEMLegacy approaches to recording and reconciling payments that employ a central “middleman” authority — adding time and expense to every transaction. Delays or discrepancies in manual record-keeping processes waste time, money, and resources, and increase the risk of undetected fraud or theft.

THE SOLUTIONDistributed Ledger Technology (also referred to as “blockchain”) solves both issues: It supports a simple, secure, fully automated process that clears, records, and settles transactions virtually in real time. Yet DLT takes the “middleman” out of this process — cutting per-transaction overhead costs.

How to Get Started

1

290%

Get ready, set ... While many institutions are still evaluating the use of DLT and some banks are engaged in pilot programs, DLT isn’t quite mainstream … yet. But this provides the opportunity to look ahead. Prepare your own organization for the benefits DLT can provide by ensuring that your organization’s global payment processes have taken advantage of the efficiencies automation and centralization can provide.

Think long-term and expect members of your financial supply chain to do the same. Choose banking and financial technology partners that either currently or plan to support leading edge technology including DLT. When planning new payments solutions, ask how they are currently working with new payment options ensuring they’re as flexible and forward-thinking as your organization.

WHAT IS DLT?DLT automates record-keeping tasks. Exchanging and approving payments triggers self-executing contracts, and initiates the process of clearing and reconciling the transaction.

Digital IDs and strong encryption minimize fraud and risk; real-time tracking, reconciliation, and reporting enable visibility into transactions and a consistent audit trail.

DLT replicates and routes payment data without relying on a central authority, resulting in cost savings from cutting out “middleman” services.

of U.S., Canadian, and European banks are exploring blockchain/DLT payments technology.4

6

Machine Learning & Predictave Analytics

7

THE PROBLEMMassive — and still growing — payment transaction volumes push legacy, labor-intensive financial processes to the breaking point. You’re collecting tons of data, but it ends up scattered across disparate sources and applications, beyond the reach of traditional data-analysis tools. The inability to access consolidated information leads to both inefficiency and increased risk. What’s more, if you can’t access your data and do basic analysis you won’t be able to get to the next level and reap the benefits of machine learning and predictive analytics.

THE SOLUTIONArtificial Intelligence (AI) combines the availability of low-cost computer processing power and the statistical profiling of deep data pools to process, manage, and extract insights from highly diverse business data. Combined with machine learning, a predictive analytics technique that gives computers the ability to learn without being manually programmed, these tools find patterns humans cannot detect. This in turn enables your organization to predict fraud, incoming invoices, incoming and outgoing payments, delays in approvals, and more. It also sets you up for significant operational efficiencies and cost savings.

How to Get Started

52%

12 3

4

Perform a comprehensive data audit. Document the data you’ve got, where it lives, and how it’s managed. The more data you can feed to predictive analytics tools, the more likely they are to perform well.

Match business processes to AI capabilities. Successfully leveraging machine learning and predictive analytics relies in great part on clearly understanding — and mapping — how they align with and impact your most important processes and can solve business pains.

Pick the right partners. Find a financial technology partner that understands and leverages machine learning and predictive analytics, and takes the time to understand how they can best help your organization.

Analyze data for features and patterns. This should take place both within and across accounts for missed payments, paid late fees, and accuracy of cash flow.

WHAT IS MACHINE LEARNING AND PREDICATIVE ANALYTICS?These powerful technologies analyze historical data and “learn with it” to identify ongoing trends and risks, forecast future ones, and crunch the data on “what-if” scenarios in order to inform decisions and improve processes.

52% of companies generate 10,000 or more payments monthly, while 25% generate 1 million+ payments5— a huge amount that needs to meet regulatory requirements and be vetted against fraud schemes.

8

VISIT SMARTPAYMENTS.COM/SUBSCRIBE TO SIGN UP TODAY!

1. Association for Financial Professionals, 2016 AFP Electronic Payments Survey

2. Atradius, Payment Practices Barometer – Results, September 2017

3. The Clearing House/PR Newswire, “First New Core Payments System in the U.S. in More Than 40 Years Initiates First Live Payments,” November 14, 2017

4. Accenture Mobility, Block Chain Technology: How Banks Are Building a Real-Time Global Payment Network, 2016

5. Strategic Treasurer, B2B Payments + WCM Strategies 2017 Survey Report