Solving B2B’s Back-Office (Digital Payments) Challenge

Digital payments may be in the crosshairs of treasury professionals, banks and FinTechs, but the journey to truly transform business payments is fraught with challenges.

In a video interview with PYMNTS, Bill Wardwell, VP of strategy at Bottomline Technologies, said the advent of open banking and “the narrative that has created will have effects for the foreseeable future.” He said the payments industry will see more banks and technology companies working together — and a key area to watch is whether the new payment methods that have been introduced for business payments gain the scale and adoption they need to reach critical mass. He said the transition from physical cash, check and card to more digital means is accelerating.

“Businesses and consumers seem open to accepting the digital-first model,” he told PYMNTS, and “over the next couple of years we can finally see the majority of payments transactions shift to digital mediums.”

Easier said than done, of course, as the executive noted that challenges and barriers exist to such a shift, tied in part to back office functions and systems, which can be outdated and disjointed.

Connectivity

In one recent survey, 69 percent of organizations cited lack of integration between electronic payments and accounting systems as a leading barrier to electronic payments adoption.

Payments solutions potentially need to be connected with dozens — or perhaps even hundreds — of different enterprise resource planning (ERP) systems. The payment capabilities of ERPs themselves can be complex, and while there are some standards in the industry, variations do indeed exist.

“We are seeing some progress in this space where ERPs are now recognizing the fact that they need to provide payment capabilities that are not necessarily native in their systems and they are actively partnering with banks and FinTechs to do so,” Wardwell said. And, he added, the banks and FinTechs understand the value of providing plug-and-play connectivity to ERP and accounting systems to add payments capabilities.

User Experience

There even has been fragmentation in the payments solutions themselves, noted Wardwell, who said that “historically, solutions have been created to solve the needs of one party in the payments transaction,” and those creating solutions “haven’t necessarily thought about the needs of all parties within that transaction.” Some solutions have focused on buyers, others on suppliers.

What’s needed now is a holistic approach, he said.

Payment solutions providers, to be successful, need to broaden their approach as they deliver new products and services to the market. He said Bottomline’s own end customers seem most receptive to receiving a broad set of solutions delivered in one package from a single provider as opposed to working with individual technology firms focused on delivering best-of-breed solutions. “This does not mean that we don’t want to focus on delivering the best products and delivering innovation,” he said of solutions providers in general, “but it does show that we need to deliver payments capabilities to help a business manage a broad set of their payment needs — to manage their invoices, manage multiple payment types, and manage how they receive payments.”

Fraud

Industry research shows time and time again that treasury professionals’ top payments-related concerns center on payments fraud, he said. The increased corporate focus on security creates an opportunity for banks and FinTechs to deliver technology that can help customers mitigate fraud risk within treasury and payment operations.

Banks and FinTechs can leverage technology, in fact, to stop fraud before it happens. Data tied to where and when payments are being made, to whom and for how much, can be gathered and scrutinized in the fight against fraud. The combination of data, machine learning, and predictive analytics, he told PYMNTS, can help banks not only better protect their corporate customers, but also help them better understand their customers and continuously improve engagement with them.

FinTech Firms And Banks Solving Challenges Together

It’s important that FinTech firms understand banks want to own their customer relationship and look at their solutions as ways to help them create differentiation, said Wardwell. That mindset must be pervasive across all use cases  — whether it’s a corporate looking to make a payment to a consumer, looking to connect to a real-time payments scheme or make payments across borders.

When it comes to choosing solutions providers, said the executive, the quality of technology on offer matters — but other key considerations arise and must be considered. He pointed to the importance of finding providers who have “a relentless focus on innovation” and who “can move fast enough to deliver for their customers.”