Trends in the payment domain demand a new, adapted business model. Making the right choices can benefit all parties involved; you, clients and banks. The result: quality (process control) improves, costs reduce, and risks are more manageable.
Six trends in payment traffic for a better business model:
The lines are blurring and it is becoming increasingly easy to organise payment traffic centrally, regardless of which banks and countries are involved, due to standardisation of formats (ISO20022), instruments (SEPA) and bank connectivity (SWIFT, EBICS). This is bringing about a reduction in costs.
Whereas processes were linked to paper documents in the past, there are more and more solutions on the market for digitising these paper processes. Examples of this ‘drive-to-digital’ include: electronic signatures, eID, electronic mandates, electronic means of opening/changing/closing bank accounts (eBAM), as well as OCR applications to digitise information on paper for follow up processes (amongst others, invoices, letters, etc.).
Companies are increasingly trying to put their clients ‘in the driving seat’ via self-service portals. For example, there are insurers and utility providers that offer the option of choosing direct debit payment dates, skipping a direct debit payment for a month, or that encourage customers to amend information (name and address details, bank account, etc.) directly online via their ‘my domain’.
Greater role for supervisory bodies
Whether it concerns banks, insurers, payment service providers, corporates, or parties that provide general services, all are facing increased scrutiny from ‘supervisory bodies’ and related legislation and regulations. Measures to prevent money laundering and the financing of terrorism and the requirement to report information about American clients (FATCA) for example, demand changes to process and system design. It is essential that process design is set up in such a way that it is fully ‘auditable’ and equipped with the appropriate ‘controls’ to manage relevant risks.
The focus on designing processes in a way that limits loss and ensures checks are ‘risk-based’ so that only those exceptions worth flagging are picked up means that capacity is used far more effectively. The process of automating a large proportion of essential checks on payment orders means the time that still needs to be spent on these payments can be reduced considerably. The trend towards more and more STP processes is also bolstered by methodologies such as Lean/Six Sigma, which highlights the client value of each process step thanks to a different perspective of processes.
Access to banks is improving
The last important trend is that more and more banks are making it possible to arrange initiation of payment orders, as well as receipt of bank statements, electronically outside of the specific Electronic Banking channel via direct (SWIFT, EBICS, FTP) connections. Changes in respect of Access-to-the-Account in the new European legislation in the Payments Service Directive II underscore this development.