Corporates Compile Their Payments Innovation Wish Lists

Corporate decision-makers are seeing more choices in technology and services when it comes to the ways they pay suppliers, employees and business partners. However, these professionals have their own ideas about where corporate payments innovation should be headed.

A new report from BNY Mellon, “The Future of Payments: A Corporate Perspective,” surveyed a few corporate clients of the institutions’ Treasury Services unit. It’s important to note that only 55 professionals were surveyed. However, despite the limited reach of the research, those corporate responses do offer insight into how they’re preparing for the future of business payments.

BNY Mellon also interviewed a range of corporate payment experts for its report to gain deeper insight into the factors driving survey responses. Put simply, the vast majority of businesses are expecting the digitization of B2B payments to impact their firms in the coming three years. Once payments are moved away from checks, though, where should they go — and why?

The survey results and commentary suggested corporates need efficiency and reliability more than other benefits of electronic payment rails. Firms are currently struggling with a lack of data attached to transactions, and are readying for industry disruption from real-time payments, tokenization, cross-border payment improvements and blockchain, to name a few.

“Payment technologies such as application programming interface [API], robotics, artificial intelligence [AI] and blockchain/distributed ledger are promising further efficiencies, streamlined capabilities and cost savings that aim to speed payment operations,” said BNY Mellon Treasury Services Director and Product Line Manager for Immediate Payments Carl Slabicki in a statement.

While there is significant opportunity in payments innovation for corporates, some of the key challenges ahead involve the complexities of transforming processes that currently operate on legacy infrastructures across borders and within siloed systems.

“The sheer number of new options creates confusion for practitioners,” BNY Mellon concluded in its report. “While many are closely following industry advancements, the need for guidance around what the many options mean for their particular payments circumstance is crucial.”

Corporates should work with their payment service providers (PSPs) to get educated on their options, receive guidance when upgrading infrastructures, and ready themselves for APIs to transform their ability to connect and communicate within and outside of the enterprise.

PYMNTS addresses below some of the key data points BNY Mellon produced from its survey, which may offer a glimpse into the strategies corporates are taking to ready for significant payments disruption.

Fifty-four percent of corporates ranked payments reliability as the highest area for possible improvement, more so than security or the ability for a payment to include more information, which came in second and third place, respectively. Researchers at BNY Mellon noted that professionals are seeking greater transparency and reliability in both their domestic and cross-border transactions to ensure accuracy and clearance. Traditional financial institutions (FIs) were perceived as having acceptable levels of reliability in their payment services. However, as new technologies are introduced, corporates want that reliability to be maintained, if not enhanced.

Twenty-nine percent of professionals said real-time payments will have a very high impact on their firms in the next three years. Since it’s not the area of payments expected to have the biggest impact (that ranking goes to moving vendor payments from check to electronic), such a high ranking for faster payments technology may come as a surprise, considering the uncertainty around how corporates would adopt such tools. Analysis suggests that executives are pushing for faster internal payments and exploring how the innovation would affect their credit management strategies. Eleven percent of respondents have already said they are ready to implement real-time payments today.

Seventy-seven percent of survey respondents said payments innovation will have a significant impact on risk mitigation, making reduced risk the greatest benefit of emerging payment solutions. BNY Mellon pointed to recent spikes in cybersecurity concerns as a key motivator behind the statistic, as fraudsters begin to advance their tactics and challenge banks’ existing fraud prevention measures.

Forty-two percent of firms said platform support will be essential to driving payment improvements within their enterprises. That means ERP platforms, treasury solutions and other internal payment systems must be supportive of any changes made. This factor was ranked above the need to re-engineer internal processes to boost automation (34 percent said this is most necessary), as well as the need to standardize payments and messaging formats across country infrastructures and banking systems (24 percent).