Businesses want a frictionless and Uber-like payment experience, but delivering that can be challenging due to security and compliance issues, says Shelly Swanback, Western Union’s president of product platform. In this month’s FI’s Guide To Modernizing Digital Payments, Swanback discusses how integrating a cloud-based infrastructure along with use of automated systems can help strike a balance between these competing needs.
Digital payments have become commonplace for businesses and individuals alike, with the global payments market expected to be valued at $6.7 trillion by 2023.
Along with this surge in digital payments’ volume has come a growing demand for seamless payment experiences. Customers expect payments to be as fast and friction-free as any other part of their digital lives, and providers are faced with the challenge of meeting this expectation while also ensuring that payments are secure and compliant with regulatory requirements.
“Everybody likes to talk about the Uber effect, how when [you are] in an Uber and realize that the payment is just instant, you sort of start expecting that in all parts of your life,” said Shelly Swanback, president of product and platform at Western Union.
Swanback talked with PYMNTS about how the use of automation and a cloud-based infrastructure can help financial institutions (FIs) deliver an Uber-like experience for B2B payments.
Hurdles Facing Business Payments
The growing expectations regarding the ease of use and seamlessness of payment methods apply not only to consumers but also to business customers, with business payment processes increasingly being held to the same standards as those of consumer-facing payment methods such as Venmo or Zelle.
“Customers have really come to expect full transparency, instant access and gratification, and a seamless experience for payments, just like they expect in every digital experience of their lives,” Swanback explained. “That goes not just for consumers, but for small and medium businesses as well.”
Delivering on those expectations can be a double-edged sword, however. Offering a secure payment experience requires rigorous authentication or time-consuming behind-the-scenes security checks, which can often conflict with customers’ collective desire for an Uber-like frictionless experience. FIs must also ensure that the transaction is compliant with regulatory requirements.
“Compliance and privacy regulations aren’t necessarily getting easier — in many cases, [the process is] getting more complex, and it’s also expensive,” Swanback said. “Being able to stay compliant, deal with privacy, deal with security and do that in a cost-effective way will continue to be a challenge.”
Further raising customer expectations in the payments industry is the multitude of new providers, many of which are digital-native and do not have the legacy systems baggage of more established players. Many of these companies, although newcomers to payments, are well-known in the technology world, further driving customer expectations for speed and ease of use.
“Every payment player is trying to expand its business in different directions, entering new spaces and really trying to figure out how to leverage or explore the strategic advantage,” Swanback said. “In many cases, we have non-payment players entering the payment industry, and this is causing [a] pretty big disruption to the economics of particular payment types or use cases.”
This is where relying on a cloud-based infrastructure can help.
How Cloud Innovations Augment Business Payments
Cloud computing technology can help FIs take a significant step toward meeting customer expectations for B2B payments without compromising security, said Swanback. It allows providers to pivot quickly to meet varying demands without needing to undergo extensive software refits for each new development.
“The promise of [the] cloud is really about flexibility and scale,” she explained. “The ‘plug-and-play’ applications allow you to make complete business model pivots and let you identify and go after those new opportunities.”
Automating fraud detection, meanwhile, can help provide a seamless yet secure B2B payments experience. Western Union, for one, leverages advanced artificial intelligence (AI)-powered analytics systems to prevent fraud on the back end without inconveniencing its corporate customers.
“It’s getting more sophisticated in terms of using more advanced artificial intelligence, machine learning and the like, particularly in the compliance and product risks space,” said Swanback. “We have literally thousands of rules that we’re looking at in each transaction on a real-time basis to help identify potential fraudulent transactions.”
These systems not only help deliver a more convenient user experience but also significantly improve the operating efficiencies of the providers that deploy them. Swanback noted that automation has greatly accelerated several day-to-day tasks in addition to fraud prevention, allowing the provider to reduce its overhead.
“Being able to automate routine tasks that are done every day is absolutely an efficiency play,” she said. “Automating things like reconciliations …[and] processes to identify potential errors and fraudulent transactions are big efficiency plays for our back office.”
Reducing overhead and improving customer-facing processes in B2B payments through cloud computing and automation may feel intimidating for established players, but they have become indispensable to gaining a competitive edge in the space.
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