In the post-COVID world, corporates are faced with what should be an easy decision: creating better value for the organization, speeding time to new markets and creating new business models.
AWS Global Head of Institutional Payments Nilesh Dusane and FIS General Manager of Enterprise Payments Rijuta Jain told PYMNTS’ Karen Webster that treasury services are key to realizing these strategic goals, as the surging tide of digital payments demands they find new operating efficiencies while controlling costs.
That’s no easy task, given the fragmentation that still exists on the institutional side of payments.
The end-to-end experience of initiating a transaction or simply getting the status of a payment is rife with friction. Companies rely on enterprise resource planning (ERP) systems to send payments, and those systems need to be tightly integrated with banking relationships (and vice versa). That’s not always the case.
“If there’s a failure in the payment process because of incorrect information or bad data,” said Dusane, “there are instances where corporates have to go through manual processes to figure out why the payment failed.”
Failed or delayed payments cloud cash flow visibility, and the lack of visibility hampers chief financial officers and treasurers as they try to navigate the stormy seas of volatile interest and exchange rates, which in turn negatively impact liquidity.
However, as Jain noted, “technology is helping drive efficiencies and integration — and standardization — across industries.” It’s also helping weave those bank-corporate relationships ever more tightly.
“It all starts with the business case, but bringing operational efficiencies to your payment processes reduces your cost of doing business,” Dusane said.
We’re evolving into a platform economy, where integrated solutions made available to banks and corporates — and through the joint efforts of AWS and FIS — can centralize data and harness it into actionable insights, Jain said.
The partnership takes care of the heavy lifting tied to cash flow management, allowing firms to concentrate on their key and core efficiencies, while offering embedded finance, without having to become payments experts themselves, Dusane said.
“If you’re a corporate in the telecom industry, they’d rather focus on the telecom part of their business, not being a payments company … and because of that, they’re looking at different things to improve their payments operations,” he said.
The auto industry is an example, he said. A few years ago, it was impossible to buy a car online. Now a vehicle can be browsed for, bought and delivered to one’s driveway with a few clicks of a button.
“Corporates and retailers want to create their own platforms out of products, which in many cases involves going direct to the consumer if they don’t already,” Dusane said.
As business models evolve and expand, the geographic footprints of companies and banks in many cases are also expanding, Dusane and Jain said. Thus, the need to connect to banking relationships in those jurisdictions remains critical, especially when tapping into instant payments. As it stands now, many countries have differing cut-off times governing payment rails, and insight into when money will arrive in, say, Japan might be more opaque than many would like.
“When you consider technology and how you would want to centralize all this, the corporates need to place emphasis on systems” that support a platform approach, Jain said. That considers all of the different stages of money in and money out through a holistic approach.
FIS, for example, has treasury and payments offerings that support and foster that end-to-end visibility, she said.
The joint efforts are modernizing what it means to be a payments hub, Jain and Dusan said.
The concept of the hub is not new, and previous efforts by other firms have failed to establish a single point of connection that ties payments, corporates and banks together, Webster said.
However, with the help of AWS, the shift to the cloud has transformed hubs into “powerful, nimble and elastic tools that can scale up and down, on-demand, to process high volume transactions,” Jain said.
The power of funneling global payments through cloud-native technology on offer from technology partners with microservices architecture enables the processing of 2 million single direct debit files in under an hour — and there’s still server capacity left over.
“That’s a high-performance and cost-efficient way to process your payments,” Jain said.
Dusane said: “This becomes an easy conversation where you won’t have to wait for, acquire or procure hardware. All you have to decide as a corporate is, ‘I want to go live with my business in a particular country. Here’s what it will take for me to do from a business standpoint to build a business case’ … You can roll out a pilot, see how it goes, and scale up or down depending on your findings.”
As platforms drive efficiencies, streamlining payments via integrated services into accounts payable and procurement software, “there’s the cooperation that supports the money in and money out … under one umbrella, and one platform that drives complete visibility into your cash pool,” Jain said.
FIS and AWS are changing the face of bank connectivity, which makes the modern payments hub transformational. In the past, that connectivity was manual, marked by one-to-one connections and several changes in message formatting. The emergence of ISO 20022 is moving the industry to a standard messaging exchange across the globe no matter if the payments are occurring with credit cards or mobile wallets, Jain said.
In terms of the technology itself, the need to run “parallel stacks” to be paid — and to pay suppliers — is eliminated, collapsed into one enterprise-wide payment solution that can be easily managed from within the enterprise, Dusane said.
“We’re able to automate a lot of those integration processes that were done manually in the past,” Jain said.
No conversation about the transformation of treasury services would be complete without discussion of artificial intelligence (AI) and how the millions of terabytes of data created each day can be harnessed and distilled into actionable insights.
“On the corporate side, from the banks, even on the retail consumer side, there’s tons and tons of data,” Dusane said, adding that AWS collects and ensures that data is used in regulatory-compliant ways.
Although AI has been around for decades, within consumer-facing applications, we’re seeing the emergence of generative AI in payment processes to determine which payment routes and rails will be most efficient.
“The same thing goes in reverse as well,” Dusane said, adding that “if you want to know the status of a payment or how long the payment will take to complete, there are ways in which AI and machine learning can be used to do that.”
AI, used to reconcile information between accounts payable and accounts receivable departments (while shortening the cash flow cycle), can extend the duration of cash flow forecasting from weeks to months, which improves liquidity and access to financing options.
AI is a boon for fraud and risk management, detecting anomalous patterns to identify suspicious behaviors, Dusane and Jain said.
“We work with a technology platform that consolidates data across multiple banks, across multiple corporates to be able to alert us in real time if there is a red flag,” Jain said.
“The real success we have seen … is giving [corporates] a solid business case and cost efficiencies of running their day-to-day operations,” she told Webster. “…The more that these organizations think about their own journeys with payments, the more we can help them streamline those journeys.”
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