How an Integrated Payment System can transform Accounts Payable to help banks and customers

August 14, 2020

Terra-forming the payment landscape within accounts payable to keep pace with the recent accelerated technological developments in the financial industry hasn’t been easy. Why? Because despite their flaws, legacy systems and processes still get the job done. But with the prevalent environment, dallying might give your competition the chance to get a step ahead in the game. How? By using an integrated payment system.

The existing Accounts Payable scenario.

In the US, despite the advent of the Automated Clearing House (ACH) and the Real Time Gross Settlement (RTGS) Systems, payments have been slow in their path to evolution, desperate to keep up with the metamorphosing digital payments era. And although antiquated payment approaches such as the physical checks are on a steady decline, they still see considerable usage.

The convoluted legacy payment infrastructure within a lot of banks also inadvertently adds to an already troubling problem. Complicated due to interconnected fragments such as payment types, currencies and acquired Clearing and Settlement Mechanisms (CSM), the payment landscape within banks is often tethered by its age-old legacy systems. Such a legacy payment infrastructure often limits a bank’s potential to offer a better and faster accounts payable customer experience.

Quite evidently, the amalgamation of such technological building blocks has created bottlenecks for banks in the form of spaghetti architecture.

Disadvantages of the obsolete spaghetti architecture.

With a global pandemic in play, banks and customers alike have been forced to transition to a digital model, accelerating the rate of digital adoption within the financial industry. Despite the costs associated with educating the customers, at Go-Live Faster, we believe that segueing away from the traditional to the digital will ultimately lead to a better customer experience.

As a result, complications arising from legacy payment systems have begun to stimulate a larger number of banks towards an integrated payment system. Among the several problems observed within the existing payment legacy systems, we have taken the liberty to highlight a few of the most important ones:

  1. Reduced transparency in payment processes.
  2. Technical breakdowns, which create further payment related problems.
  3. Longer integration time frames birthed from legacy systems with obsolete enhancements.
  4. The need to handle multiple file formats.
  5. An unnecessarily complicated and multi-layered payment process resulting in slower transactions and reduced operational efficiency.
Such roadblocks birth the need to optimize the existing technology by modernizing the accounts payable process through an integrated payment system.

What is an Integrated Payment System?

What are Integrated Payments

A treasury management solution - that is what an integrated payment system effectively is. It can help streamline payment processes, reduce costs and improve operational efficiency both for a bank and its customers.

Integrated Payables are the back-end to the Accounts Payable. Through an Integrated Payments hub, banks can create a payment platform that can liaise with multiple systems. Commercial and retail banks can effectively build an omni-channel connection capable of breaking past bottlenecks presented by their legacy infrastructure.

How can an Integrated Payment System benefit a bank?

Aside from the improved operational efficiency and reduced operating expenses in the entire account payable process, some of the other key advantages of incorporating integrated payment include:

  1. Increased payment transparency.
  2. Higher capabilities to handle a growing volume of payments.
  3. An overhaul of the existing payment system, which replaces legacy infrastructure.
  4. Aggregation of data (that can be used for analytics).
  5. An ease in the ability to integrate newer offerings

How can an Integrated Payment System benefit a bank’s customers?

A growing cadre of businesses are looking to improve their entire accounts payable process. Offering such a disruptive accounts payable automation enables banks to provide a holistic solution that caters to the entire accounts payable process and addresses a broad range of customer pain points such as:

  1. Time and Cost saving - By providing increased transparency in payments, customers spend less time executing check runs, printing and mailing. It cuts down on the time wasted in administering processes. This translates into cost savings in the form of an efficient payment process.
  2. Reduced Risk of Fraud - Most Integrated Payment systems are PA-DSS (Payment Application Data Security Standard) certified. This means that they meet the Payment Card Industry Security Standards Council’s requirements.
  3. Greater Accuracy - By automating the accounts payable process, integrated payments eliminate human error from the equation. Fewer errors equates to fewer losses.
  4. Increased cash flow - By leveraging automation in the accounts payable process, banks can reduce the payments processing turnaround. This will give their customers the opportunity to take advantage of supplier discounts.

Benefits of Integrated payments to bank customers

Rather than remaining solely as a solution provider, with integrated payments, commercial and retail banks have the opportunity to become strategic partners for their customers. Providing an end-to-end accounts payable solution will drive customer loyalty. It will present a chance to banks to differentiate themselves from their competition.

When other banks approach your customers, the switching costs associated with going back to a manual accounts payable will likely deter your customers from making the switch.

Next Steps to an Integrated Payment System!

The advent of the Integrated Payables system has been a game changer for the financial industry. It is the Holy Grail that can modernize a bank’s payment infrastructure and benefit both a bank and its customers.

But tighter budgets, domain knowledge and timelines within the prevalent market scenario can make implementing integrated payments a daunting task. One way of circumventing these challenges is by partnering with a specialist such as Go-Live Faster. Go-Live Faster is a global fintech solutions firm that has helped multiple banks accelerate their product releases by making technology implementations predictable.

Our analysts understand the risks that could derail your treasury management system implementations. They are in a position to help you avoid those pitfalls, all while ensuring that you quite literally Go-Live Faster.

If you are looking for someone who can help you accelerate your time to market on product releases look no further. Get in touch with us today to explore our scientific and analytical reports derived from our proprietary technology!

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