Voice of the Industry

How banks & FIs can overcome digital payments transformation issues through SaaS

Tuesday 22 February 2022 08:33 CET | Editor: Claudia Pincovski | Voice of the industry

Charles de Rougé, Bottomline: Operational efficiency is no longer a nice plan to have, it is what makes the difference between success and failure for a financial institution or a bank

After decades of long and hard technology change programs and projects, the pace and variety of innovation in the financial services industry has drastically increased. With that innovation comes operational challenges. But regardless of the intensity of change, operational efficiency is no longer a nice plan to have, it is what makes the difference between success and failure for a financial institution or a bank. What does that mean in practice for Heads of Operations, Heads of Information Technology, and Chief Operating Officers?

This article addresses identified pain points and proposes a simple, smart, and secure solution: a single, centralised, automated, SaaS platform.

It was supply chain expert Dave Waters who was recently quoted as saying: 'If you can make time to fix problems, you can make time to plan so problems don’t occur.' Arguably that is the main mission of operations executives in the current financial services environment. At a time when a multitude of ‘change requests’ are hitting desks, it is vital for decision-makers within operations to take a step back and ask critical questions before they build, partner or buy anything. In our 2021 global research report, The Future of Competitive Advantage in Payments & Banking, we gained insight into some key pain points for the industry and the operations function in particular.

Which issues are you facing with your current payments infrastructure?

These are serious issues that should make the operations department ‘snap to attention’. They all affect the ability of FIs to connect, control, comply and compete. Let’s use these as a structure to shine more light on the report:

1st – ‘Connect’: 55% of banks and FIs said that adopting new payment rails was their top priority in the next 12 months*.

2nd – ‘Control’: Centralised automation tools that prevent friction and fraud; 38% said that mitigating fraud risk was one of their top priorities over the next 12 months*.

3rd – ‘Comply’: 64% of banks and FIs said that regtech would be more important than ever over the next 12 months*.

4th – ‘Compete’: Data and Analytics: This is an area of concern. When asked which areas of the treasury process are currently automated to their satisfaction, only 30% said cash flow forecasting and 27% liquidity planning.*

5th – ‘Compete’: Innovation - 64% of banks and FIs said digital transformation was the biggest focus for them at the moment, yet 26% said they were skeptical or highly skeptical of their current strategy*.

Click here to find out more detail – How Banks & Financial Institutions Can Leverage Centralised SaaS Platforms & Hybrid Integration Models to Win Competitive Advantage

What is the solution for Heads of Operations & COOs?

With 34% of all corporations originating payments with six or more banks, and 56% using three + currencies, it would seem complexity is unavoidably built into today’s domestic and international payments landscape. The solution lies in the flexibility, simplicity and SaaS-based architecture which has already achieved results at several of Bottomline’s banking customers. In addition to streamlined processes and controls in real-time, it also delivered accurate and compliant audits without any effort or manual intervention.

The real added value from replacing a manually intensive, unstructured payments process with a single, automated solution is the combination of multiple payments rails and networks in a single platform. From Domestic ACH networks to direct Host to Host connections, from urgent instant payment to high volume direct debits that are all processed, monitored, and executed in one place. Additionally, using a SaaS-based solution opens up the potential for efficient and auto-application of payments compliance for any bank. Therefore, there isn’t software or hardware to drain internal IT resources, to exhaust security and compliance skills and stretch capital expenditure in budgets – just the delivery of consistent updates to ensure you stay apace with the market.

The biggest differentiator for SaaS-based platforms is the ability to reduce operational risk and fraud while managing cash balance positions in counterparty and clearing. Using automated workflows ensures that all payments go through the correct internal authorisation process. Payments can then be screened against watchlists, which supports the bank’s anti-money laundering (AML) and financial crime obligations. Once checked, you then have the ability to send each payment via the appropriate payment rail. The result: audit trail, reconciliation, management information and control.

The urgency of SaaS

Financial institutions are going through a major change, and you can be confident that the pace will not abate any time soon. Using a hosted, standard, secure, SaaS-based platform to connect, control, comply and compete, brings enormous long-term strategic possibilities. Firstly, it inspires confidence that your capabilities evolve according to market expectations and the demands of your internal strategy regarding appropriate investment, product development and the generation of new revenue streams.

SaaS is also urgent to address the innovation emerging from new payment rails, Instant Payment schemes, regulations, and deadlines to new agency bank/partnership models. Therefore, the responsibility for operations will need to grow to support interoperability, the shift towards real-time, and ensuring the safest processes. To succeed, you will need to embrace digital transformation, improve operational efficiency, and exceed customer expectations. Jerome Powell, Chair of Board of Governors, Federal Reserve System, stated: 'One of the keys for cross-border moving forward will be both improving the existing system where we can, whilst also evaluating the potential of and the best uses for emerging technologies'.

The Bottomline

There’s a difference between driving innovation and feeling forced to do it. And there’s also a difference between improving the customer experience and being mandated to do it. It will be the FIs that harness innovation and strategic partnerships that will compete to win in 2022.

*2021 global report. Click here to take the benchmarking report yourself and see how you measure up against your competition.

About Charles de Rougé

Charles de Rougé is Head of SaaS Solutions for the Financial Messaging business at Bottomline Technologies that helps banks, financial institutions and large multi-national corporates to pay and get paid in a simple, smart and secure manner. Charles is a payments and connectivity expert, with over 15 years’ experience in Corporate & Transaction Banking, Asset Management, Private Banking, and Treasury Management.


About Bottomline

Bottomline delivers a single SaaS platform for payments, securities, and messaging that helps financial institutions and corporations to achieve lower costs, wider reach, speed-to-market, greater security, and improved risk management. 

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Keywords: banks, financial institutions, digital payments, SaaS, Bottomline Technologies, financial services, supply chain finance, research, report, payments infrastructure, fraud prevention
Categories: Banking & Fintech
Companies: Bottomline
Countries: World
This article is part of category

Banking & Fintech


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