The Future of Treasury Payments: AFP Panel Discussion

INTRO  0:08 

Welcome to The Treasury Update Podcast presented by Strategic Treasurer, your source for interesting treasury news, analysis, and insights in your car at the gym, or wherever you decide to tune in. On this special episode of The Treasury Update Podcast, Strategic Treasurer features as 2021 FinTech hotseat discussion from the AFP conference, moderator Uma Wilson, Executive Vice President, Chief Information Product Officer of UMB Bank, experts from technology firms, banks, and consultants in the hot seat to answer questions on the future of payments. Topics of discussion center around speed, globalization, digitization, regulations, and more. Listen into this dynamic discussion about the ideas and developments impacting payments.

Uma Wilson  1:02 

I’ll do a quick introduction then I am going to have our panelists that are in hot seat, give a quick introduction and their company and about what they do at their firm. So, I’m Uma Wilson, I’m with UMB bank. We are based out of Kansas City, Missouri. We are about $38 billion in asset sites. I’m the Chief Information and product officers. Thanks for the opportunity and looking forward to it. So, Ben…

Ben Bianchino  1:32 

Ben Bianchino, Director at Coupa Pay, which is obviously a part of Coupa, based in San Mateo, business spend management company, also based in Kansas City. Looking forward to the discussion today.

Kristin Robertson  1:44 

Hi there. I’m Kristin Robertson. I’m the Director of the account management team for payments and corporate cash at Finastra. Before Finastra, I did come from Bottomline technologies where I spent 25 years as a strategic director selling into the world’s largest NBFIs and corporate, so I have familiarity with both what the banking needs are as well as the corporate needs are for payments.

Jeff Feuerstein  2:05 

The morning everyone my name is Jeff Feuerstein with Bottomline technologies. I lead our Paymode- X product team so Paymode-X is a full invoice to pay solution, helps companies pay and get paid.

Craig Jeffery  2:18 

Craig Jeffrey with Strategic Treasurer, I’m the Managing Partner, our firm does consulting and advisory services to banks, corporations and FinTech’s. We also have an Inform arm where we publish a tremendous amount of material, we have a research part of the business we do 12 annual surveys. Part of our media operation we acquired CTM file, so if you have your phones and you’re open to LinkedIn, please follow CTM file.com.

Uma Wilson  2:46 

Well, thank you. So, we have some questions prepared. So, I’ll just start with the very first question, which is what is the guidance or feedback you would give to corporates or banks or think that they should be focused on for the next coming year or two? So, I know that could be a lengthy, kind of a loaded question. The best way I would ask is if you get give that in three-word choices, what comes top of your mind for corporates and or banks?

Ben Bianchino  3:08 

I would say automation, enablement, and directory.

Kristin Robertson  3:15 

I would say strategic partnerships is how you’ll innovate, win, and grow on both sides of the equation.

Jeff Feuerstein  3:21 

Security, data, interoperability.

Craig Jeffery  3:27 

Shifted the three phrases if I can think of them as the end-to-end, security, and API’s.

Uma Wilson  3:33 

For the next question. I would say: What are the hot buttons with payments? What is changing most significantly? This industry I think we’ve talked about this in our ecosystem, we add more payment options. We don’t take anything out of rotation and the beauty about our framework as well as we have opportunity for every new player and the new entry to have a space in the segment, which is not a bad thing. It actually provides more innovation. But given some of you guys coming from some payment stream that has been relatively young in or entry into the market. One of the things that comes to top of your mind when it talks about payments and what are the hot buttons around that?

Ben Bianchino  3:36 

One of the top ones I know for us is supplier adaption of what we offer. Right? And that’s at the top of the minds of our customers as well. Obviously, they have lots of options. They have lots of people, some of us on the stage, right, asking them to take payments in different ways, asking them to look at POs in different ways, send invoices in different ways.

Kristin Robertson  4:35 

I think you raise a good point I think you need to first we must support the traditional payment types that are always been in the marketplace. But with COVID and the pandemic it’s really amplified the move towards change and innovation in the marketplace on both sides of the equation. And there’s so many market disruptions going on from new and innovative FinTechs and really consumers in businesses looking to change the way in which they do business. So, really embracing the innovation, looking at the new payment types, making it easier for your customers to consume your products by having the right partnerships with your banks.

Jeff Feuerstein  5:11 

I think first of all, like the automation, what I would call choice for different payment types. It’s something that you gotta have open for both the businesses that are doing the paying and the businesses that are receiving the payments, right? So, enabling that choice is critical and it helps with the other things that make money and data move which is payment timing and discounting and financing etc. The other I think really big hot button is security. There’s a I would say a myth that payments are naturally secure. And that’s not necessarily true. There’s a feeling I would say in the market that there’s an expectation certainly more consumer lives as well as in businesses, that they are secured and that they’re always perfect. And there’s a ton of work that makes that happen.

Craig Jeffery  5:59 

There’s definitely a disadvantage been at the end and never said any good things, but I would say complexity and transition. Complexity is the there’s new payment types., there’s new systems, there’s new standards, new entirely new payment rails, and that has to be accounted for and that increases the process of exchanging value. So, that’s a massive thing. I’ve heard some of that from everyone so far. The transition part is how do we handle the changes with technology? Everything from API’s to emerging networks and registries to concerns about fraud. I think this transition that the end game is an end-to-end seamless process or straight through processing that’s enriched and fully featured. And that’s a I don’t know if that’s impossible, but it’s that’s the journey that we’re going to tie. Those are the two things I would say.

Uma Wilson  6:48 

Switching gears, a little bit as far as we talked about checks in our industry. We talked about a lot of traditional payments without going into every single payment option. Real-time payments. And other definition when I talk about real-time payments could it’s part of the Clearinghouse Initiative, or the Federal Reserve initiative. So, ton of time the industry is spent, and I know many folks in this panel as well. Your team is spending a ton of time trying to make sure that we are supporting the need that exist. So what is your take on it? What do you think is going to be the success rate on the deployment of the real time payments? There’s so much energy around it, respectfully. Most of the corporates are opportunists. I mean they’re very much looking forward to it but at the same time, the unknown is this going to be something that’s going to take like another 10 to 20 years to see the adoption? What are your thoughts on it? What are you hearing from banks or what are you hearing from corporates?

Kristin Robertson  7:40 

Yeah, you’re absolutely right. There’s a ton of interest in real-time payments. And I think frankly, here in the US, we could perhaps use other countries as a barometer as what to expect. So, you look at today, we’ve got one clearing rail that’s available for consumption, which is the clearing house and said now is currently partnered with folks like Finastra and a pilot program and is coming down the pipes to give both banks an option for how they choose to actually clear real-time payments. What I’m seeing in the banking community is it’s almost at this point of competitive play. There are a lot of their corporates are looking for banking partners to have this rail available to them. So, they’re worried that if they don’t actually start adding this to their portfolio that there could be lost business opportunities as their customers go out periodically in the marketplace and look at what their banks can provide them from an innovation perspective. And they’re now seeing this as a really have to have when they’re ready to consume it. But I think what matters most is trying to figure out from the banking side as well as on the business side. What exactly are the use cases for the outgoing payments incoming is kind of a natural progression. As soon as banks have been on, they start receiving incoming payments, but how do you actually monetize that for your consumers and make it a market differentiator for them? So, it really tends to vary industry to industry, vertical by vertical, so it’s super important to understand from the bank’s perspective, where they want to target and grow their business. And from the business side of it, how could real-time payments make you unique in the marketplace? For example, I talked with a bank yesterday that focuses on education and working with government basically school districts and we talked about using real-time payments potentially to pay their, you know, substitute teachers that come in, so they come in, instead of waiting for a paper check or a payroll run. Imagine if you could differentiate yourself one school district versus another by paying those teachers the same day that they actually show up. That would allow them to maybe prefer coming in for your school versus another if they have a choice. So, that’s just one example. And there’s many more and I think it’s really important to think that through and to make it meaningful. These folks are looking to understand how it would impact them their business and help drive adoption.

Ben Bianchino  9:53 

I’ll take that from a corporate perspective, I think that in business-to-business payments, there’s always going to be some lagging, right, in terms of when you start talking value proposition on real-time payments, mostly because it’s really real-time settlement in the b2b world, right? If you don’t have a PO and invoice matched up, approved, ready to pay, who cares how fast the settlement happens, right, that takes your company 7, 10 days if you’re doing it manually. Are we just putting a Band-Aid on, you know, what’s happening on the front of your process? But I do agree from a b2c perspective or the example that you gave those are huge opportunities. But I think on b2b, we’re really, we got to figure out the front end of the process before there’s like a true need for that real-time settlement is what I would call.

Jeff Feuerstein  10:41 

 I love to comment on like the looking at international markets, right? If you look globally at payments, for a lot of reasons. There’s other markets that have seen same day in real-time, and it’s much more common. If you’ve been to the UK five years ago, even 10 years ago, you had a frictionless experience when you went to checkout for your coffee because you could just happen go 10 years ago, you go to the subway, tap and go and like totally a frictionless experience that like it literally took our country a global pandemic to get contactless terminals in almost every place that you went. Though when on real time in B2B is a little bit of that sort of hygiene if you will, in terms of how we think about payments, gets to this market, right? Because, to me, it’s the right thing to do to have real-time payments. It makes a ton of sense. The actual the data that’s flowing through with what’s on both the request for payment, as well as making the payment are the right things. We just kind of find the use cases that sort of open this up, like today. It’s like, we’re in the world of you used to have to pay for your mobile app to be a solution, right? You paid like your software, and you got like, you know, like if you wanted to get that same software in a mobile app, they charge you for it now you’re like, What are you talking about? It starts on mobile, and then it goes to like to the software. And so, we’re gonna make that transition. Right now, you’re paying for that real-time payment. At some point, we’re gonna realize it’s just hygiene. It’s just the right thing to do and real-time payments are going to grow in B2B, and I think in the B2C as well.

Craig Jeffery  12:16 

Increasingly, no one tolerates delay, everything goes fast. There’s nothing that goes slower. There’s an aspect of on the consumer side, you want everything instant, right? You know, I have an account for my dad’s account was at one bank and my main stuff was at another bank, you need to transfer stuff well wire transfers are pain, writing checks and driving to the bank are trying to get their app working to scan it. That’s so 2005 now it’s, you just Zelle and all of a sudden, it’s like a wire transfer that happens instantly. One point is interesting in this is that on the B2B side, is where is the weakest or the slowest link. You talked about, “Hey, there’s this whole process that’s 15, 18 days, you’re going to speed the last bit up a day or half a day”. That’s a small fraction of it. But at the same point, that whole value chain or time chain has to be reduced and so do we keep working on smaller parts, but speed is one component with the value of information and knowing what goes on is probably more important than you know it’s speed with other things, speed with information, speed with knowledge and awareness and visibility.

Jeff Feuerstein  13:23 

I think that’s a good point. And if you think about you know where we are from like a source to pay or procure to pay process, right, the payment can sometimes be a carrot, right? To get the supplier to change PO and invoice information electronically. Right? So, I think, or I could see RTP in that view from a b2b perspective of tell the supplier, “Hey, listen, we can do real-time payments with you. But this is how you have to exchange information with me. I can’t get a paper invoice from you and still do this”. Like you know, try to do a real-time payment seven days later when I you know, figure out what the payment was for.

Kristin Robertson  14:01 

Well, one thing that no one touched on one more quick point is that operationally it’s a different way of doing business. So, banks are frankly struggling with what does it mean to be 365 days a year 24 by seven whereas you’re accustomed to the operating windows of NACHA or the Federal Reserve System for wires. So, it is in a bank you have to consider the operational dynamics and from a corporate and individual consumer side week back that immediacy. We want to be able to move payments in real-time over the weekends when we choose to do so. But by doing it having the finality of payment there’s also an operational benefit that you’re dealing with any repairs or rejects up front, there’s you’re no longer dealing with knocks returns and frankly, the recourse that you have with traditional ACH. So, it forces you to have better hygiene at the front end of the process and catch things issues frankly before they occur.

Uma Wilson  14:52 

This is not a rapid fire but I’m going to ask if you are a betting person, how long it’s going to take for real-time payments to be successful in the United States. It’s in just one word.

Jeff Feuerstein  15:01 

Define success.

Uma Wilson  15:04 

Adoption, let’s talk about the adoption. Adoption is extremely important. So, that’s why our payment streams never get out of rotation. Right? They all stick around here forever. So, if you want to sit here and say the adoption that’s going to be 50% of US is going to be in real-time payment settlement rather than the traditional checks or ACH or other payments. What would be your guess?

Jeff Feuerstein  15:26 

Total or B2B, B2C total?

Uma Wilson  15:29 

B2B, B2C, just it’s a guess. I’m not going to hold you accountable.

Jeff Feuerstein  15:32 

I mean, they’re gonna say you’re gonna write this down.

Uma Wilson  15:34 

Now I’m gonna write it down. I’m gonna look at the video and write it down. I’m just this is just a curiosity.

Jeff Feuerstein  15:39 

I’m gonna get calls in 2030 years from Uma saying you were wrong.

Uma Wilson  15:43 

I’ll do that to you for sure.

Ben Bianchino  15:45 

I mean, I think five years, 12 years I’m sorry. 12 years.

Kristin Robertson  15:51 

Wow. 12 years, I’d say rapid adoption, six years.

Ben Bianchino  15:56 

I’m gonna say seven years. No reason why I came up with seven years is that seven years ago, approximately checks were somewhere in the high 60% of payments, right and they’re now in the sort of 49% of payments. So, it’s taken quite a long time to get rid of something that most think is an inefficient way to do things.

Craig Jeffery  16:22 

If we’re talking 50% of payments, I’m going with 15 years because everyone will forget YouTube probably won’t exist. This will be gone but…

Uma Wilson  16:29 

Well, thank you. Thank you so much. So that is that is actually a good segue.

Craig Jeffery  16:34 

I shouldn’t have said all that stuff.

[Inaudible talking]

Jeff Feuerstein  16:41 

How long will it take for urgent trade require? Right and I’ve got to do a treasury…. How do I do it without logging on?

Craig Jeffery  16:51 

Someone’s gonna say smart contracts, I’m sure but I’ll let you guys cover that where it’s built in.

Ben Bianchino  16:58 

I mean, I think that’s really more of a banking system question. Right because the banks on either side of that transaction, have to be ready to accept an instant transaction.

Uma Wilson  17:11 

I would say this way in order for the vision of as a treasurer in the division, you want to have an option where you go to your own internal ERP or whatever application you’re using to say I want to send this version wire. This is where the payments stream it’s not really about the banking side. This is about your company and whoever your preferred financial provider doing it through API’s, right, or the Swift messaging, it is not about going into a banking portal, or logging in with those tokens your super-duper safe, four-digit PIN code, and you got to flip it over the debit card and enter the other three-digit super-duper PIN code. It’s all exposed everywhere. So, I would say the best way is API’s. And that was one of the follow up questions I have for the panelists as well. When we talk about real-time payments. We talked about data quite a bit, right? Is data important Absolutely. Who would say data is not important? It is important that the key is which format. There’s ISO 20 or 22. And there is of course, this is not your format, then there’s your format. Then there’s my format that’s but other 1000 formats out there. The question goes is SWIFT, ISO and also the other part is, is this the time for us to talk about blockchain? We never talk about that. But I would say the best way I would answer not trying to avoid it would be an API. So, you would create an API after your approval process is done you will send a message to your financial institution to consume that API, assuming that all the security and everything is considered and go execute that transaction. So, you don’t have to worry about logging in. You don’t need those fancy tokens. You can just put that away, and that’s where the control comes into play.

Kristin Robertson  18:45 

Yeah, I also have something to layer on to that. I think that what I’ve seen a lot of corporates do if you’re a large corporate and you’ve got a significant number of banks. It may make sense for you to look at developing either through a FinTech or a banking partner, basically be your own internal bank or portal. So basically, what that gives you is consistency in things like requests for payments approval workflow, your own internal security and fraud controls. And as Uma then highlighted, having the connectivity to your community of banks is going to be an important piece, whether that’s via API or near real-time batch file interfaces, but they need to be chatty, meaning you send a request for a wire, you’re getting the acknowledgment, you’re then getting the final confirmation with the Fed reference number. And it’s really based upon, frankly, your SLAs with each of your banks. So, you need to know that if you get the wire request over whether it’s via SWIFT or direct connection from your organization, or your FinTechs that you’re getting the service from to your bank, that you will have a certain SLA to get the acknowledgement and then the final fed reference time. In my past life, I used to have corporates that would time it from when they would initiate a wire request to when they get the final fed reference number. And I had some down to two minutes, which I thought was very reasonable. And again, it there’s lots of pieces to the puzzle to streamline that but the end game gives you that again, that consistency, one source for multifactor authentication instead of all the different things were portals.

Craig Jeffery  20:12 

Part of that question is, do you think back let’s say five years and we think four or five years of batch processes for wires or other activity, that there’s some delegation of authority in a company people are making approval on payments, which may be off system may be someone signing a piece of paper after the fact. Right, that happens at all companies, despite what it says in the audit report that occurs. So, there’s this internal audit process, and then at the bank, there’s delegation of authority and rights by people to receive it and then what happens there’s a file a batch file that goes across is controlled by an ID a password and some encryption that set up on the system. So, these two elements aren’t talking. So, if there were something where you could have all the approvals that are tracked and locked in, that the bank season can compare against their lists or delegation of authority matches the permissioning of the bank. Then you have all of that you don’t have tokens, because everything signed, everything’s tracked.

Uma Wilson  21:07 

Can you share your thoughts about ISO 2022 in SWIFT? It took our industry about 10 years, right? It’s still we ended journey in that long marathon that we’re going on with adoption of SWIFT and the ISO side of the equation. So, what are your thoughts? As far as there’s a lot of buzz around blockchain? I’m not talking about Bitcoin. I’m talking about distributed ledger blockchain. Should folks in the room should they be thinking about blockchain rather than SWIFT and ISO because we tend to focus on like the next two years, looking at five to 10 years, is that going to be the new payment mechanism or information we’re going to be exchanging? What are your thoughts on that Craig?

Craig Jeffery  21:45 

So, when you say ISO 2022 and you say SWIFT, I would say what is SWIFT? SWIFT is a network for messaging for payments, there’s tremendous value in the network that will continue. If it was all delivering messages with the old message type, that would be a problem, even if it was just a channel for passing messages, you know, using an ISO 20022 standard. That may not be enough to keep it going. But you know, I think their plans and their development on a payment platform means that APIs won’t necessarily take out SWIFT. They won’t because you can connect to their payment platform with API’s, it creates an integrated experience. So, the power there network 14,000 banks across the globe, representing I forget what percentage of bank capital, it’s huge. And so, the power of the network for SWIFT will change, but it’s also going to be enabled by some of those items. So, when people shift from a terrible standard, like BITU or other ones that were designed well in an area where it cost a million dollars to transfer two bits of data. So, there’s five numbers separated by commas. Well, that’s great. But if you take that and you enrich it in XML, and each number now describes what it is, if that’s all you did, you did almost nothing. So, if you’re a bank, you don’t provide more data or enrich it. You haven’t added value you have a better vehicle, but you left all these containers empty. So, it doesn’t help AP or reconciliation other areas. So, I think that’s really the mix of SWIFT as it makes that change. That’ll help and I think we need to think about that and change.

The blockchain question. Is this an awesome one, like as a product guy, like I love to get into it? Should people be thinking about it? The answer to me is obviously yes, you should be thinking about it. But we need to have more adoption, more standard, because if you’ve got one party in a two-sided network that wants to make payments, you have one hand clapping it’s up to I think, banks, corporates, and just businesses to continue to get educated so that you’re aware of the information and aware of the myths so that we can really accelerate what can enable fast, secure payments with lots of data.

Uma Wilson  23:58 

Thinking about the future and how we want to reshape the way we do payments and commerce, it’s critical. On the topic of blockchain, you actually shared about security when we opened up the discussion. Our security framework in our country is something to be proud of as a financial institutions or FinTechs. We’ve done a good job of layer security. So, we have multiple stops, rather than more cohesive approach. Do you think that in order for us to rip and replace kind of a new security protocol, the new way of thinking is blockchain is going to get us there? Or is that going to be the existing framework, which is going to give us a better security I mean, as a product force, we all love to vision and dream. If you are if you have to dream, what do you think would be the best option for us?

Jeff Feuerstein  24:38 

I’d love to dream. I think there’s a better way than what we’re doing today. Blockchain as a vision to me offers an exciting vision. I don’t know that that’s the end state today. There’s a lot of room for us to grow as an industry in payments to be more secure, faster, provide more visibility into data. What I would say is my seven-year estimate on RTP, I’m going to give it like 15 are watching.

Kristin Robertson  25:03 

Like people hear blockchain they get uncomfortable with it because there’s a lot of known unknowns about it. And frankly, it’s an opportunity and a threat to many of us in this space, which is why so many banks and corporates and FinTechs are looking at what the what blockchain could mean to them. But don’t assume when you say blockchain, that it’s necessarily open to everyone. There’s a lot of folks looking at how do they develop their own blockchain really as a closed offering to a specific subset of folks. And I think that as this industry will have a fiduciary responsibility to make sure that the security is at least equal or better than what they traditionally experienced in the past.

Craig Jeffery  25:42 

I think we are mentally prepared for blockchain and COVID helped us a lot with that. So, you think about signing agreements, this whole print, wet signature, nail it, then it became, “Okay, can we accept a scan yes or no?” And then COVID happen. And we went from 30% of people or I’m making that number up 30% of people accepting agreements that way to everyone uses right signature DocuSign and it has routing and has approval. So, you see all of the document and the activity all the way through to the end, and it’s super easy. It’s in a central spot. You can see the, you know, the authorizations. We were prepared mentally, but are we prepared system wise, I think that’s a core of your question. That’s part of this part of the core, your question to our system support that type of flow? For the most part, it’s no and so that’s another chasm. It’s where we are systems to where we need to be systems, and there’s a jump and that’s a change and we see that in every technology. And I think we see that payments and that’s the hard point that when you said 15 years, that might be a long time to change attack. Mentally, I think we’re really close to that. Technically, no.

Ben Bianchino  26:52 

There’s software tech, there’s infrastructure to provide this you know, we were talking about like, hey, go the banking systems right from this right and all this complexity for sure. But back to your question, like, should people be thinking about it? Like, where should we be? Absolutely. Like, let’s, you know, as much as we all can get informed. I feel like that answer is yes.

Uma Wilson  27:11 

Directory. We have a race for directory, right? There are a lot of directories out there. It’s not that it’s a bad thing. That’s fantastic. Because that facilitates and fosters, faster payment settlement and great way to bring two parties together. So that’s fantastic. At the same time, now we’ve also created this bifurcation of everyone have their own directory, going back to Christin made a point as an industry if we don’t have one unified way to make a fast progress towards it. It’s going to be a struggle in the long run. So, what are your thoughts about directory because I know there’s the Coupa, and that’s also Paymod-X within Bottomline. What are your thoughts about it in directory?

Ben Bianchino   27:48 

Yeah, the question directory is what is it a directory? Right? Like is it just suppliers, is it DMV type information? Is it payment information is it all of the above? I tend to trend towards it needs to be all of the above, we don’t have all that information on every one of those suppliers. That’s for sure. However, that’s the way this industry if you’re not collecting all that information, you really know that supplier, are they really in your network? If you don’t have that, and as far as you’re thinking about the bigger picture, some sort of standard. I think that would be well however, from a competitive landscape, right in America, very good at not mandate, things like that, that allows for some of us to be created and exist. So, how do we balance you know, competitive framework of a country that takes so many great companies with the best thing to do for ease of business?

Jeff Feuerstein 

How do we create the best way for like ease of business? How do we create better experiences? The other thing you said Ben, right is my words are like there’s a land grab for the network’s payment networks are going to continue to exist likely trying to create efficiencies and how businesses pay and get paid. The directory business is certainly growing as a standalone entity. You know, my take on that is like, only interoperability. like it’s good, like interoperability is only good for us. Interoperability on the directory itself, is only helpful because if everyone’s participating, everyone else gets a benefit. So, as long as there’s a mutual ecosystem that enables those directories to share information in what I’d call both a public and private way, then let us compete on all the other things.

On the supplier side, you know, they’re obviously running into death by 1000 ports, every system has a portal, right whether it’s AP, whether it’s treasury, like if I’m a supplier, and I have a bunch of customers, how many volumes, but I think the networks that exist today, the more they open up for their suppliers and allow their suppliers to interact with their system, maybe programmatically, instead of via portal. I think those are networks are going to grow organically and the best position to strike. There’s no standard….

Ben Bianchino 

I think about our treasury friend who’s got you know, a bunch of different portals has got to log into right and actually, the more time you think about how do our end-users spend time out of the application the better off our users will be. Why do I need to log into something to like receive funds and data? Right? There are other ways to communicate that and sort of going back to the API question a little bit, but there’s other ways to communicate that information.

Uma Wilson

On the interoperability. I know it’s off script again. It’s easy but the struggle about interoperability, it is extremely, very hard for us to get every party at the table to look at that one unified vision. So, I’m going to ask Craig, given that you work very closely with corporates and engaging and consulting with them, what are your thoughts on interoperability and if you have the power how would you do it?

Craig Jeffery  4:48 

Well, interoperability or embedded finance or open banking, open treasury? I think that’s the power of mean you use the term interoperability. It’s not just I mean, what’s the power of networks? How many how many people are end users are on it and what you can do on it and how you can enrich the experience. And so, networks that can connect to networks will win. I don’t think there’s one central repository for all legal entity, entity identifiers, all the rich information, you said that everything in one that’s never going to be the case. So, interoperability has to succeed, then that’s the end game because if you have four networks and they all connect, that is a magnitude of power, right, the power of networks as it gets bigger, it scales rhythmically.

Kristin Robertson  5:30 

One thing to add, that I’m seeing both on the banking side as well as the corporate is a push towards really open finance orchestration. So, it is kind of layers into the API’s. As well as an expectation of both banks, as well as corporates whether through their treasury workstation or ERP partners to be able to easily plug and play in a competitive marketplace. The Fintechs that make the most sense for their business to that could be multiple different closed networks that we see with like Coupa and Paymode-X. It could also mean other new innovative Fintechs that are coming to the marketplace. That interoperability in the free competition and marketplace is where I think the markets going on both sides of the equation.

Uma Wilson  6:11 

So, first of all, you have the account validation, right? We talked about interoperability, directory, real time payment settlement. Can you just give us your thoughts on account validation? And how important that is?

Kristin Robertson  6:24 

It’s extremely important, frankly, it’s a big play for why corporates choose to go with a system that is a network because frankly, it’s the vendors are really providing a fraud and due diligence aspect on behalf of the corporate where they’re betting that the actual bank account that’s provided is owned by the particular vendor. And it’s a struggle for corporates because they don’t have access necessarily to the same best practices as organizations where that’s what they do as their core business is onboarding vendors and going through the compliance and due diligence checking. So, until there’s a better way to have access to things like early warning, or better things for corporates to consume to get that sort of bank account Validation and ensuring that they’re paying who they believe they’re paying. I think that the value of these closed networks will continue to remain.

Uma Wilson  7:11 

What is a compelling reason for a corporate or end client to partner directly with FinTechs compared to going through their financial institution partnership?

Jeff Feuerstein  7:21 

From a FinTech perspective, one of the differences that I’ve experienced in the last year since joining Bottomline and really focusing on the payment network is every day we are thinking about our product, our solution, our network and improving that experience. And we sell that solution to our customers, and we’re incented every day to make that better. And what I would just share you know versus a bank is that they’ve got lots of different reasons to bring you compelling solutions. We are sometimes one of many of those solutions for that bank to resell. And so, like we like when we’re partnering with our banks that we are on the frontlines, right so we’re helping that bank deliver everything end-to-end because that’s how we are delivering the best experience for our solution, whether it be direct to corporate or in partnership with our bank. And because of that, it’s like the absolute best experience of what we can deliver for Paymod-X which is full invoice to pay. If you automation account, validation security. So, partnering with us means you’re getting like the purest of a mode x versus in some cases, got a reseller example and that bank is trying to resell a product that could be washed a little bit from this period of sets. So that’s not the go to market approach that we take. We’d like that pure sense end-to-end whether it’s through our bank channel partners or even through us direct but that is a risk in terms of getting the best experience.

Kristin Robertson  8:54 

So, I think it’s also super important to understand from a corporates perspective and we also see this on the banking side as well. There’s a big push to try to reduce the number of vendors that you’re partnered with. It’s expensive to onboard a vendor. It’s expensive to do your annual risk reviews of those vendors. And frankly, when you look at some of the FinTech profiles, a lot of them are smaller startup type companies. The benefit of choosing to partner with your bank to consume these new innovative FinTech solution sets is that frankly, you’re relying on the bank to have done the due diligence and to provide you with that extra level of security, that it’s a product that’s been well vetted. And again, you’re consuming it under your bank’s paper. So again, you’re not bringing on the vendor having to maintain the relationship, do your own risk and mitigation of consuming innovative FinTech solutions.

Ben Bianchino  9:42 

There is a, if you will, a stereotype that sort of says like, look, you’ve got to work with FinTechs because they’re, you know, more innovative, their banks are innovative, right, like they’ve got loads of smart people, right? Lots of banks, what banks struggle with that FinTechs offer and it goes back to like that area focus is like the speed. It’s just the speed at which a lot of FinTechs can work versus the speed at which banks can and it goes back. It’s because they’ve got things like compliance. It’s got things like they’ve got regular, a little bit more regulation, that all these things come into play. It’s not that the FinTechs have more and better ideas. It’s that when those ideas come, we can move, and we can enable banks and we can enable corporates to move.

Craig Jeffery  10:25 

Yeah, banks have capital, which is pretty important for businesses and then when they have a, they have long term relationships, so institutionally, they have longer relationships with their customers over long term. And so, it’s very symbiotic. What goes on between those two.

Uma Wilson  10:42 

There’s always this chicken and the egg concept which comes first who’s going to drive innovation so great. What are your thoughts about what can we learn from the consumer payment experience? And the business payments journey? Right? Which is going to be taking the lead, I mean, in the next coming years, is consumer payments is going to be the drivers that’s going to drive innovation, their business is going to be a fast follower, or is that going to be the business that’s going to be driving that password consumers going to hop on it? What are your thoughts on it?

Craig Jeffery  11:09 

I need to set this up, so I don’t get slammed by the other people on the panel or maybe there’ll be some support, but it’s what’s happened so far. Innovation comes from consumer side and bleeds over there’s increased expectation. Now he talked about the speed of payments like two or three years ago, the AFP Pinnacle Award here was given to Uber. As they were banging people four times a day and were like four times a day. How do you why do you need to get paid four times a day? I guess because you can. And you know, you get coffee, you do a ride you get it you can fill up your gas tank, and it’s like okay, that’s interesting. So, we learn about speed and so that that expectation changes. Everything that’s done on the corporate side is more complex or most things are more complex. You have to have segregation of duties, multiple signers. And so, it always seems to lag because we got this layer of security over it. So, the working assumption is it has to be able to provide some feedback loop to the consumer side into the cases can we prove it? Or can we think about it? So, part of it’s a challenge to think about it. And so that’s one way of defending myself in the front but I also want to say a couple things. So, before I get chewed up on this one, but it’s like, there’s they’re ready, they’re gonna go through it. But security is one feature. Corporates are way better on security, because they have larger sums. They’re learning and experience in security better that’s one. The second is the richness of relationships between businesses, the business of business relationship, and their relationships with their banks and the relationship with the FinTechs. There’s more data, there’s more information. If data is king as someone said, here, I can’t remember who said it. She said data is King cash is king. Data is king. There’s a whole bunch of royalty here, the richness of the relationship of the supply chain of supply chain financing and business processes, that extra data, the ability to use and leverage that relationship has to bring about some results that could influence downstream because it’s, you know, it’s like the power of the network. It’s how big it is. There’s an exponential factor. There’s an exponential factor of data and we have to find out what that is. And so, my challenge anybody else who speaks against that is: Are you’re not creative enough?

Jeff Feuerstein  13:23 

You know, on these coasts, you drive down the highways, you put an RFID tag. Now you know, without any toll booths, you can make payments at 65 miles an hour. The friction has totally gone away. The way I think we can learn from that experience is it says a lot about like the trust in what’s happening in the payments. And if you connect some of the things that we’ve been talking about relative to like, the need for directories is because we don’t know who we’re paying, and we have to onboard our vendors and like the reason why I can meet someone today instead of pretty much trust this person, right, the way that corporates do that is usually in days and sometimes in weeks, and maybe even in months, depending on how much compliance there is. The amount of trust that we need to improve and level up in b2b payments comes with, you know, it enables that security and with the right protocols that enables that data to come through. And so, it’s just like, let’s figure out how we make payments 100 miles an hour. And the way we’ll do that, again, is like with trust in the system, with the right moving the data and the money at the same time. Consumer we don’t have the same data problem.

Kristin Robertson  14:39 

I believe that a lot of the innovation comes, frankly, from the consumer side into the business, you know, we expect things to be that 65 miles an hour, real-time when it comes to things even though it may be just appearing to be real-time. So, when you look at things like Venmo I was pulled into that because I’ve got adult children in college who expect you know, you know, cat mom to be on hand to provide cash when needed, right? So that’s that was how I adopted that. But when you look behind the covers, it’s not really real-time behind the covers, right. But I also believe there’s an expectation on the consumer side for banking to be seamless for it to be integrated and for their actual businesses that they’re working with to provide that in conjunction with their banking partners. So, having things like you’re making a big purchase, maybe you’ve got a significant other who wants to buy a John Deere tractor, and they’re able to get, you know, embedded lending as a part of that process where they don’t even know that they’re working directly with John Deere’s bank. That is what you know that the actual individuals are now assuming and expecting from the corporates that they do business with, which is also forcing the banks in the industry to adapt and change.

Craig Jeffery  15:47 

You mentioned the Coupa the end and you know, payment process, all those different steps and that’s that seems to be part of that’s a business process. It’s tracking items. And even if you were to think back on RFID that came from the business side, on shipping containers. And so, if we look at payments is only the last element. You know, so much is going to flow from the consumer side by when we look at it, that’s part of the transacting business and we don’t want to UI we don’t want those other things. Data makes more sense. There’s value transfer. There’s an aspect of that where it’s a richer, more complete, you know, supply chain, supply chain financing settlement. There’s more opportunities that are there and hopefully some of them will flow over I’m trying to figure out that car and toll booth thing to come back at you don’t have don’t have it right.

Uma Wilson  16:39 

Many thanks for the panelists. Thank you so much. Really appreciate it. And many thanks to you guys for joining us this morning as well. Thank you.

OUTRO  16:45 

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