A shift is under way in how banks and other corporations adopt and apply new technologies. For the payments industry, ease of integration has become a primary focus and serves as both a driver and limiter of innovation.
We surveyed roughly 160 treasury and banking executives in 2019 on payment trends and found that nearly two-thirds of them believe that the shift to artificial intelligence (AI) is happening, and that implementing it could deliver greater efficiency, automation of manual processes and a reduction in payment fraud. If leveraging burgeoning technologies like AI is top of mind for these executives, and the benefits are numerous and clear, what stands in the way of actually doing it?
Integration was the biggest barrier to adoption identified, even ahead of regulatory/legal uncertainty.
Nearly half of respondents identified integration into existing technology as the biggest issue preventing greater adoption of AI in banking and business payments, and 40 percent said accounting and enterprise resource planning (ERP) system integration is their primary concern with adoption of corporate real-time payments.
If these findings seem surprising, they shouldn’t be. Plagued for decades by the manual tasks associated with accessing, reconciling and compiling data across multiple ERP/accounting systems, bank portals, and other payment applications, finance professionals have good reason to worry about how any technology or payment model will integrate with their existing environment. And as their businesses grow geographically or through acquisitions, finance and treasury professionals face a proliferation of bank relationships and disparate systems, which further complicate their daily cash management and payment tasks.
As banks and fintechs increasingly work together, both need to ensure they are aligned on clearly defining what levels of integration customers need, the associated technical requirements and ultimately, the approach to solving. Given the importance that corporations place on easy integration of new solutions into their existing environment, banks should not be surprised if their corporate customers choose to place ease of integration above bank loyalty, and work directly with whichever solution provider can solve their integration challenges in the most straightforward way.
Solution providers must first understand the customer base they seek to serve. Which ERP systems and payment or other financial applications are commonly used? How do these vary by industry or customer size? After truly understanding their target customers, providers must design solutions that easily integrate with customers’ commonly used systems and banks. Solution design should consider a range of factors, including user experience, how easily financial and payment-related data can be shared across systems, and how nimbly new technologies can be embedded later on to ensure the solution is future-proof.
As ERPs are an organization’s primary source of truth, connectivity to these systems is especially important. For their own part, ERP providers now recognize that their customers may require more advanced payment capabilities that are not necessarily native in their systems, and these providers are actively partnering with banks and fintechs to meet those needs. This increasing collaboration ultimately bodes well for ease of use for end users.
There are various technology approaches to actually making integration happen. Common examples include APIs and ERP-specific connectors, which can sometimes be API-based. APIs can create plug-and-play connectivity between banking platforms, ERPs, and other core business technologies or financial applications, creating ultimate ease of adoption and ongoing use.
Open banking and the dialogue it has created around access to technology is further good news for anyone concerned about technology integration. Open banking will force a focus on building solutions that are not only innovative, but easy to implement and use. Recent headlines in the B2B payment space also emphasize the focus on comprehensive vs. niche solutions. Fintechs that have historically targeted a specific function, such as accounts payable or accounts receivable, are beginning to realize that their customers want holistic solutions that can be leveraged across the finance, treasury and accounting functions in a single implementation.
Focusing on ease of integration will not only enable adoption of innovative payments technologies, it will also provide business users with improved visibility and access to financial data and a better user experience. This ultimately frees up treasury and payments professionals to focus on the activities that enhance their organization’s financial health and increase its competitive edge.
Bill Wardwell leads the product and business strategies for the Paymode-X Business Solutions line of business at Bottomline Technologies.
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