Tuesday, April 14, 2009

NACHA Payments 2009 Highlights

Posted by Mark Brousseau

On the Glenbrook Payments Views Web site, Erin McCune, a partner with Glenbrook (415-441-4840), provides the following highlights, observations, and recurring themes from last week’s NACHA Payments 2009 Conference in Orlando.

The exhibit hall was approximately one half the size of last year and many of the vendors opted for smaller booths than they’ve had in the past. There were relatively few bankers in attendance - travel budgets are tight, as is scrutiny of how TARP funds are spent ("Disney World Boondoggle!" would be bad PR indeed). This was disappointing for the vendors but great from my perspective; they had lots of time to talk to curious consultants from Glenbrook.

Here at Glenbrook we recently coined the term Payments as a Service (PaaS) to describe a growing interest among businesses (billers as well as ecommerce merchants) to outsource their payment processing (incoming and outgoing) and related functions, such as fraud analysis. At Payments 2009 we observed vendors offering PaaS services to billers as well as new capabilities that will enable banks themselves to offer more comprehensive payments support for their corporate customers. For example:

... Fiserv announced a new "convergent" payments solution that enables banks to process ACH and check payments on a common platform, streamlining and combining customer facing capabilities. This has the potential to significantly improve the silo’d product specific interfaces that consumers and businesses face when they interact with their bank. Eventually the solution will support wires, credit/debit, and CHIPS. The potential to streamline and enhance treasury services to businesses, by allowing them access to their bank’s own cross-payment portal is huge.

... The combined forces of 3i Infotech, J&B Software, and Regulus offer a comprehensive lockbox solution to banks and billers, regardless of whether they want to install software locally or utilize a hosted solution (or some combination). The solution allows billers to use one platform to generate and deliver bills (paper or electronic) and receive payments via IVR/telephone, web, walk-in, kiosk, or call centers. A new feature enables remote check capture via cell phones, which may be particularly appealing for brokerage and insurance customers.

Those of you who know me, know that I have spent much of my career toiling to increase the number of native electronic B2B transactions. At NACHA this year there are signs of hope for B2B payments on a variety of fronts:

... The investment and financial planning company Raymond James presented a case study with Bottomline Technologies. Raymond James generates one million outgoing payments per year and utilizes Bottomline to manage its interface with SWIFT and route payment approvals across its 2200+ broker offices and 700 bank accounts. Key benefits include: improved customer service; increased audit/control; format standardization; and, most importantly as stressed by Raymond James, the solution is bank agnostic.

... Corporate adoption of ISO20022 within SEPA/Europe and beyond; top 10-15 corporate customers at each global bank are in the process of implementing.

... At last year’s Payments Conference NACHA presented the results of research on small to medium sized business’ payment capabilities and needs. This year, NACHA’s B2B initiative showcased a pilot of electronic invoice delivery, payment creation, and auto-cash application integrated into QuickBooks. The solution, from BankServ and ipCommerce demonstrates a seamless solution for SMB.

... 3Delta Systems enables merchants to send L2 & L3 data to buyers using PCards and is working to reduce friction for businesses accepting card transactions. Those that provide L2 and L3 data benefit from significantly reduced Interchange.

Western Union is an example of a payments company that has proactively adapted its product offering to changing consumer needs. News from Western Union at this year’s conference:
Western Union is offering expedited, same day payments - primarily in-person payments, but also via the Internet and IVR (telephone) systems.

... Did you know that if you are a Google AdSense publisher you can collect your advertising income in cash via Western Union worldwide?

... Western Union sends data to billers real time (or hourly, or daily depending on the capabilities of the biller’s A/R system). RPPS and other bill payment consolidators do, too. Is it too much to ask for B2B transactions to have similar timely data delivery?

Additional biller testimonials from Comcast and Liberty Mutual:

... Bill suppression is key, electronic payment accelerates receipt of funds by 7 days, but billers need to suppress paper bills in order to achieve their cost saving goals.

... Liberty Mutual: reduced internal lockbox resources from 29 FTE in 205 to 13 this year.

... Comcast: payroll cards, bank by card products are reducing walk in traffic, incorporate incoming transactions through eLockbox solution.

... Each new payment process requires extensive training to address customer concerns/questions about payment at each of Comcast’s 70 call centers.

... Comcast: Don’t forget, it’s all about the exception processing!

... Scalability is key, Comcast has 24 million customers.

Interest in Web 2.0 demonstrated by a handful of well attended sessions. One on financial institution marketing that I attended had audience members frantically taking notes; low point was when one banker asked "What’s LinkedIn?"

... BofA research reveals that customers very much prefer widgets, they are perceived as more conversational than websites

... BofA paying attention to iPhone, iGoogle, Adobe Flex, Silverlight

... Half of BofA’s 2 million mobile banking customers are using iPhones.

... Four key components of bank new media strategy: mobile/SMS, blogging, social media, Internet marketing (TDG Phenix)

... Quote: "If I think my bank is doing something great I tell 3 people, if they are doing something terrible I tell 25 people AND blog about it."- Larry De Palma, TDG Phenix

Web 2.0 has the potential to transform corporate treasury solutions. Where is the Mint for corporate payments? Ideally a light weight treasury workstation + payment hub. Best quote about today’s cash management offerings: "Treasury is the Atari of banking" - Milton Santiago, BofA

... Smart alerts have potential to help resolve B2B transaction issues more quickly, i.e. alert supplier that buyer attempted payment but had an issue, supplier A/R should contact buyer A/P (BofA session)

... FedEx analogy - demystifying treasury and payments - don’t care how it gets there (plane, truck, train) as long as it gets there (BofA session)

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