Banking

How Banks Can Tap Into The Benefits Of Integrated Receivables

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FinTechs are keeping an eye on the needs of banks and their corporate clients in today’s market. Treasurers, in one case, may have deposits at multiple banks as some institutions may provide services to help them collect deposits. However, they are seeking ways to consolidate all of those deposits into one primary bank. At the same time, DadeSystems CMO Tom Berdan told PYMNTS in an interview, check deposits are declining.

A corporate treasurer for, say, a mid-sized manufacturer might see that customers are not paying with checks any longer. Instead, they might be making payments with electronic ACH deposits, wire transfers, or some other electronic deposit, which is difficult for the corporate treasurer to reconcile. And, as checks are on the decline and electronic payments are on the uptick, new payment streams are coming in — that is, real-time payments.

Treasurers then are looking at the new payment channels that are emerging and realizing they need the ability to provide those types of services in order to be competitive with their customers. Treasurer, according to Berdan, are saying they need a bank that can provide all of those services and simplify life — to offer “one-stop shopping so to speak” instead of having multiple systems handling different payment channels.

As all those new payment channels come online, treasurers need to add more labor into their efforts. As it stands, there is significant manual effort occurring in treasury departments where workers are engaged in the cash reconciliation process — receiving the payment, depositing it at the bank, and then updating the customer’s account. That procedure is all done manually, and it further creates problems amid a shift to electronic payments.

And, with emerging payment channels and new payment types, Berdan says treasurers are looking at ways to “future proof” their treasury function. They are having difficulty processing payments, and they know that solutions exist to help. As a result, they are seeking some consolidation — i.e., integrated receivables. The technology, for one, offers automated payment matching.

As an electronic payment (or check) comes in, Berdan says the FinTech can automatically read and reconcile that payment “without any human intervention.” In addition, the FinTech can provide a single archive of data. It can also automatically take all of the payments as well as receipts the corporate has received and update a single file to their enterprise resource planning (ERP) system daily or multiple times a day. And it can send any checks or electronic payments to their bank for deposit and reconciliation.

Berdan says corporate treasurers are savvy to this trend, and they are now looking to companies such as DadeSystems and others to provide these services. Treasurers can approach FinTechs directly, but there are some silver linings for banks that want to provide these offerings. For one, Berdan notes that the banks have a trusted relationship with their customer.

And, if banks decide to enter the integrated receivables market, the FinTech is finding that three out of four corporate treasurers would prefer to buy those integrated receivables solutions from a bank rather than go to a FinTech partner. That is because the bank has a trusted relationship with the corporates and also because it can provide them with other offerings such as merchant acquiring, trust, or payroll services.

And 50 percent of the corporate treasury market has a budget to tackle the integrated receivables challenge. As this market is willing to dedicate resources to this area, the bank can retain the corporate’s deposit and loan account. It can also charge fees for those integrated receivables services to grow their fee income with the help of FinTech innovation.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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