As a consumer I find that banking is not easy. Branch hours are not always convenient; the website is not always easy to navigate; and I still need to use a branch to deposit those pesky checks I occasionally receive. And now we need to accept credit cards for my wife’s home-based business.
Imagine how much more difficult it must be to deal with banks when corporate receivables are involved?
For businesses large and small, managing receivables is not just a back-office challenge; these days it extends to the point of sale. In fact, payment convenience has become a huge differentiator and loyalty builder for many companies, with perhaps the most obvious example being Starbucks, a pioneer in mobile payments that has other customer-facing businesses scrambling for responses. You can walk into your local Starbucks and pay with a Starbucks card, a mobile app, credit card, cash, rewards coupon and more (I dare you to write a check for your latte). The coffee chain also recently announced a deal with Square. Pick your favorite retailer; there are more ways to pay than ever before. Greater flexibility of payment is a growing trend.
The resulting opportunities for banks and credit unions arise out of thinking proactively about the challenges business clients face. They arise from answering questions like “How do we help local businesses become more competitive?”
Enter the integrated receivables hub. The name couldn’t be any more boring, but the functionality itself is destined to become a critical operational and customer service differentiator for financial institutions, large and small.
New applications and demand for distributed payment capture and consolidated reporting streams are creating pressures on financial institutions to reassess strategies and investments in payments. This has become most obvious with high-touch, low-value transactions, like card payments. And it has been made more difficult by the silo nature of banking.
An integrated receivables hub eliminates these difficulties. It consists of software on the front-end that can take data streams from multiple payment and receivables channels and output in whatever formats a business requires to systems throughout the enterprise. There is no longer any need for reformatting or rekeying information. And once a receivables hub has been established, integrating new payment offerings is a snap.
So where’s the action? A survey of financial institutions taken by Aite and RemoteDepositCapture.com, presented at the RDC Summit last September, suggests the industry’s reputation for moving at glacial speed remains intact. Among those surveyed just 14 percent had implemented a comprehensive receivables solution strategy; 34 percent didn’t even know if their institutions had comprehensive receivables solution strategy, and 14 percent were certain their institutions did not.
One of the early adopters of an integrated receivables platform is BNY Mellon, which operates in over 100 markets worldwide. To BNY Mellon, an integrated receivables hub enables the aggregation of all payments from a multitude of different locations, and provides a standardized reporting stream, greatly reducing operational cost and complexity. Lower costs and complexity translate to faster, simpler customer service. Ultimately, the key benefit for the receiver is a consistent reporting process to ensure accurate client receivables information in an efficient user interface.
Financial institutions stand to gain customers by offering value-added services that can help them save time. But first banks and others need to put themselves in their customers’ shoes to really understand their receivables and payments processing requirements. They need to be asking questions such as: How many people do you utilize to manage receivables? How many points of collections do you have? How many types of payments do you accept? How many financial institutions do you use to manage collection points? A single point of access for information can enhance receivables management and allow the chief financial officer and others at companies to make more informed decisions.
So how can your financial institution capitalize on the opportunities presented by receivables hubs? One way is with a simple what-we-have versus what-we-need inventory. Ask customers about the technologies they are running and how they need to receive transaction data. If your institution offers remote deposit capture or mobile check capture solutions, you might be sitting on the building blocks for an integrated receivables hub.
RDC is a process that has been getting a lot of attention from financial institutions and businesses alike because it slashes the time it takes to deposit and process check payments. All the leading banks have some type of RDC offering; most small financial institutions do too. More recently ads for mobile check deposit products by leading banks have given RDC something approaching rock star status.
But the functionality RDC provides need not be limited to just handling checks. RDC is about capturing (imaging) payments and related information and providing customers with information they need to make better decisions. Imagine all the possibilities that spring forth from being able to image and archive every payment and related remittance document a business receives.
In the end, businesses succeed because they can offer more payment options and better customer service while keeping their cost structures low. Your bank succeeds by keeping operational costs in check and offering value-added services that increase customer loyalty. Integrated receivables hubs are just this type of value add. And receivables hubs are coming. When will you get onboard?
Don Dew is director of marketing at Parascript, a leading provider or recognition technology.
Copyright (c) April 2013 by BankNews Media