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As Fraudsters Target Corporate Cash, CIOs Demand Grows for Payment Hubs

By Bob Stark
June 7, 2019
in Cash, Credit, Debit, Featured Content, Fraud & Security, Processing, Security
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As Fraudsters Target Corporate Cash, CIOs Demand Grows for Payment Hubs As Fraudsters Target Corporate Cash, CIOs Demand Grows for Payment Hubs

As Fraudsters Target Corporate Cash, CIOs Demand Grows for Payment Hubs

Cybercriminals always follow the money, and corporate finance is a potential honey pot for them, given the potential to divert payments to their own accounts. Last year, a WEX Worldwide survey found that 52% of organizations admitted to being victims of payments fraud. Today, many CFOs alongside CIOs are implementing payment hubs to protect corporate cash through better payment controls.   

 

While inefficient payment processes inhibit supply chains, cash flow and profitability, they also create a ripe opportunity for fraudsters. Payment hubs have emerged as the preferred solution of many treasury and finance leaders to combat fraud. Not only do payment hubs help fight against the increasing threat of fraudulent attacks and cybercrime, they have the potential to provide global visibility into payments to ensure consistency and compliance. Additionally, payment hubs can optimize cash and improve overall working capital.  

 

So why are CFOs, CIOs and CISOs demanding that payment hubs be implemented? Here are several benefits organizations gain from integrating a payments hub within their finance function: 

  

Standardization eliminates unauthorized payments

 

It is quite common for global organizations to have different payment procedures by country or business unit, even if a single ERP has been implemented globally. Yet internal and external fraudsters prey on inconsistency in the way payments are managed. Payment hubs support digitization of payment policies while enforcing payment controls (e.g., payment approval scenarios, extra layers of authentication, remote and absentee approval procedures, and restrictions on payment modifications). 

 

Screening for internal and external compliance 

 

As payments continue to diversify across multiple channels (e.g., wires, ACH, checks, real-time payments, non-bank channels), organizations cannot solely rely on finance and treasury staff to scan every payment in real-time or count on banks to be the last line of defense. Corporates can be fined for violating sanctions lists such as OFAC. At the same time, payment screening should also detect payment anomalies and payments that violate internal policies (e.g., those that that take place outside of an organization’s “approved” countries, payments to a recently modified bank account, or even an odd payment amount). Process automation through complex algorithms and/or machine learning in a payments hub offers increased protection.    

  

Payment hubs reduce the cost of managing payments

 

For CIOs who manage ERP implementations, the intricacies of ERP-to-bank connectivity, payment format transformation, executing payment controls, and delivering middleware to support manual payments is a complex exercise. This responsibility increases in difficulty as banks move to API connectivity while SWIFT mandates global transition to XML ISO20022 formats. Fortunately, payments hub technology manages every aspect of payments compliance and bank connectivity, enabling CIOs to manage a modern payments infrastructure at a fraction of the cost (typically saving $1 Million +). Payment hubs also allow CFOs to optimize banking services as they scale to meet the liquidity needs of a growing organization.   

 

Increased visibility to payment activity 

 

Although organizations continue to stockpile cash, boards are demanding that CFOs minimize cash used for working capital so that more liquidity can be directed to higher yield investments, strategic projects, and shareholder returns. Cash visibility is critical to meeting the CFO’s KPIs and payment hubs enable real-time visibility into all payment activity. Without these centralized views, corporate treasurers estimate end of day cash positions for their bosses, leaving idle cash in bank accounts yielding dismal returns, and robbing the CFO of the opportunity to maximize the return on cash. Management and the board demand visibility and only a payments hub can complete the picture. 

 

A centralized payments hub is a vital risk management tool to protect the organization’s cash flow by strengthening payment controls. Return on investment is quick while maximizing the value of ERP solutions to streamline connectivity and compliance for the CIO and CFO.  

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