In many financial services organizations, the payments value chain spans across a slew of systems, teams, and rails. This can make it difficult to create a holistic end-to-end view of business operations and understand which parts of the organization could benefit from process automation.
Recognizing this, the financial services consultancy firm Capco, which was founded in 1998, formed a partnership with the process mining software company Celonis. By leveraging its partnership with Celonis, Capco has been better able to help its clients address key efficiency challenges.
To learn more about how, with the help of Celonis, Capco has successfully helped clients improve end-to-end payments flow, PaymentsJournal sat down with Ed Kelley, Managing Principal at Capco, and Patrick Galbraith, VP of Financial Services North America at Celonis.
Key operational challenges in the payments industry
Payments processes often span across different aspects of an organization. In addition, initiatives such as real-time payments and the migration toward ISO 20022 can make challenges even trickier to address. As a result, figuring out what processes should be improved is no easy feat.
According to Kelley, operational challenges are twofold. “One, there’s the operational side [including teams working on data, SSI and processesing wires], and two, there’s the risk side, [where ensuring your operations are efficient and controlled to allow for payments to] go out the door properly,” he said.“ These challenges, in a nutshell, can be really burdensome [from] an operational perspective within an organization, whether it’s a settlements team, a treasury team, [or] a margin team,” he added.
Such challenges are compounded by the ever-evolving nature of market conditions. From regulatory changes to mergers and acquisitions, fintech competition, new product launches, and more, financial services organizations have a lot on their plates.
“Companies are trying to act faster. They’re struggling to keep up with that transaction volume, and this is resulting in a growing number of missed payments, and in some cases, significant unrecoverable losses and [damage to] client relationships,” explained Galbraith. In fact, it is estimated that an alarming 20-30% of revenue is lost annually by companies unaware of poorly executed processes within their organization.
Streamlining operations solve these challenges
While operational challenges can be daunting to overcome, it is both possible and worth doing. By mapping the payments flow end-to-end, the straight through processing (STP rate) can be increased. Straight-through-processing (STP) refers to the proportion of transactions that pass through a payments system with no errors that require manual intervention. A higher STP rate speeds up the payments process, reduces manual processing costs, and improves the customer experience, among other benefits.
“We kind of look at it from a spaghetti string perspective. You want it to be one spaghetti string from top-to-bottom as your STP. But what you’ll see is that when you boil a bunch of pasta, it’s going to be all over the place. And that’s really the challenge today,” said Kelley.
A powerful partnership: Capco and Celonis join forces to improve payments flow
Through the combination of Capco’s years of industry expertise and Celonis’ process mining technology, it is possible to identify and automate operational efficiencies. More specifically, process mining aggregates the data feeds for all systems involved in the payments flow, making that “single spaghetti string” ideal (i.e., a seamless end-to-end flow) a reality.
“[Celonis] likes to let the data tell us the story. There’s been a great deal of automation already in payments and there’s opportunity for more, but what Celonis really does is bring a data view of those processes and sub-processes so that when organizations look to drive automation, they’re doing it intelligently,” noted Galbraith.
Thanks to its partnership with Celonis, Capco now has access to a software component that enables them to promote process mining, which maps payment journeys from initiation to release and allows management to look at process inefficiencies they may not have even known existed.
Both Capco and Celonis appreciate the value that the partnership has brought. “[Capco] has used [Celonis’ process mining solution] with multiple clients specific in the payments space at this point, as well as with other critical processes like KYC and trade lifecycle. It’s not just related to payments, but we know that it works for payments and that challenge is looking at data, looking at flow, and working with the proper technology and business teams on the client side to get that done,” said Kelley.
Meanwhile, Celonis sees tremendous value in Capco’s expertise and trusted client relationships. “Capco’s expertise spans not only Celonis and processing mining, but banking and its complex processes, including payments. Celonis continues to grow 100% year over year, and we absolutely could not do that without strategic partners like Capco to deliver solutions with banking capital markets,” added Galbraith.
Immediate steps organizations can take to improve efficiency
The first step organizations should take to achieve end-to-end payments flow and improve operational efficiencies is simple: use a process mining tool over a period of time to gain a holistic view of automation opportunities.
“Bringing all of these pieces together… allows banks to run their core front, middle, and back-office operations as efficiently as possible, and also allows them to perform as an organization at their full potential,” concluded Galbraith.
