While this posting in Finextra goes on a bit longer than most, the subject matter is quite consistent with Mercator Advisory Group’s views as consistently presented in member research, and summarized as part of our 2020 Outlook papers.
The author is a CTO with the 2016 UK startup bank Clear Bank. The underlying premise is that the consumer technology paradigm is now working its way into business environments, with expectations shifting through generational demands and the existence of latest gen capabilities. The real-time this and that will then transition to cross-border demands for similar experiences, something already being launched via blockchain, APIs, digital assets and card rails.
‘When looking to the future of something like B2B payments, it is best to focus on just one aspect and from that, you start to see a numerous other areas of change coming into focus. You don’t have to look to far ahead to identify one very clear trend and driver in the payment’s world, and that is an ever increasing drive towards real-time payments that can be made at any time, 24x7x365.’
‘The cross-border payment experience should be no different to a real time domestic payment. As the globe continues to wake up to global economics, businesses find that their supply chains are increasingly becoming international, and not just tied to a single geography. Cross-border possess harder challenges than domestic to satisfy real-time, namely that of currency liquidity, visibility and the fact there isn’t a payment system operating 24/7.’
As Mercator Advisory Group has also pointed out in research on faster payments, getting from this to that point will take some time, since business environments have not been hitched to the real-time infrastructure yet. Therefore, many attendant and associated systems capabilities have to be enabled before we see global scale and ubiquity in the new world.
‘This means systems have to embrace event based patterns, understanding horizontal scale and distributed data across their systems. For many, this will prove too far a leap to make, and for those that fail, they will lose market share quickly. However, once you’ve solved this enablement part, providers must ensure payments process all the way through automatically, straight through process (STP) raises its head.’
The author goes on to discuss risk management, financial crimes, and digital identity, and so forth, which all impact the ability to safely move from today’s situation into the faster next level situation for businesses.
Finally, there are the challenges associated with reconciliation, the final step in receiving, posting, and closing off transactions between business counterparties. Worth the five minutes to browse through and get acquainted.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group