Payments: The revolution continues apace

The powerful combination of globalisation and digitalisation in recent decades has encouraged firms and sectors of all shapes and sizes to look beyond their domestic shores for business, fuelling the rapid rise of ecommerce and demanding ever faster and more secure payments technology and infrastructure.

The transformation has been such that now, more than ever, payments activity is seen by organisations as playing a vital role in delivering convenience, speed, and a high-quality customer experience. Ensuring efficient, secure payments and collections is therefore regarded as a vital element determining overall business performance.

Against that backdrop, treasurers’ appetite for timely and accurate payments intelligence has been increasingly voracious, offering them as it does the opportunity to optimise cash and liquidity management, and in turn maximise returns from excess cash and reduce levels of trapped cash.

Growing corporate demand for open banking platforms and associated, bespoke APIs, integrated with their ERPs in recent years is an indication of the investment firms are making to secure real-time control and visibility over their payments and balances and more efficient reconciliation. Not surprisingly we now have the concept of the “24/7 treasury” being increasingly mooted as a more accurate reflection of the aspiration of round-the-clock, 365-day treasury operation. The growing interest among corporates in digital currencies, whether they be crypto or central bank offerings, and which operate on truly 24/7 markets, only reinforces the need for the 24/7/365 treasury.

Open banking and APIs hold great promise for unprecedented levels of connectivity between companies and their banks across markets, currencies and regions, and between head offices and local subsidiaries, but it is widely acknowledged that they have the potential to offer much more. For instance, the rich metadata they can generate on a 24/7 basis for treasury analysis, potentially provides organisations an edge in tapping new, emerging opportunities across markets much more quickly.

Blockchain technology for treasury operations is much more nascent but potentially, over the long term, even more revolutionary. Proven real world applications of blockchain in treasury are scarce currently and, as a result, treasurers are reluctant to embrace it to any great extent. But if the growing interest in open banking and APIs amongst treasuries translates into tangible, widespread success over the next five years, it could well encourage treasurers to look much more closely at blockchain too.

In the meantime, treasurers’ near-term focus will be on real time and 24/7 payments, ongoing modernisation of the payments architecture globally, and improvements SWIFT is pushing through with SWIFT gpi, which offers track and trace.

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