Role for banks as CFOs plan payments overhaul

A report by American Express has found that 77 per cent of Australian chief financial officers have plans to overhaul their payments processes despite challenges around adoption. 

According to research undertaken for the payments giant by RFi Group, only 24 per cent of businesses strongly agreed that the pace of innovation within the finance department was adequate. 

The report also revealed that businesses have continued to rely on the same, time-consuming payment processes that have been in place for years with 14 per cent of organisations still using entirely paper-based processes, whilst only 22 per cent had moved to a fully automated solution.  

However, CFOs believe that now is the time to invest in new payment processes. The research found 89 per cent of businesses had allocated funding this financial year for a payments system modernisation process, with 39 per cent having already invested between $50,000 and $100,000 to improve payments over the past three years.

Initially much of this investment will go towards solutions that can be implemented quickly and can demonstrate a strong return on investment. For many CFOs, the low-hanging fruit includes better collaboration with other finance tools, better spend reconciliation and improved invoice automation.

More than 40 per cent of CFOs hoped the initiatives would drive better business efficiencies and frictionless payment experiences, whilst 33 per cent hoped that payment modernisation would mean they could redeploy finance department staff into more strategic roles.

Education and partnerships 

The report also found that banks have a role to play in helping businesses move to emerging technologies. 

Speaking from Singapore, American Express general manager of international payments, Barry Fletcher told AB+F that there are two big roles for banks and payments solution providers to play.

“The first is around innovation. Our report found that 42 per cent of CFOs turn to financial institutions to help educate them about emerging payment technologies. The second is partnership,” Fletcher said. “At American Express, we’ve found partnerships between banking partners and technology companies have been critical in gaining acceptance amongst CFOs and consumers.” 

For example, in January, American Express announced it would be joining the Hyperledger Project - a cross-industry, open source initiative - which is focused on developing blockchain technology for corporate use. There are also opportunities for fintechs, however, awareness could be an issue. 

“The challenge for fintechs is slightly different, because it’s new ground for a lot of CFOs. They aren’t aware of the technologies or the companies that provide them,” he said. 

“This is a problem because the research found a third of them said ‘technology uncertainty’ was a barrier to bringing these kinds of solutions into the business. However, we also know that there is an enormous amount of curiosity amongst businesses about these solutions. So the challenge for everyone in the payment space is to make sure that our solutions are customer-led rather than purely technology driven.” 

In terms of what CFOs want from a modern payment system, 41 per cent want new payment strategies to deliver cash flow management and improved business efficiencies, while 40 per cent want a frictionless payment experience. 

Many CFOs are also looking to turn to emerging technologies to help transform their business’ approach to payments during the next 12 months. Some 20 per cent of businesses will soon use APIs to streamline payments, 18 per cent will deploy smartphone mobile wallets, 16 per cent will increase mobile transactions, 12 per cent will trial blockchain-style distributed ledger technology and 11 per cent expect to incorporate virtual card numbers to improve business transactions. 

Mobile wallet had the most take-up with 32 per cent of CFOs adopting the technology, followed by peer-to-peer payments (31 per cent), blockchain (25 per cent) and virtual card technology (30 per cent). 

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