The continuing evolution of digital payments

Making possible more than just payment execution, technological solutions are backed by progressive regulation to deliver payments that are based on the requirements of corporate treasuries. The treasurer of today is part of a generation that is always connected, with any device, in real-time, and expects hyper-relevant services. Client expectations, technology solutions, progressive regulation and new participants are the four forces moulding the future of payments, said Tom Halpin, Global Head of Payments Product, Global Liquidity and Cash Management, HSBC.

“The digital environment, the mobile environment and the need for instant is really changing the way we need to think about delivering our products and services and capabilities. We are being driven by customer expectations, needs and problems,” Halpin said.

Transaction and payment technologies have always been responsive to evolving consumer needs. However, ease-of-use is a defining feature of new technologies, with legacy systems giving way to products that can be used to flow information through the user’s mobile phone or back-end systems. Now, more than ever before, customers rather than technological possibilities are the catalysts of product development. Citing the example of real-time payments, Halpin said: “More and more of our customers are telling us that their pain points are in the reconciliation, in the ability to accept an incoming payment into their account, and have it reconciled so they can make a business decision and improve their working capital solutions.”

Real-time payments then translate into making and receiving payments in order to meet vendor obligations and close deals. For such instant transactions to be truly useful, it is important that they go beyond a transaction and include richer payment information. Being able to track the payments is another important component of this process.

Data and insight, modern APIs, artificial intelligence and machine learning come together to facilitate a better customer experience. APIs enable fine-tuning of rich payments information so that it can be delivered to the user in the format that is useful to them. APIs are most effectively used to simplify processes and give the user greater control over data. Since corporate treasurers are constantly managing credit and liquidity risk, the ability to turn data into decision-enabling information allows predictability. Capturing and effective utilising big data is crucial. Halpin said: “We have created a liquidity portal that allows you to bring together your payment information to understand trends and different cycles in real-time.”

Regulatory initiatives for open banking and real-time payments translate into simplified processes and increased transparency with global impact. Open banking enables access to information from multiple sources in a more consistent manner. At the same time, it allows varied, sometimes competing, service providers to come together and deliver various components of a technological solution in a way that benefits the user. Corporate treasuries will see fintech companies work together with banks to plug in solutions that deliver efficiency.

“We believe your partner journey will likely be a combination of banks and fintechs,” Halpin said, adding that trust is an important factor in this. “We already have a trusted relationship. HSBC handles about 20 million payments daily on behalf of customers. That’s us impacting your business 20 million times a day as a client community. This trust may create other opportunities because HSBC has a proven track record of delivering in a way that creates value.”