To sustain their operations, businesses have more than their fair share of challenges to confront. With a recession imminent, climbing interest rates, supply chain disruptions, and a turbulent global climate, business executives have many AR issues to address, along with just keeping enough cash on hand.

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To get an in-depth look at what executives are struggling with, Versapay surveyed 1,000 C-level executives to uncover their biggest concerns on the current economic climate as well as how the customer experience directly affects the bottom line. Here are the findings.

“We did a survey of a thousand C-suite executives from medium to large-sized companies,” said Nancy Sansom, Chief Commercial Officer at Versapay. “The number one concern across the board was supply chain disruption. The top concern for CFOs is inflation. Second to that is rising interest rates, and then labor shortages.”

Sansom added, “We put out two reports, one is the state of digitization in B2B [business-to-business] finance, and the other is the impact of customer experience on B2B payments. For inflation, finance teams are under pressure to increase cash flow and speed up the invoice-to-cash cycle. AR [accounts receivable] teams haven’t been prioritized from a technological perspective. So the digitization of finance and AR teams are the last priority in the organization, yet they have an impact on customer experience.”

Without the proper tools, such as the latest technology that can automate these processes, outdated systems are sure to cause an interruption in cash flow, thereby impacting the customer experience.

“The other theme of these reports is that customer experience is top of mind,” said Sansom, “because we all know that it is easier and cheaper to keep a customer than to acquire a new one. In a downturn, you really want to be keeping your customers happy so that you can retain them.”

Poor Processes Can Lead to Poor Customer Experiences

Accounts receivable seem to have fallen into an obscure, back-office category, with not much in the way of optimizing its processes, an out-of-sight, out-of-mind, hidden operation.

“Companies think of accounts receivable as back office,” Sansom said. “But every customer interaction is important and AR teams really do touch the customer, especially when something goes wrong, and that’s when tensions can be heightened.”

She continued,

Most of the narrative within the fintech and crypto space revolves around the decline of cash. But is cash really declining? Countries that have attempted to go cashless, such as Sweden, have backtracked these efforts to ensure that consumers still have access to cash when the occasion calls for it.

“Cash is on the increase,” said Joe Myers, Executive Vice President of Global Banking at Diebold Nixdorf. “If you look at global cash in the economy since 2012, there’s a compound annual growth rate of about 7.5%. So cash is growing. That was one of the things that struck me as an ‘aha’ moment. Consumers need access to cash. And that has a direct correlation on how that all plays through in the ecosystem, including access to technology like ATMs.”

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Diebold Nixdorf, a multinational company that specializes in self-service transaction systems such as automated teller machines (ATMs), has supported this need for cash for consumers. There is a need for more ATMs now more than ever as more bank branch networks are beginning to shrink.

Myers added, “Diebold Nixdorf sits in a very interesting place, connecting the physical to the digital and still allowing access to cash for those that need it. The ATM market is in good shape. We have tremendously strong products and global market share.”

“You can’t argue with cash, that’s for sure,” said Brian Riley, Director of Credit Advisory Service at Mercator Advisory Group. “The ATM has become more than a money machine. There are other functionalities to it. Even as electronic payments start growing, there’s definitely a use case for these machines to displace the operational expenses associated with the branch.

Although it is not a worrisome rate, banks are beginning to close more branches, something that should remain top of mind. As banks aim to reduce costs, the increased use of technology will be critical to continue to deliver a top customer experience.

“Functionality and technology are playing a bigger role,” said Myers. “The rate of decline is there for banks, at about 1% per annum. It’s not huge but certainly happening. The functionality that technology is putting forward so that people still have access to services is critical.”

Addressing Customer Pain Points

Every industry struggles to remain competitive and solvent, and the banking industry is no different. Myers has taken the time to get on the ground to hear firsthand what banks are struggling with.

For financial institutions, focusing on digital transformation has become extremely important. The shift to digitization accelerated during the pandemic when many people weren’t stepping foot into physical bank locations, keeping most of their interactions with banks virtual.

PaymentsJournal recently sat with Whitney Stewart Russell, President of Digital Solutions at Fiserv, and Steve Murphy, Director of Commercial Payments at Mercator Advisory Group to discuss Fiserv’s recent study and the key findings from it, as well as the advantages that financial institutions may have, and why trust is crucial to their success.

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Digital Behavior Shifts

Financial Institutions have historically enjoyed a high degree of consumer trust, but during the pandemic more consumers were drawn to the convenience that fintechs provided when it came to digital banking.

“It’s interesting,” said Russell. “One stat that I often share with customers as we’re talking about this change is from a study. Millennials were asked who they would feel most comfortable banking with, and it actually swung to fintechs and big tech because of the convenience those organizations can provide.”

“Maybe I don’t trust them as much, but I’m willing to migrate to them because of the convenience factor,” she said.

Now the pendulum is swinging back, largely because banks are following the lead of fintechs and upping their digital capabilities. “We’ve actually seen that swing back in our most recent research, where the trust factor associated with banks and credit unions is outweighing what was perceived as a competitive advantage from a convenience factor,” said Russell. “And we’ve also seen banks and credit unions make digital investment a top priority. So they’re starting to even the playing field. When you have an even playing field, you’ve got the advantage of trust.”

Financial Institutions are also adding new features to help extend the banking experience, with real-time payments and financial planning tools. By having all those tools in-house, integrated in a smooth digital banking experience, there is no need for customers to go elsewhere.

As the holiday season approaches, merchants should be aware that as overall sales increase, so will fraud. In fact, the holiday season is an opportune time for fraudsters to strike. And merchants need to plan accordingly so that they are not overwhelmed. Fortunately, certain strategies and tools can help merchants adjust their fraud procedures. They can adjust in ways that avoid the need to hire additional staff to process holiday season fraud claims.

This fall Kount conducted a survey about anticipated consumer behavior this holiday season. It is to better understand how merchants should focus their fraud strategy. To learn more about the survey and how merchants and acquirers can optimize their fraud management this holiday season, PaymentsJournal sat with Casey Zenner, Vice President of Global Sales at Kount, Brady Harrison, Director of Customer Analytics Solution Delivery at Kount, and Daniel Keyes, Senior Research Analyst at Mercator Advisory Group.

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Equipping Merchants to Combat Holiday Fraud

According to Kount, holiday fraud tends to peak during the year-end consumer buying season. And it continues to persist after the big holiday rush with returns, refunds, and charge-backs. Many fraudsters tend to target this period in the hopes that a merchant’s fraud defenses are overwhelmed. And it’s critical that merchants are prepared and fully equipped to respond to any potential attacks.

“It’s such a double-edged sword for many businesses working to try and capture revenue during their busiest time of the year — because the holiday season, for many merchants, can really make or break their business,” said Zenner.

“During the holiday season, levels of fraud do peak, just because we have more transaction volume in terms of dollars lost,” added Harrison. “But you really need to sift through those events where it makes sense and not overwhelm your existing operational footprint — that’s what we hear a lot from the fraud space.”

Adaptive Friction

“The other option is to dial down your fraud strategy and just say, ‘Hey, we’re just going to take this on the chin, minimize the level of friction for all customers, and then deal with the holiday hangover in January of charge-backs,” he added.

Fraud continues to pound embattled financial institutions, which are aiming to stay ahead of increasingly sophisticated attacks. More organizations are realizing that fraud prevention tools and strategies must remain top of mind, which means investing heavily on the most effective tools on the market today. Great strides have been made thanks to powerful tools such as analytics, artificial intelligence (AI), and machine learning, yet financial institutions are failing to capitalize on another vital tool they have in combatting fraud in the payments space: data sharing.

Bruce Diesel, Global Head of Product and Payments at Diebold Nixdorf, David Excell, Founder of Featurespace, and Marco Salazar, Director of Technology and Infrastructure at Mercator Advisory Group, discussed the delicate balance and challenges between enhancing the customer experience and delivering robust customer protection against fraud.

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Greater Data Sharing and Its Implications for the Payments Space

Vital Customer Insights

Data sharing provides vital insights about customers and can also inform FIs on what solutions their customers are demanding. But it also plays a vital role in protecting customers from fraud.

“Data sharing enables the banks to protect the customer and create new experiences for that customer instead of [offering] new products and services to meet those real-time needs and requirements,” said Excell.

With the surge of customer information in circulation comes bad actors ready to swipe from the massive sea of data.

“Increased data sharing is increased opportunities for fraud,” added Diesel. “An increased volume of transactions means a bigger attack surface area for fraud.”

“Data sharing, if done correctly across business units and third parties, allows for broader detection of fraud before it even begins across a wider array of products,” said Salazar. “There’s this delicate fine balance that needs to be played when thinking about data sharing.”

Data Sharing and Fraud

Another reality that Excell pointed out is the proliferation of data sharing among fraudsters. It is through compromises that they get access to data in order to both share and sell data between themselves. He continued with proposing current solutions such as artificial intelligence (AI) and mach...

In the event of a possible recession, it’s important for acquirers to make their businesses as efficient as possible. Increasing sales is one important part of that, but so is reducing transaction fraud. Yet, being overzealous with transaction fraud detection has its risks. If false declines on transactions are too high, customers become frustrated and stop shopping with certain merchants. This can lead some merchants to switch acquirers, which in turn ends up costing acquirers billions of dollars.

In a recent podcast, PaymentsJournal sat with Amyn Dhala, Chief Product Officer at Brighterion, a Mastercard Company, and Brian Riley, Co-Head of Payments Research at Mercator Advisory Group, to discuss why optimizing transaction fraud detection is important in the face of increased volatility.

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Overview of the Transaction Fraud Space

Banks and acquiring banks are making use of machine learning (ML) models. They are leveraging internal data to predict which transactions are most likely to be fraudulent and stopping them pre-authorization.

“The key objective for acquirers is the same as it has always been — increasing revenue for merchants, increasing approval rates, and reducing fraud,” said Dhala.

What’s different now, according to Dhala, are the new tools and developments during the pandemic. They have changed the way fraud may be tackled in an economic downturn.

Brighterion uses artificial intelligence (AI) models to leverage Mastercard network data. And these models are trained on billions of transactions, and the latest payment trends.

During the last few years, customers have changed. “Over the last couple of years, we’ve seen an increased use of [digital] wallet payments. For example, making payments using messaging apps. There’s also the use of newer credit products such as buy now, pay later (BNPL),” said Dhala.

Optimizing Transaction Fraud Detection

Combatting fraud is part art and part science, according to Riley. “You could stop fraud by not approving any transactions,” he said. “Or you could increase sales by approving every transaction. It’s finding the balance between the two that’s important. If you think about the number of false positives that you can control, it’s crucial to set the dial for false negatives right. Learning from the customer’s experience with the fraud system,

The regulatory compliance world can be very complex, and with the rapid expansion of digital payments, it’s increasingly difficult to identify and stop fraudulent transactions from occurring.

Technological solutions continue to evolve at an equally breakneck speed. But they have failed to keep up with the rapid-fire payments made by bad actors. This forces compliance analysts to manage the barrage with outdated and inefficient tools.

Euronet’s Skylight is a financial transaction monitoring solution that identifies fraudulent and suspicious activity behavior and aims to facilitate financial services compliance investigations by automating the entire process — mitigating both regulatory and reputational risk for businesses.

“Businesses have a lake of data they need to analyze,” said Bryan Zingg, President of epay North America at Euronet. “The system uses powerful algorithms to apply rules to that data and then it creates automated alerts. So, when a compliance agent logs onto Skylight, they’re able to see different alerts. The alerts have been created based on the rules businesses set.”

In a recent PaymentsJournal podcast, Zingg and Brian Riley, Director of Credit at Mercator Advisory Group, discussed how solutions like Skylight can greatly benefit businesses and help them streamline an otherwise difficult process.

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Bringing Clarity to Regulatory Compliance Cases

Efficiency is key for an effective regulatory compliance solution. And it helps liberate time for AML/Compliance analysts to focus their efforts on spotting illicit consumer behaviors. Skylight creates a case management workflow for compliance analysts. How this plays out is that companies can modify their specific workflows. These can be based on the stringency of their compliance obligations. Workflows can be straightforward or more complex depending on the needs of the business.

“Once the analyst has gone through the case and determined that it generated a meaningful alert that needs to be flagged as a compliance risk, the system can automate and populate the SAR [suspicious activity report] and CTR [currency transaction report], which are two different types of forms that a business will have to file with their regulator,” said Zingg. “Through an integration that we have with FinCEN — Financial Crimes Enforcement Network — an automated process sends th...

Within the banking industry, it’s important to secure hardware as soon as you need it. This will ensure your operations continue to run at peak performance and to meet compliance requirements. Unfortunately, the procurement process has become slow and cumbersome for many financial institutions. This is due to supply chain snags, disparate systems and lack of resources to manage this necessary function.

Automating the procurement process can help banks save time and resources. Ordering all hardware through a single vendor can further simplify the acquiring process.

In a recent podcast, PaymentsJournal sat with Alex Kennedy, Director of Hardware Advantage at Fiserv, to better understand the importance of automating the procurement process.

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Procuring Hardware for Retail Branches

Financial institutions require a lot of business hardware and supplies — PCs, check scanners, printers and ink cartridges — to ensure their business is functioning. Increased maintenance costs, decreased security, non-compliance and compatibility issues are just a few reasons to regularly update or upgrade hardware.

“Today the rising demand for hardware is due to changes in regulations, cybersecurity, as well as mergers and acquisitions,” said Kennedy. “In addition, the impact of the pandemic has given rise to supply chain delays from equipment manufacturers.”

Despite automation availability, many banks still procure their equipment through manual systems. According to a recent survey by Oxford Economics, 47% of banking executives reported that most, if not all, of their procurement processes are manual. Kennedy explained that this can be a problem for banks. Not all equipment is compatible. Working with different vendors can result in varied delivery schedules, especially when supply chains are already strained.

Benefits to Automating Hardware Procurement

Working with a single vendor such as Hardware Advantage from Fiserv streamlines and simplifies the procurement process dramatically. This will require fewer workers at the banks. Dealing with just one vendor also means that the equipment procurement process goes quickly. And new institutions can be up and running quickly as well....

For most financial institutions, modernization and digital transformation are top priorities, yet many still struggle in these efforts. Many are unsure where to start and also wary of the potential risks with modernizing legacy systems. Therefore, a large number of banks and credit unions are still in the beginning or exploratory phase of digital transformation.

Yet these projects are more important than ever. Financial institutions face more competition than ever. This is not only from other financial institutions. But they face competition from fintechs and digital-only neobanks, too. This also includes consumer expectations derived from nonfinancial firms such as Amazon and Uber.

Digital transformation and modernization may seem a monumental task, but by using open architecture and taking advantage of partnerships, financial institutions can make great strides. To learn more, PaymentsJournal sat with Lance Homer, Global Head of Digital Payments and Banking Ecosystems for digital infrastructure company Equinix, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service for Mercator Advisory Group.

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What Makes a Better Bank?

Ultimately, modernization projects are embarked upon to create a better bank. There are several aspects of what constitutes a “better bank,” noted Homer.

“It’s about being greener, connected, smarter, modular, distributed, and automated,” he said. “These are the things driving digital transformation across the landscape.”

All of the above are byproducts of moving out of legacy data centers and into the cloud. That includes using open application programming interfaces (APIs), breaking up the legacy tech stack, and moving toward a platform model. As one example, Homer noted that moving to the cloud and operating fewer data centers mean banks can reduce their carbon footprint and reach ESG goals quicker.

Furthermore, by adopting a platform model using open APIs to connect with best-of-breed partners, banks can offer more innovative products and services to their customers and bring them to market quickly.

“It’s difficult for banks to differentiate on the thing they used to, like interest rates,” said Homer.

Data is the driving force behind key strategic decisions for any business. But, businesses have a tough time turning the wealth of data and insights into something actionable and tangible. How can cloud data help?

Through their partnership, Mastercard and Amazon Web Services (AWS) are equipping organizations with the most up-to-date location and spending insights. This enables those organizations to make informed and strategic business decisions.

“Mastercard has a wide reach across geographies that can provide powerful insights for businesses across industries and regions,” said Paul Chang, Principal of Payments at Amazon Web Services (AWS). “Through the Mastercard and AWS Data Exchange partnership, we can collaboratively provide meaningful insights and solutions to businesses across markets and industries to help them tackle their own unique challenges.”

“When we think about our Data & Services business at Mastercard, we focus on helping our customers make smarter decisions that result in better outcomes for everyone,” added Stuart Finkelstein, Executive Vice President at Mastercard Data & Services. “Our collaboration allows us to improve our reach with the simplicity of access and helps us drive scale by getting these powerful tools into the hands of more customers.”

Both companies delved into their partnership and why it’s so important in a recent PaymentsJournal podcast. Finkelstein, Chang, and Marco Salazar, Director of Technology and Infrastructure at Mercator Advisory Group, spoke about two offerings. These are Mastercard SpendingPulse™ and Mastercard Places. They discussed how these are critical solutions for organizations looking to stay ahead of competitors.

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The Benefits of AWS Data Exchange

Through AWS Data Exchange, customers can locate, subscribe, and use third-party data to supplement their own internal data. This enhances their decision-making.

According to Chang, data subscribers expressed the need to locate and use data within the cloud. “They wanted it to be as easy as it is to shop online today so that their team can focus on producing differentiated products and spend time on value-added activities rather than discovering data, maintaining infrastructure, or managing revisions,” he said.

“As a subscriber, you can reduce time to find and source data from months to hours with minimal changes to existing operations,” Chang added. “AWS Data Exchange makes managing data subscriptions easier by consolidating contracts,