Fraud Concerns Driving Payments Innovation

In recent years, organizational structures and processes have changed dramatically, presenting new opportunities and challenges for modern CFOs and treasurers. Organizations shifting core business processes online and day-to-day operations to the cloud require payment efficiency and flexibility to stay competitive.

As businesses expand globally and increasingly rely on electronic payment methods, the opportunities for fraud also increase. Most survey respondents (69%) from the SAPinsider Cash Management and Cash Visibility benchmark report said fraud detection for outgoing payments was an important or very important requirement for their organization. The changing business landscape has placed new demands on CFOs and treasurers. They must now manage risks while making payments quickly and efficiently. While this can be a challenge, it also presents an opportunity for CFOs and treasurers to streamline payment operations further and improve efficiency.

To better understand how CFOs and treasurers think about innovation across the payments landscape, SAPinsider spoke with Thomas Keim, Principal Solution Architect at Serrala. During the conversation, we also discussed the complexity and pain points driving overall trends across the payments space.

Link to Video Technology Insight: Video Q&A with Thomas Keim, Principal Solution Architect, Serrala.

Transition to Digital Economy Driving Need for Payments Innovation

Thanks to a perfect storm of new technologies, shifting consumer behavior, and regulatory pressures, businesses of all sizes are rethinking how they send and receive payments. In addition, the growing need for seamless cross-border payment capabilities tracks the exploding volume of digital transactions facilitating omnichannel global growth initiatives. So, it’s no surprise that the world of payments is undergoing unprecedented change.

For SAPinsider organizations to meet the challenges of the digital age, CFOs and treasurers must modernize their payment processes. Multiple priorities come to mind when we think about modernization initiatives across payment processes and workflows—for example, adding new banking relationships and payment types, enabling work from home or hybrid workforce models, and providing more flexible payment options with personalized customer experiences.

Mr. Keim notes that providing this level of payments flexibility can be complex and require significant resources, taking away focus from executing on core business and strategic opportunities responsible for growth. “Treasurers want to focus on the treasury business; they do not want to become IT professionals.”

One way to do this is to leverage payments as a service (PaaS) providers, like Serrala, who can offer flexible and scalable solutions that integrate seamlessly into existing SAP landscapes. These providers offer bank connectivity, payment delivery in several formats, and a central view of bank balances, allowing businesses to clearly understand their daily working capital. In addition, PaaS solutions offer enhanced fraud protection to help shield businesses from payment risks.

Payments Space Facing Escalating Threat Environment

Traditional banking and payment systems are often siloed, providing businesses with limited visibility across transactions. In addition, conventional payment processes are also vulnerable to fraudulent payment exploits due to gaps in the system. With more businesses moving online and more people working remotely, there are more opportunities for fraud and errors. Mr. Keim outlines some of these challenges, suggesting that “work from home access is more difficult to manage and can make it easier for external parties to get into your system. Yes, your employees might work with a VPN, but system access starts with the employee’s private environment first, followed by company system access. From a technical point of view, there are a lot more open doors for external parties to access your system. This makes managing secure processes tricky and where we see more fraudulent activity than before.”

Some technological solutions offer value-added features such as data analytics and fraud detection. Still, these approaches can be costly and time-consuming to implement. That’s where Payments as a Service (PaaS) comes in. By outsourcing global payments management to an experienced third-party vendor, organizations can free up valuable resources that can be better used elsewhere. This is a significant reason why CFOs and treasurers continue to elevate payment automation and integration initiatives as a priority to help combat fraud.

Automating Payments with PaaS solutions

It is no longer necessary to rely on manual processes or paper-based documentation. Many global payment functions can be automated, which leads to greater efficiency and accuracy. PaaS can also enable companies to automate manual processes, such as accounts payable (AP) and accounts receivable (AR). This saves time and money and can help improve organizational compliance efforts. For example, by automating the invoice processing workflow, organizations can avoid late payment penalties, make use of early payment discounts, and improve Days Payables Outstanding (DPO).

PaaS provides businesses the flexibility and scalability to adapt quickly to changing market conditions. For example, PaaS can help companies rapidly onboard new suppliers, expand into new geographies, or adopt new payment types and bank formats.

Customer Benefits of PaaS Adoption

Outsourcing payment processing can give businesses access to the latest payments technology and bank connectivity while reducing the costs and resources required to manage payments internally. This aspect is especially critical for organizations with both SAS ERP and non-SAP ERP financial systems. During our conversation, Mr. Keim shared how corporates leveraged Serrala’s PaaS solution to help modernize and optimize payments processes, “Corporate system landscapes are often very heterogenous spanning across on-premise and cloud-based SAP and multiple other ERP and/or Treasury Management systems. So you need solutions that can cover payment requirements from both worlds, on-premise and the cloud. Then you need to have the capability to combine that into what we call a hybrid solution [for SAP and non-SAP].”

The need for finance and accounting strategy innovation in the payments space has never been greater, as employees and customers demand improved user experience. The difference now is that the technology and infrastructure have evolved to the point where it is possible to offer a complete end-to-end solution that alleviates the complexity of managing global payments. PaaS can help organizations improve payment capabilities, providing a competitive advantage in the current digital economy.

What Does This Mean for SAPinsiders?

Modernize legacy payment systems to mitigate fraud risks. As businesses increasingly move away from traditional payment methods, the need to modernize legacy payment systems has never been greater. The ability to reduce the risk of fraud by identifying suspicious activity in real-time and taking proactive measures to prevent it from occurring requires a modern solution. PaaS providers offer many advantages in terms of security, including advanced fraud detection and prevention tools. In addition, these providers often have built-in compliance features that can help businesses meet their regulatory obligations.

Leverage bank connectivity technology to provide CFOs and treasurers with greater cash visibility. Banks traditionally haven’t been very good at providing this information in an accessible and understandable format. However, new bank connectivity technologies such as payments as a service are changing this. By using these solutions, companies can more efficiently convert transactions into the format that CFOs and treasurers need, making tracking and controlling cash flow more manageable.

Evaluate Your Organization’s Needs for Payments as a Service solution. With Payments as a Services, customers eliminate the cost and constraints of maintaining a complex internal infrastructure for payments and fraud prevention. They can also efficiently change and add banks or connectivity if needed and rely on the vendor’s expertise and best practices for Payment Services Directive 2 (PSD2) compliance, fraud prevention, cash visibility, and more. As a result, CFOs and treasurers can focus on their core business while reducing operational risk and lowering operating costs.