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Finance Execs Ready for Useable Payments Tech

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February 08, 2019

Survey: Awareness of new pay technology, benefits jumps; but adoption a challenge

E-commerceCorporate finance executives see faster-payment-related technology being put to use but also see increasing operational and cybersecurity challenges. Those findings from TD Bank’s annual payment survey, conducted in November at the 2018 Association for Financial Professionals Annual Conference in Chicago, may reflect executives’ growing understanding of the pros and cons of new technology.

Rick Burke, head of corporate products and services at TD Bank, said the survey found that corporate treasury and finance professionals anticipate more operational challenges this year compared to previous years. For example, cybersecurity-related fraud remained the top concern with the percentage of respondents emphasizing that risk increasing to 44%, up 14% from last year.

That jump comes in part from experience, as many companies have suffered cyber-attacks. Awareness of the issue comes from campaigns by banks and government agencies to educate them about the growing and ever more sophisticated risk. Mr. Burke said it’s difficult to find finance executives today who do not have intimate knowledge of cyber-attacks in their own institutions. He added that the frequency of cyber-fraud appears to be increasing, as FBI statistics show, and attempts today increasingly focus on a company’s employees, rather than its technology, as the “weak link” enabling fraud, often inadvertently.

The survey found that 98% of respondents expect financial institutions to assist organizations in protecting against fraud and cybercrime, and 55% said they can do that through education, even though 48% said that their own companies do not offer any in-house cyber fraud prevention training.

“It’s striking that respondents nearly universally acknowledged that more education is necessary, but only half have programs to educate their employees,” Mr. Burke said.

Additionally, one-in-four finance professionals surveyed said they feel that banks should offer greater controls on transactions and 18% said they want risk or process reviews.

On the faster payment front, 37% said the ability to adapt to or process faster electronic payments remains an obstacle, a concern that also increased by 14% year over year. Still, Mr. Burke noted that faster payments tech, much like blockchain or external application programming interfaces (APIs), has been on the horizon for years and is finally entering the mainstream as finance executives learn more about it.

“As soon as it takes on an element of realism, it becomes a bigger concern,” Mr. Burke said.

He noted that while same-day ACH payments have been available for more than two years, The Clearing House’s Real Time Payment (RTP) system more recently went live among a limited number of banks, and others, such as TD Bank, are now integrating the technology into their systems.

“Now we’re actually seeing applications, and it goes from something potential to the real thing,” Mr. Burke said.

APIs and blockchain technology are at a similar stage. APIs have been around for decades, but banks used them mostly internally. Now they’re opening their use to customers, giving them better access to bank data and systems; corporate finance is also starting to recognize the benefits.

“APIs have suddenly become a powerful tool for external connectivity, and companies may now be talking to their banks or enterprise resource providers about how they may have to change their own tech environments to take advantage of the technology,” Mr. Burke said. “It creates a sensitivity that things are really going to change.”

Half of survey respondents claimed their organizations currently use or are in the process of integrating open APIs into company operations, while another quarter plan to do so, and the rest did not respond.

In terms of blockchain technology, which just a year ago most NeuGroup meeting participants were unfamiliar with, 90% of survey respondents said it will have a positive impact on payments. The top three were creating stronger audit trails (29%), speeding up the payments process (22%), and improving efficiency of cross-border payments (21%).

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