This is a special episode focused on payments. How do you make faster payments securely? How do you lower the cost of payment processing? How do you enable different payment rails for a better customer experience? And how do you prevent inadvertent payments? We’re getting inside the minds of top CFOs and Treasurers to find out how they’re handling payments in this ever-changing financial landscape. We’ll hear from Reed Luhtanen, Executive Director of the U.S. Faster Payments Council, Katherine Edenbach, CFO at Emburse, Benjamin Seal, Vice President of Treasury Services at Cenveo, and more, including some bonus content from Michelle Richardson, SVP and CFO at Plaza Home Mortgages.
This is a special episode focused on payments.
How do you make faster payments securely? How do you lower the cost of payment processing? How do you enable different payment rails for a better customer experience? And how do you prevent inadvertent payments?
We’re getting inside the minds of top CFOs and Treasurers to find out how they’re handling payments in this ever-changing financial landscape. We’ll hear from Reed Luhtanen, Executive Director of the U.S. Faster Payments Council, Katherine Edenbach, CFO at Emburse, Benjamin Seal, Vice President of Treasury Services at Cenveo, and more, including some bonus content from Michelle Richardson, SVP and CFO at Plaza Home Mortgages.
Quotes
*“We're in a world where we expect things to happen in real time. We expect when we do whatever it is we're doing, it's never fast enough. And so I think the banking system has relied on a very robust and very successful system of interconnectivity for the ACH network. But that does have a number of lags in it that fall short of consumer expectations and business expectations in terms of how fast things should happen in the 21st century economy.” - Reed Luhtanen, Executive Director of the U.S. Faster Payments Council
*”The new generations that are coming in, they're all instant gratification. They're used to having apps for everything and being able to have a meal delivered within five minutes to their house. Having that generation come in and take over treasury and payments I think is going to really streamline and make things a lot faster.” - Michelle Richardson, SVP and CFO at Plaza Home Mortgages
*”Our biggest area of risk management today is really around cyber security and phishing attempts. Making sure that our employees are well-educated and know how to identify phishing and establishing controls around where we know that those fraudsters might try to get in. So we have a number of controls around approving invoices and around outgoing payments, especially payments with new or different banking information or changes to invoice addresses. This year, we're also going to be adding a credit component to our card product. And obviously that will bring a whole different realm of potential risk management along with it. So we are anticipating that coming as we move through the year, but as of today, our biggest areas are really cybersecurity and phishing.” - Katherine Edenbach, CFO at Emburse
Time Stamps
*[1:55] Reed Luhtanen, Executive Director of the U.S. Faster Payments Council
*[2:35] Kevin Permenter, Research Director at IDC
*[4:17] Hamza Benamar, CFO at Kyriba
*[5:37] Michelle Richardosoon, SVP and CFO at Plaza Home Mortgages
*[9:40] Niklas Bergentoft, Principal at Deloitte & Touche LLP
*[12:30] Katherine Edenbach, CFO at Emburse
*[13:33] Benjamin Seal, Vice President of Treasury Services at Cenveo
*[15:35] Thomas Gavaghan, Vice President of Global Presales at Kyriba
Sponsor
The Invisible Vault is powered by the team at Kyriba, the global leader in cloud treasury and finance solutions, empowering CFOs and their teams to transform how they activate liquidity as a dynamic, real-time vehicle for growth and value creation. To learn more visit www.kyriba.com
Links
Connect with:
Reed Luhtanen, Executive Director of the U.S. Faster Payments Council
Kevin Permenter, Research Director at IDC
Hamza Benamar, CFO at Kyriba
Michelle Richardson, SVP and CFO at Plaza Home Mortgages
Niklas Bergentoft, Principal at Deloitte & Touche LLP
Katherine Edenbach, CFO at Emburse
Benjamin Seal, Vice President of Treasury Services at Cenveo
Thomas Gavaghan, Vice President of Global Presales at Kyriba
Daniel Shaffer, Executive Producer and Host of the Invisible Vault
Narrator: Hello and welcome to The Invisible Vault.
This is a special episode, and today we’re focusing on one topic… payments. How do you make faster payments securely? How do you lower the cost of payment processing? How do you enable different payment rails for a better customer experience? And how do you preve nt inadvertent payments?
We’re getting inside the minds of top CFOs and Treasurers to find out how they’re handling payments in this ever-changing financial landscape. We’ll hear from Reed Luhtanen, Executive Director of the U.S. Faster Payments Council, Katherine Edenbach, CFO at Emburse, Benjamin Seal, Vice President of Treasury Services at Cenveo, and more, including some bonus content from Michelle Richardson, SVP and CFO at Plaza Home Mortgages.
But before we get into it, here’s a brief word from our sponsor.
So please enjoy this special episode on Payments presented by our Executive Producer Daniel Shaffer.
Daniel Shaffer: So given this fast-moving financial landscape which has gone into overdrive since the onset of the pandemic, payments have also become faster, limits of daily Real-Time Payments have increased to $1 million, and CFOs are driving digital transformation to improve cost efficiencies across the enterprise. Reed Luhtanen, Executive Director of the U.S. Faster Payments Council says we’re outgrowing old payment networks.
Reed Luhtanen: We're in a world where we expect things to happen in real time. We expect when we do whatever it is we're doing. It's never fast enough. And so I think the, the banking system has relied on a very robust and very successful system of, of interconnectivity for the ACH network. Um, but that does have a number of lags in it that fall short of consumer expectations and, and business expectations, um, in terms of how fast things should happen in the 21st century economy.
Daniel Shaffer: Kevin Permenter comments on the state of digital transformation and the APIs that connect all the data in real-time.
Kevin Permenter: So the why behind the data. Getting to an understanding of what's, you know, what this data means for my company, for my, my, my shareholders for my customers. Right. What is it telling me? And so that's the other sort of data problem. And then there's like a overarching data problem, which is the security of it. Right? So when you see all of these sort of data management issues you know, what you realize is that it's the companies that have invested in the infrastructure to efficiently manage, you know, their data. Those are the ones that are agile, right? Those are the ones that have shortened the time between a business event and a decision. Right. They've shortened that time so that you know, the CFO, the board, now they have that information that they need rock solid information even across a very complex business environment, they have information that they need to make the decisions, you know, the M&A decisions, the global expansion decisions to, you know, to, to add a new product line, to, to move toward a digital subscription model. These kinds of big decisions demand a, a smooth and, and, and sort of agile, um, data management environment.
Daniel Shaffer: So, payments are changing and the demand for real-time data input is moving the industry to digitalize finance. The whole space is quickly shifting. Here’s Hamza Benamar, CFO at Kyriba.
Hamza Benamar: What's happened over the last 18 months is, uh, we've been able to convert many customers and vendors to electronic transactions, something that has been taking companies many years, and a lot of effort, uh, to accomplish is now, uh, actually happening at a faster pace. We're not at a hundred percent obviously, but, um, the growth of payment vendors. Uh, you know, for a C to C and B to C and C to B, uh, are mushrooming around us. Uh, you know, if you visit China Alipay or, or a web chat, uh,
WeChat I'm sorry, uh, are taken now for granted as forms of payments and, uh, no one, but probably the, the tourists are reaching for, for some cash. Uh, I see that progressing at a faster pace here in the us. Uh, but more importantly, these B2B payments, I think we'll see a lot of, of, of benefits as much as, uh, we've accelerated our move to remote work. I think we will also accelerate our digitization when it comes to, um, uh, to payments.
Daniel Shaffer: And to the point of accelerating payments, Michelle Richardson, SVP and CFO at Plaza Home Mortgages, says it’s partly because of the social culture and up-and-coming generations who are now leading or making their way in leadership positions in finance.
Michelle Richardson: The new generations that are coming in, they're all instant gratification. They're used to having apps for everything and it being able to have a meal delivered within five minutes to their house. I mean the payments and having that generation come in and take over treasury and payments, I think is going to really streamline and make things a lot faster.
Daniel Shaffer: Reed Luhtanen says not only are real-time payments necessary to meet expectations, but the U.S. Faster Payments Council is also working to make the whole process seamless for both users. Corporates and banks alike will need to adopt a faster payments profile in approach to real time payments before the benefits can be fully realized. But here’s Reed on those developing scenarios.
Reed Luhtanen: Developing those faster payments systems, you know, notably, like we mentioned, the RTP network where truly every transaction moves within seconds from one bank to the other in a way that allows for certainty and transparency is, is a huge game changer. Um, in meeting the expectations of those users. Um, another thing is. The ability to include rich data and even files along with the payment. So imagine, um, you're one business and you're invoicing another business. You can send that, that invoice in what's called a request for payments. And then when they pay you, they can. Including the messaging back that this payment is attached to the invoice that you sent us. So the reconciliation can be truly automated in a way that really makes the back office much more efficient.
Daniel Shaffer: And automating reconciliation is just a part of what makes a great customer experience. Kevin Permenter, Research Director at IDC, says the people aspect of payments is critical.
Kevin Permenter: Your productivity and, um, in your, um, sort of efficiency Can even have a effect on the customer satisfaction, right. And customer retention. Um, and also it can have an effect on the employee experience, right? So there's a people aspect to, um, to the, you know, to the outcome of the office of the CFO. Right. Um, you know, sort of, uh, you see this a lot, uh, in the banking space, right? For example, financial services where, uh, your, your outcome, uh, of course is, you know, being able to close the books faster, you know, and those sorts of things, but it also means that you're able to get Uh, information about the customer, right? About the patterns that a pattern of behavior that the customer is exhibited. Right. Get that to, um, the decision makers. So, uh, or, you know, sort of get that to the, um, sort of sales team and the customer relationship manager team. Um, and, and, and, and so that they can act on that, um, on that information and provide a more, a richer experience for the, for the clients provide a richer and deeper sort of, and build a deeper relationship. Right? So, um, you see it in the AR space, right? Accounts receivable, where, uh, having, having efficiency in the collection process means that that strategic vendor Right. Who routinely pays 50 days out because that's how their cycle works. Doesn't get the same, you know, sort of Dunning letter, um, that a, uh, um, that a non strategic vendor might get. Right. So adding a personal, personalized touch, um, you know, uh, on the payment side, being able to accept payments in whatever rail, um, whichever format, you know, that helps the client, you know, sort of, uh, you know, uh, helps the client be efficient, right? So there's all of these sorts of, um, human aspects to, to bringing efficiency to the, um, the office of the CFO.
Daniel Shaffer: Kevin is right. I mean, there’s a lot of human aspects to bring to the table. Efficiencies, streamlining operations, automating processes, all of these are pertinent and relevant to the treasury and the office of the CFO. Earlier in the pandemic, we spoke with Niklas Bergentoft, Principal at Deloitte & Touche (LLP) about how this has affected managing liquidity. Here’s what he had to say.
Niklas Bergentoft: As we've navigated through this past year specifically, I believe you have to tie the full ecosystem of liquidity together, right? So first from being able to see your cash real time, and they're predicting the liquidity outlook, controlling cash outflows in payments, and then have various sources of funding, whether you need to raise funds or various sources of placing excess cash. Right. So some, some thinking about how the treasurer's role may have shifted and changed. I think that we've seen both CFOs and treasurers and that roles have evolved quite a bit over the past, probably five years, but. In this past year, we've seen the role of the treasurer evolve into areas of working capital.
Whereas working capital has traditionally been part of the treasurer's roles and responsibilities and in many organizations. It's also moved or expanded further into payments us. Now the whole payments landscape is being transformed, looking at alternative payment rails and how it may fit into a strategy for, for the organization as a whole.
Daniel Shaffer: Niklas is right to say the role of the CFO and treasury are becoming more strategic, And, to manage data in real-time, technology will become vital to finance leaders, especially for payments. Reed says there are easy ways to make sure the payment is made error-free and securely.
Reed Luhtanen: We want payments to be like sending an email or sending a text message. And we, we mean that in that it should be simple and it should be instant, I guess what we don't, but who among us has not sent an email to the wrong person, um, inadvertently. Right. So we, we definitely want to have the processes, controls in place to prevent erroneous payments from going out or, or people being scammed, you know? And there are, you know, there's lots of different, you know, you're right. There's AI, there's machine learning, things like that, that can help it to detect it. There's also just putting in very simple checks, like asking somebody for one extra piece of information that you maybe don't even need to process the payment, but that would cause them to have to look. up The person that they're sending it to and then re potentially realize that they had the wrong name or they had the wrong something about it that was going to make it go to the wrong place. Um, so there's, there's, there's lots of things like that that can be done to help offset and prevent fraud from mere, not fraud necessarily, but even accident, um, from happening.
Daniel Shaffer: CFOs are taking protective measures to mitigate risks of faster payments.
CFO Katherine Edenbach says her company, Emburse, has already put technology to work.
Katherine Edenbach: Our biggest area of risk management today is really around cyber security and phishing attempts. Making sure that our employees are well-educated and know how to identify phishing and establishing controls. Around where we know that those fraudsters might try to get in. So we have a number of controls around approving invoices and around outgoing payments, especially payments with new or different banking information or changes to invoice addresses. This year, we're also going to be adding a credit component to our card product. And obviously that will bring a whole different realm of potential risk management along with it. But, um, so we are anticipating that coming as we move through the year, but as of today, our biggest areas is really that cybersecurity and phishing.
Daniel Shaffer: It’s not just the CFO. Treasurers are also using technology to help protect payments. Benjamin Seal is Vice President of Treasury Services at Cenveo says they’re leaning into new tech tools to manage risk around payments.
Benjamin Seal: Focusing on the machine learning with AI is key, and that's what we're looking at doing now. Actually this month, we'll be implementing a fraud tool from that Kyriba has It's the only way to truly, you know, save the company money without incurring additional expenses related to it. And that's always an easy sell to management. I mean, not trying to disclose too much, but we, you know, for fraud for that fraud tool, it doesn't just look for, for the fraud itself. It looks for accidentals, I'm going to say, but duplicate payments. And we had an incident in, I believe was October of this year that we had a duplicate payment go through. And luckily our vendor, you know, notified us almost immediately and we were able to get that money back, but there's a savings, you know, if your vendors aren't honest, that could have cost, you know, Cenveo time and money because we didn't catch it right away And that's what this tool is designed to do. Not only just for fraud, but also just human error.
Daniel Shaffer: But not all payments can be made instantaneously. Not quite yet. And technology is a necessary enabler to ensure faster payments remain protected. Here’s Michelle Richardson again.
Michelle Richardson: There's so many payment flows in the mortgage industry. And then not to mention you, you mentioned third parties. You know, we have the wires that have to go to the warehouse bank and then from the warehouse bank to the title company and the title company has to disperse that to all the different places that require funds related to the closing. So it's just. It's a lot, a lot of wire activity in the mortgage business. The ability to process payments quickly and capitalize on market opportunity, I mean, without having to worry about those wires being intercepted, I mean, technology is a necessity in being able to prevent risk and fraud.
Daniel Shaffer: Of course, while the future is leaning towards full digitalization and Real-Time Payments, Thomas Gavaghan is transparent about the reality of payments right now. Thomas Gavaghan, Vice President of Global Presales at Kyriba says that real-time payments are still a work in progress.
Thomas Gavaghan: Real-time payments is a method, right? That's a, that's an avenue. It's an outlet that companies can leverage, but you cannot make every payment through real time payment today, right. Uh, payment, payment optimization, and what we really are seeing more and more and more, and there's a couple of driving factors behind that, uh, is how to come. As a company, how can I better ensure that all of my payments, um, are centralized? Are processed timely, that I'm not missing payments and I'm not late on my payments. And then I'm doing it in a most cost effective way. Payments, cost money, right? They're getting clipped by the bank in terms of how, you know, because they're charging you for making those payments, you have internal costs in terms of the processing that goes into it. You have technology costs that you're incurring and where those are being managed and you have additional human resources costs, and whoever's managing those technologies and keeping the whole, keeping all of the, the, the, the pieces stuck together. I think a lot of organizations that we talked about earlier, those that are growth and growing, uh, and, and, and going through that, uh, that those changes that results in a technological nightmare sometimes, right? There's a lot of internal technologies that are held together through, you know, bubble bubblegum and shoestring. Um, and now what we are seeing is, uh, a, uh, a technology migration of organizations looking to deploy their enterprise technologies in the cloud. And that opens up these opportunity to reassess, where are we making payments through? Uh, who's touching the banks and can we do it in a more optimal way? Uh, and that's been a, a massive kind of direct, uh, direction that the, that the, uh, that the, uh, industry and the world is going towards.
Daniel Shaffer: So as we look to the future, we can only speculate about what payment networks or rails will come into play. Especially looking back at how something like the internet became a true game changer, Reed says.
Reed Luhtanen: The internet really created a whole bunch of business models that wouldn't otherwise have existed. And I think, I think there's something to be said for, as you really leapfrog and advance certain technologies. Um, who's to say what types of business models might be made possible by having, you know, truly, you know, highly efficient and instantaneous payments that we haven't had before.
Daniel Shaffer: There’s a lot of pressure on CFOs and Treasurers to focus on cost reduction, digitalization and mitigating risk of growth in new markets. One area that spans all of these objectives is payments. Our guests have given us a lot to think about as we consider the best approach to managing payments in real-time. For our next episode we will focus on the role of APIs, how they are connecting new pipes of information, including faster payments and payments services and improving decision making for CFOs.
Narrator: Thank you for listening to The Invisible Vault. If you’re enjoying the show, please take a moment to subscribe, rate and review. And share it with someone who you think might enjoy it.
The Invisible Vault is powered by the team at Kyriba, The global leader in cloud treasury and finance solutions, empowering CFOs and their teams to transform how they activate liquidity as a dynamic, real-time vehicle for growth and value creation. To learn more visit www.kyriba.com