Modulr: 5 essential features Next Gen payment services offer P2P lending and crowdfunding platforms

5 essential features Next Gen payment services offer P2P lending and crowdfunding platforms

Modulr
July 2019

Payments are now simpler, faster and cheaper than ever before.

Easy to use APIs have revolutionised the alternative finance sector by enabling integration of common software with banks and payments processors. This has allowed for increased process automation, making reconciliation significantly easier and providing richer data for enhanced reporting.

With these developments in technology, critical changes to regulation and a wealth of well-funded fintech start-ups and operators, the number of innovative new payment solutions arriving to market is growing rapidly.

More companies than ever are now developing easy to adopt services that allow for complete customisation, offering opportunities that have previously been unavailable in the payment solutions sector. This is driving a new era of improved efficiency, productivity and growth.

Here we take a look at five features these disruptive companies have unlocked throughout the sector.

1. Open APIs

The arrival of open APIs has allowed for simple integration of new software with lending platforms. This has opened up new opportunities for alternative finance providers, including:

- Easier to create Instant Payment Accounts
- Flexible and immediate payment initiation
- Ongoing ledger reconciliation

These opportunities create an operational environment that lends itself well to greater automation, reducing the need for human involvement and the likelihood of mistakes in payment management. Beyond the efficiency gains, the ability to improve the quality of service offering and the speed at which payments are made also becomes a genuine reality.

2. Instant Payment Accounts

With Instant Payment Accounts, unlimited dedicated accounts complete with a unique sort code and account number can be instantly created for every client using a platform. This avoids the need for time consuming KYC checks and makes the payment process much more efficient and easier to track.

Using a unique Instant Payment Account as a dedicated client account to hold the funds of each individual borrower or investor delivers major benefits including:

- Significantly simplified real time ledger reconciliation
- The clear separation of client funds
- Instant client onboarding­­­­

Realising these benefits simplifies the payment management process, reducing the risk of errors and the resources required to ensure the right people, are paid in the right place, at the right time.

What is an Instant Payment Account?

An Instant Payment Account is like a standard bank account in that it has a dedicated account number, it holds a balance and statements can be produced for it.

However, unlike a standard bank account, there is no need to go through a time consuming due diligence process each time a new account is created. Additionally, there is no limitation on the number of Instant Payment Accounts that can be opened.

Customers need to be validated once when the facility is set up, but when that has been done, it’s possible to create and close as many Instant Payment Accounts as required.


3. Flexible 24/7 Payment Initiation

Using an API, Faster Payments and other payments services can be accessed automatically when and where they’re needed. This eliminates the need for batched payments, avoids some of the time restrictions imposed by many banks and can reduce errors, while also limiting first party fraud risk and processing costs.

The ability to operate 24/7 with the help of the right systems and automation presents a fantastic opportunity to further revolutionise the payment sector.

4. Rules Engines

With fully programmable rules engines, complex payment flows, fee collections and treasury management can all be customized to improve their design, allowing for automation of key processes and systems, reducing operational overheads. This also eliminates the need for manual reconciliation of payments, reducing the risk of critical errors while unlocking the opportunity of unlimited scalability in the operation.

Flexibility in the design and implementation of these systems is integral to progressively improving performance and optimizing efficiency in key areas.

5. Management Dashboards

By allowing clients to build their own accounts and access key reporting features, it becomes easier to simplify manual onboarding and customer service processes. These dashboards allow all parties involved to monitor the metrics that really matter and help to manage payments and financial matters.

These developments are fundamentally changing the rules of the game in alternative finance, creating major opportunities for organizations to progress and evolve. By working with an innovative payment provider, alternative finance companies can enhance their productivity, reduce their operational costs and improve their bottom line. The future is now, and those who choose to embrace it will develop the competitive advantages that drive both growth and commercial success.

For greater insight into the opportunities and benefits payment innovation presents alternative finance businesses, check out our innovative payments guide.

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