Insights, Payments Industry

How automation will unlock the potential of instant payments

Modulr By Modulr on 7 April 2020   •   4 mins read
<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >How automation will unlock the potential of instant payments</span>

Automation is one of today’s business buzzwords. It can mean many things to different people in different contexts, and there have been a wide range of claims about its potential.

One thing is certain: even the low estimates of its impact suggest we are on the cusp of dramatic changes to how we do business.

One of the industries that will be most affected by the coming wave of automation will be financial services, in particular the payments space.

Why will automation affect payments?

In short, it’s because so many providers – whether banks, corporates or SMEs – still have a long way to go before their internal operations fully reflect many consumers’ experiences of digital platforms.

There is a gulf between their internal provision, and the convenience many of us – including these companies’ staff – experience in our everyday lives.

Many new employees have grown up in a world where instantaneous service is neither a bonus nor even impressive, but a given.

It can be shocking to walk in from a fully digitised consumer world and start working in an environment that, like more than half of all business in the EU, still retains manual processes – such as payroll or accounting systems that rely on offline and/or paper invoicing.

And this is just for employees. Most customers would doubtless be surprised at the legacy practices which have stubbornly persisted behind the scenes.

Real-time (or near-real-time) payments services such as the recent introduction of SEPA Instant Payments (SCT Inst) are just one part of the answer to this.

Whether a lender, employer, merchant, online retailer, accountant or any other finance function, your instant payments offering is undermined if legacy manual practices persist at either end of the pipeline.

Modernisation in one part of the payments chain, however critical, needs to be met with similar updates in the organisation and the ingestion of relevant data for the full value of digital payments to be unlocked.

We are, of course, talking about automation.

An integrated, automated solution allows accounting and CRM solutions to be cross-referenced and ensures that data, once uploaded, does not need to be manually entered in a system – saving a significant amount of employee time.

We are always hearing about the perceived threat that automation poses to jobs, but few of your team members will mourn the extinction of manual tasks like adding payments data to outdated systems that were likely deployed before their careers began.

Instead, accessing and sharing data via a consolidated platform, with the various data sources connected with payments providers and/or banks via APIs, paves the way for significant benefits.

In a similar vein, approval levels can be set for each category of transaction, smoothing the creation of an audit trail. Errors may be reduced by the standardised input that digital solutions require, which in turn can lead to savings in time and resources spent on correcting erroneous transactions.

This is all important and carries real value for businesses in any sector and of any scale – but these are also the familiar arguments in favour of automation.

What is automation’s unique offer to the payments space?

This is where we return to SCT Inst and related services.

Automating your payments system can not only allow you to consolidate all your payments providers into a single interface, but this streamlining allows you to adopt a truly agnostic approach to how you make your payments.

Is there a specific provider whose service matches your particular needs at a particular time?
Switching to the solution you need will be easy, fast, and straightforward – freeing you up considerably as you match your outgoing payments with the right provider.

This will often be determined by the payment service they offer – whether SCT Inst or CHAPS or Bacs and so on – but also the flexibility, security and control provided by the provider.

You won’t be constrained by the lack of convenience in switching from one solution to another, and the control will be placed back in your hands, rather than whoever designed a legacy practice that is just not up to the demands of the modern market.

This is where the opportunity of payments automation truly lies: the simultaneous upgrading of capabilities both in terms of how a payment is made, and how it is controlled.

A business that performs both of these upgrades together will unlock significant value and place itself in a strong position for future growth.

The team at Modulr has over 120 years’ experience of real-time payments. Get started by signing up for a payments strategy review and we’ll be in touch to explain how an end-to-end automated payments platform can benefit your business.

If you're interested in the future of European payments, download our latest guide.