“Payments aren’t sexy or high profile, but you’ll soon find out how important [they are] if [they] go wrong.”

Financial Director at UK charity

 

Large-scale payment failures, such as the Barclays outage last year, quickly make national headlines. It illustrates how critical payments are for individuals, corporates and governments alike. As such, building resilient payment operations should be a core objective of every organisation.

However, the changing face of payments and trade globally creates numerous challenges for UK corporates. In our recent webinar entitled ‘Protecting your financial operations: how to maintain resilience and security in times of uncertainty’, we discussed four general themes that challenges fall under. These include policy, social, legal, and technological challenges, each of which has a direct impact on a company’s ability to maintain continuity and trust in its payments process.

 

Evolving Policy Regulations

Policy challenges, for example, have emerged with the recent change in government. Businesses have had to respond to evolving fiscal policy, trade agreements and regulatory priorities, which can impact payment flows.

In addition, currency and interest rate volatility has influenced international payment strategies and hedging needs. Any corporate reliant on suppliers outside the UK requires real-time visibility over its foreign exchange costs. Resilience is undermined when organisations can’t anticipate cash flow exposure or react quickly to market shifts.

 

Social Trends Impact Payment Strategies

In the social environment, the shift in consumer payment preferences has had a knock-on impact on business-to-business behaviour. Rising demand for flexible, digital-first, real-time options has also seen corresponding regulatory pressure around fighting fraud. The commercial takeaway is that companies should update legacy processes or risk falling behind customer expectations.

Workforce decentralisation is another social factor impacting payments. Companies employing remote workers in the UK and globally need to have robust financial controls in place to prevent fraud and errors, ensure accurate reporting and maintain operational efficiency.

 

Legal and Technology Trends Evolve at Pace

On the legal side, data protection laws - such as the EU General Data Protection Regulation (GDPR) - influence payment data handling and verification. Organisations face reputational and financial damage when they suffer data loss, whether accidental or because of a cyber-attack, which makes complete confidence in data handling and auditability essential.

The adoption of artificial intelligence (AI) and application programming interfaces (APIs) brings threats as well as opportunities. For example, AI can rapidly increase the sophistication and frequency of phishing or other cyber-attacks. Gone are the days when a spoof email was easily recognisable due to typos, grammar mistakes and incorrect branding. This matters because payments teams become targets, and operational resilience can hinge on preventing just one successful attack.

In a straw poll, two-thirds of the webinar audience chose technology as the external challenge with the greatest impact on financial operations, followed by government policy (17%) and legal (11%).

 

How to Build Resilience

Having robust payment operations can help companies to:

  • Ensure continuity during disruption: maintain cash flow and customer trust during economic, political or environmental ‘shocks’
  • Protect revenues and relationships: strengthen supplier and customer confidence, reducing churn and disputes
  • Enable scalable growth: an organisation can’t grow if its payments or collections practice is built on shaky foundations. Companies need to consider volume spikes, new payment methods, expanding into new markets and regulatory change.

For example, a new UK law came into effect on September 1, holding any large organisation that operates within the UK criminally liable for failing to prevent fraud. The only mitigation strategy against prosecution is providing evidence that the business has the right policies, culture, processes, and technology in place to tackle fraudulent behaviour.

To build resilience, companies should centralise workflows and controls, including auditing and approvals, so that they have the right checks and balances in place for every payment. In addition, they should optimise processes using AI, which can act as a complement to rules-based policy and controls that already exist.

Businesses can also build resilience by reducing data risk. Many are looking to platform providers such as Bottomline to shoulder the responsibility for managing sensitive financial information, such as vendor, customer and employee data.

By deploying a modernised payments infrastructure, companies can respond quickly to change by providing greater flexibility around payment methods, as well as ensure operational continuity by connecting to multiple payment channels.

By moving to software-as-a-service (SaaS) or cloud-based platforms, an organisation will benefit from the security and workflow improvements that are rolled out across a platform’s customer base.

 

Showcasing Success Stories

During the webinar, Bottomline presented several customer case studies to illustrate the positive impact a resilient payments infrastructure can deliver.

 

1. Energy Provider: Tokenisation to Reduce Fraud and Support Digital Modernisation

In the first use case, a large UK energy company decided to change its billing system and CRM, shifting from its incumbent provider to Kraken Technologies. The move was triggered by developments in the energy sector, such as electric cars and renewable energy, as well as changes in the way that customers want to pay for energy.

While Kraken’s core business is a billing and CRM system, it didn’t want to take responsibility for storing and managing payers and beneficiaries’ bank account details. To solve this issue, Kraken implemented account tokenisation through Bottomline’s Payment Hub.

The solution is built on a scalable API-driven framework integrated with Kraken’s CRM. Tokenisation reduces fraud risk, as well as helps Kraken comply with regulations, such as GDPR.

 

2. UK Insurer: Account Verification to Meet Direct Debit Rules

In another case study, a UK insurer needed to adhere to evolving Direct Debit (DD) scheme rules. Bottomline helped implement an account verification solution at the point of customer sign-up for DDs.

Verifying payments at the source reduces errors, improves risk management, helps to prevent fraud, and decreases costs associated with failed DDs. In addition, the solution ensures a much smoother process throughout the company’s collections lifecycle.

 

3. UK National Lottery: Digital Payouts for Greater Efficiency

The third customer success story is Allwyn, which took over as UK National Lottery operator last year. Historically, 50,000 cheques were issued annually to pay lottery winners of £5,000 and above.

This incurred high administrative and processing costs, as well as created risk and delays from cheques in the post. In addition, the company needed to adapt to evolving consumers’ choice of payment methods.

Bottomline’s Payouts Automation has enabled fast, secure digital payments, as well as automated identity verification through Confirmation of Payee. The solution drives greater efficiency in financial operations by removing cheques from the system and reduces risk of unpaid refunds and payment fraud, as well as provides a better customer experience.

According to the webinar poll, most respondents believe that modernising their payments will have the greatest impact on their business over the next three years, followed by optimising with AI and reducing data risk.

As illustrated by the three case studies, a modernised payments infrastructure is the gateway to solving many of the challenges facing companies today, and a practical way to unlock new opportunities as payment demands continue to evolve.