The Podcast Transcript

John Gaffney: Greetings and welcome to the Payments Podcast. My name is John Gaffney, I'll be your host for this episode, which will cover the recently wrapped Association of Financial Professionals Conference, where all walks from the financial world gathered to learn about and discuss the most important issues of the day. We're going to discuss key takeaways from that conference with Nick Berents, Director of Solutions Marketing for Bottomline’s Banking Operating segment.

Welcome, Nick. Thanks for joining us.

Nick Berents: Thanks, John, glad to be here.

John Gaffney: Alright, thank you.

Nick, there was a lot of mix of people, a great mix of people, I would think, at AFP. You’ve got treasury, you got AP, AR departments, CFOs from banks… a real wide variety of attendees. What was your sense of the energy and the general vibe there?

Nick Berents: So I guess, compared to last year, there was a lot more energy, in large part because AFP, about a year ago, they might have had maybe a third of their attendees that they normally would have had, and that was obviously because of COVID. So what they did was they broke it out into an in-person and also a virtual conference last year. But this year, everybody was there in person.

It was in Philadelphia, which is a fairly easy city for most to get to. And I thought the energy level was very good. There were a lot of folks glad to see each other. But folks were there to do business as well, and to learn. A lot of them are certified treasury professionals and need to keep that status live, so they go to educational sessions to get credits to keep their CTP designation.

I would say you had a mix of treasury, but you also had a lot of banking folks as well, because a lot of commercial banks serve those treasury customers. So they wanted to make sure they were getting in front of them and understanding the issues that the treasury, corporate treasury, folks we're looking at considering. So a lot of vendors and a lot of activity.

John Gaffney: I talked with somebody else from our company, who went to the last AFP, and he was saying that he was very impressed with the level of knowledge among the attendees there. Did you get that vibe too?

Nick Berents: Yes, definitely. I think a lot of folks came in knowing, from a strategic direction, what they were looking for. I'm talking about folks that were walking the show floor, they tended to come by our booth and ask some really specific questions, and they were looking to have conversations related to different types of technologies and processes.

I think that the education sessions that I attended were very pointed, they had a lot of very good tips for their attendees. For example, there were some sessions about corporate fraud and how to identify potential fraudsters within your organisation, traits to look for and things to look for, which I found pretty fascinating.

Then there was also new information there. There were new technologies, but also new ways of looking at things and things for treasury professionals to consider, and for their banks to consider, from a roadmap perspective. So people were very focused, and when I think the level of attendees, these are folks that have been doing this for many, many years in their professional careers.

John Gaffney: Yes, interesting.

What was the chatter like on the show floor? What were some of the hot button issues?

Nick Berents: There were a few that I thought were fairly interesting. We had a lot of folks come by asking about treasury management systems. So in other words, the idea that you have a centralised place where, as a corporate, you can pull all your information from your different sources. You might have a bunch of different banks that you work with, across the country, say, and you're pulling all that data into one interface so that you can manage your treasury systems, so you can understand your cash flow and where things stand through all your banking accounts. A lot of talk around that…

Fraud is always a big topic at a show like this too. The fraudsters are always evolving, and it feels sometimes like corporations are maybe a step or two behind. So they're trying to stay on top of it, trying to understand what the landscape is like and also what tools are out there, because there are a lot of different tools that you can use to answer a lot of different fraud challenges.

So I think there was a lot of education there. You know, a treasury professional needs to understand it, but they're not always looking at fraud in particular, that's not their central role, but they need to be really concerned about it. So I think that's part of the education process there.

John Gaffney: I know you went to a lot of panels when we were talking before, what were some of the better ones?

Nick Berents: There was a real interesting panel from what was called the Business Payments Coalition. The only reason why I tapped into that was somebody from the Federal Reserve came by our booth asking if we knew about it, and I hadn't. I asked a few of my fellow banking folks if they had and there was a little bit of, “I heard about it a few years ago, not really sure what's going on with it or what it is.” So I went and attended, and it was pretty fascinating.

The Business Payments Coalition is a partnership with vendors, but the Federal Reserve is involved, and I'm sure there are others involved that I didn't see there. But, essentially, what they're proposing is, what I would call, straight through processing for invoices. They called it e-invoicing. I think the underlying premise of it is that, well the stats they share are that, 75% of invoices require manual processing, and that costs US businesses anywhere from $160b to $200b annually.

The reason why that happens is because nothing is completely automated in that process of invoicing and then remittance. There are pieces that are automated, but there is still a lot of manual process involved. What their goal is, is to build out a platform and knowledge so that they can automate the entire process to take those costs out of there and to make things much more efficient. They even point out stats like, when you're talking about paper invoices, only 45% of them get paid on time, but electronic invoices are paid on time 92% of the time. When you hear things like that, you kind of go, “Okay, there's something there.”

So I think, from my perspective, that was interesting to listen to, and maybe even get involved with at some point. But I could tell by the folks in the audience, there were a lot of people that didn't have much knowledge, so they actually interrupted the speakers a few times to press for more details. I think there was a lot of real strong interest, you know, “What is this thing? And how are you guys going about it? When is it going to be in the market?” and those kinds of things.

It’s a group that’s still working this through, but they want to set up a bunch of standards so that they can lower costs, offer better cash management, reduce errors, mitigate fraud risk, and also increased transparency in the whole straight through processing perspective.

John Gaffney: Yes, you said one of the magic phrases here was ‘cash management’. There's a treasury aspect to the show, as you mentioned, and you also mentioned that people wanted to know more about treasury management systems. I hear a lot about cash forecasting, and how it's still almost an impossible errand these days. What did you hear about that? Take the treasury angle of this show, if you could?

Nick Berents: Yes, I think the cash forecasting, that is really a hot topic. It has been for a while. And I think the reason why it has been is that nobody's really nailed it. The cash flow forecasting or optimisation of your cash flows, nobody's really come out with a solution that provides it from end to end, and really simplifies it. There are a lot of different vendors out there that are doing different things, but it's still a burning need.

I had a chat with an analyst from Celent, named Patty Hines, and she said that tends to be one of the top issues for corporates. I always, sort of, pivot towards the banks that are supporting the corporates, and I asked her, “Do you know of any banks that are really supplying that?” And she said, “Not really, some are working on it, but if a bank can come out with a really strong cash flow forecasting solution, that would really go a long way to helping their customers. And if they don't do it then those customers are going to look for other fintechs to help with that.”

So there are firms that are doing that kind of thing out there. But if you were starting from scratch, you wouldn't really know which way to turn at this point.

John Gaffney: Interesting. I'm going to break a little bit from the show. Nick, I'm going to ask you, now that you have all this knowledge from AFP, some of the things that you're looking at for 2023.

Nick Berents: Sure. Well, from the banking perspective, I think one of the big things that'll be happening next year is the launch of the Federal Reserve's FedNow system. We already have real-time payments from the clearing house, so this will be their version, they'll call it Faster Payments. The FedNow system/platform is now in pilot. But if things are headed the way they're supposed to, they'll have it live by summer, and then other banks can start to use it and deliver to their commercial customers.

The reach of the Federal Reserve is probably a little bit more than the clearing house, I would venture to say, because the clearing house is owned by big banks and the Federal Reserve touches all banks.

It's interesting because some folks are looking at it as, “Do I do one or the other?” I think the answer is you’ve got to do all of it, you've got to enable both because there are a lot of use cases being proposed, but nobody's really clear yet on how it's actually going to be embraced and adopted. So it's out there, and it's for banks, corporates, and small businesses to use as well. So I think it's going to be a continuing evolution, which’ll be interesting to watch.

The other thing is, which is always coming up, and it's always coming up with our bank customers, is APIs. The ability to build solutions through APIs… The banks don't always come to us and say, “We want a solution that you provide,” necessarily. They want flexibility to build their own solutions on top of what they're getting from us. So the API discussion is constant. It's probably more than it was four or five years ago, and I think that's just going to continue.

I would say there's one more area that's interesting, I wouldn't say it's related to AFP quite at this point, but the idea of commercial onboarding. How do you onboard commercial customers to automate the process to get new products and services through the bank, through a streamlined, completely automated process rather than having to go into a branch or call your banking rep, and calling them a week later, “What’s the status of trying to get a new line of credit?” or something like that. It’s completely automating those processes. Nobody really delivers a solution like that now, efficiently. So I think that's something to keep an eye on. There's a lot of opportunity there as well.

John Gaffney: Alright, that's a wrap. Nick Berents, Director of Solutions Marketing for Bottomline’s banking operating segment, I want to thank you very much for your time.

Nick Berents: You got it.

John Gaffney: So once again, John Gaffney, Payments Podcast. Please give us a listen wherever you get your podcasts, whether it's SoundCloud, Apple, Android, or Spotify. Thank you.

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