« The Future of Payments » – Interview de Marion Laboure

Marion Laboure, economist at Deutsche Bank, talks to Cashlab about her latest study: "The Future of Payments".

In early 2020, 4,000 consumers were questioned about payments. The topics covered included cash, cryptos, etc. Given the success of the survey, we decided to repeat the experiment on a B2B basis. We took around 6 months to conduct our B2B survey, interviewing 600 corporates and selecting 250.

Generally speaking, what are the 3 main trends to emerge from your study?

" The first trendThis is clearly dematerialisation, with the widespread use of credit transfers, card payments, direct debits and online invoicing. Of course, this is not a new phenomenon, but the context has greatly amplified it.

The second trendThe main reason for this is the decline in the use of cash, probably fuelled by innovations such as instant payment, API integration, artificial intelligence, automation, etc. Cash payments had been falling for years, but this has accelerated by a factor of 4 or even 5 with the pandemic.

The third trendThis is the clear evolution of the real-time solutions that most companies will be using, i.e. everything that is ACH.

 

This responds to 3 challenges linked to the payment of suppliers:

• • Approval of invoices and payments to meet standard payment deadlines
  • Manual processing of banking documentation and KYC in particular
  • Managing and updating suppliers‘ bank details in an efficient and organised way’.

See the full study : https://bit.ly/3ggTj9P

Do you have the same question about trends observed specifically in treasury/cash management?

‘Above all, it's the transformation of business models. This was clearly an emerging theme in the survey.

We have identified 4 trends:

FirstlyB2C.

Large companies are investing more and more in B2C. They are determined to reach consumers without going through intermediaries, with a growing interest in e-commerce. In 2020, e-commerce grew by 50% in Europe. And we expect sustained growth through to 2023. This will trigger a clear need for solutions.

Second trend: real time.
Real-time cash flow is a major issue. Many treasurers want to be able to monitor and be informed of account balances in real time, which can be crucial in times of crisis.

Third trend: automated accounting systems and electronic invoicing technologies, which are increasingly used and in demand.

Fourth trend: centralising cash management.
We can see that treasurers are ready to rationalise their bank accounts. Interestingly, between 20% and 50% of treasurers intend to set up virtual accounts.

What do you see as the challenges facing the CFO/Treasury function in the future?

‘I think the crisis has highlighted some major malfunctions in an increasingly digital world.

There are several challenges:

• • Fraud protection and payment security exposure. There has been more fraud this year.
  • Reduce the time spent on payment errors.
    Corporates mentioned that 60% of payments still required manual intervention. And each payment takes around 20 minutes.
  • The management of KYC,bank documentation, and compliance issues.
  • Access in real time to all transactions carried out in the tool.
    Almost 54% of treasurers believe that one of the most pressing problems with cross-border payments is tracing payments. This is because they are unable to find out exactly which payments have been made.
  • Follow theevolution of technology day by day.
    It's a challenge that ultimately ties in with the first, because when it comes to fraud, you need to be technologically up to date. In fact, according to Google, the number of registered phishing sites is around 2 million. That's 20% more than a year ago.
  • Moving away from archaic payment solutions.

In fact, almost 50% of Corporates have problems with cheque forgery, with a loss rate of around 20%’.

You say that the majority of executives surveyed are ready to automate and change their payment habits. Do you think that 2021 could be sufficient time for all these changes?

‘We've been through a major crisis, with an upheaval in trends as in 2007/2008.

2021 is clearly moving in that direction.

Because there is more and more digitalisation and therefore Real-time to be able to monitor everything. This is useful when you have cash flow problems and need to monitor payments.

We will certainly see new priorities emerge in 2021. And I think the ‘paperless’ trend will intensify, at all levels as well as on the legal side where electronic signatures are now widespread.’

You mention in your research the risks of inaccuracy in cash flow forecasts. Do you think that the managers questioned would be prepared to use a forecasting tool? Automated and connected to their ERP?

‘If I put things into context, roughly half of treasurers feel that they can do more than they are doing now. Improve their efficiency in cash flow forecasting. In their view, this is by far the biggest potential efficiency gain.

• • 1/3 say that managing bank accounts is a source of efficiency gains.
  • 1/4 who want to improve everything to do with invoice processing.
  • 1/5 are dissatisfied with their payment collection and want to improve their payment collection processes.
  • And 15% of finance directors and treasurers see a potential efficiency gain in the processing of purchase orders.

So if you have a turnkey tool that can help you solve these problems, analyse spend management, monitor payments in real time and improve security, there's no reason why you shouldn't equip yourself.

On the other hand, it needs to be a turnkey tool, rather than several tools that need to be implemented in different ways.

Most treasurers focus on 3 priorities maximum in the course of the year. For recent trends such as artificial intelligence or blockchain, they won't necessarily have the time to devote to them.

Today, 48% of French managers surveyed believe that their cash flow forecast is the most ineffective element of their financial operation. What aspects and elements are they focusing on in times of crisis?

‘The crisis has reorganised CFO priorities and treasurers. And I think that today they are more focused on 5 priorities:

1. 1. Maintaining access to liquidity and credit
   2. Implement backup procedures
   3. Create total cash visibility with all transactions worldwide
   4. Determine short- and medium-term cash requirements
   5. Evaluate all ‘current exposure’.

An important point is that they are concentrating more and more on actions that bring short-term benefits. This practice is increasing at a time when there is an urgent need to make up for months of inactivity’.

You can find the full study here: https://bit.ly/3ggTj9P

Closely monitor your cash flow in a clear and optimised manner with our Cashlab tool.