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1、World Report Series 2023PaymentsWHERE IS THE CASH?ACCELERATE CORPORATE CASH MANAGEMENT TRANSFORMATION TO BUILD VALUE CONTENTSForeword 3Executive Roundtable participants 4Executive summary 5Innovation,regulation,and profit dynamics shake payments status quo 6Enterprise cash management is a challenge

2、to be met 18Forge strategic corporate relationships underpinned by efficient cash management 25In conclusion 35Methodology 36Partner with capgemini 37World Payments Report 20232FOREWORDIn the recent past,the World Payments Report focused primarily on retail payments.After rebounding from the pandemi

3、c,business-to-consumer payments was the fast-moving sector;however,in addition to retail payments,we now see a significant opportunity for banks and payment service providers(PSPs)to support corporate treasuries and commercial enterprises.Capgeminis World Payments Report 2023 found that non-cash tra

4、nsactions remained resilient as consumers and small and large businesses adopted digital payment schemes.Our data suggests that non-cash transaction volume growth will continue accelerating at a 15%CAGR from 2022 to 2027 due to improving macroeconomics,expanding digital payment infrastructure,and a

5、proliferation of new payment instruments.As global regulations,initiatives,and innovations surge,new payment instruments and use cases abound:banks and PSPs are finding it costly to juggle these simultaneous changes.Banks and payment firms will have to re-balance their focus on retail and commercial

6、 payments to unlock new value.We talked with corporate treasurers across multiple industries,and more than half told us they urgently need effective and efficient cash management services(CMS)because of ongoing trade globalization and supply chain disruptions.Another third said evolving risks(geopol

7、itics and cybersecurity)make CMS critical,while nearly 30%called out rising inflation as being behind their growing need for better cash management.And therein lies the opportunity.One-size-fits-all solutions dont work for todays enterprises,and corporate treasurers say they are dissatisfied with th

8、eir banks and seek more relevant advice and strategic partnerships.They want support to mitigate long cash conversion cycles and issues such as poor credit risk assessment,delayed payment processing,inefficient working capital management,and supplier overpayment.In short,they want 24/7 visibility in

9、to their organizations cash.So how can banks and PSPs help?Our report outlines strategies for financial firms to optimize their cash management value chain to offer business and technology advice to enterprise clients.Building a digital foundation is the first step,with a future focus on leveraging

10、cloud-native platforms.Firms can augment their CMS productivity and performance through virtual account management for increased efficiency,rationalized cash management structure,and automated processing.While we cannot predict how the economic world stage will play out over the next year,we believe

11、 strong relationships with corporate treasuries can be lucrative,win-win alliances.Anirban Bose Financial Services Strategic Business Unit CEO&Group Executive Board Member,CapgeminiWorld Payments Report 20233EXECUTIVE ROUNDTABLE PARTICIPANTSRachel Whelan Managing Director,APAC Head of Corporate Cash

12、 Management&Global Head of Payments&Transactional FX Product ManagementDeutsche BankJan Rottiers Head of Liquidity Management Solutions for Corporates BNP ParibasPaul Van Sint Fiet Head of Cross-Currency Solutions,APACJPMorgan Chase&Co.Nicolas Cailly Global Head of Payments&Cash ManagementSocit Gnra

13、le Corporate and Investment BankingSailesh Panchal DirectorDigital Transformation AdvisoryTSB BankWim Grosemans Global Head of Product Management-Payments&Receivables-Cash ManagementBNP ParibasThe Executive Roundtable participants for our World Payments Report 2023 included top leaders and acknowled

14、ged payments industry experts from leading banks.They helped steer our report content through ideation,hypotheses refinement,and validation of key findings.We are grateful they generously shared their time,experience,and vision.World Payments Report 20234Since 2022,a steep rise in inflation,rising i

15、nterest rates,tumbling stock markets,waning consumer confidence,supply chain disruptions,and escalating geopolitical crises have affected global commerce.Current volatility has even driven a temporary rebound in cash use,indicating that reliance on paper notes remains despite its general decline.INN

16、OVATION,REGULATION,AND PROFIT DYNAMICS SHAKE PAYMENTS STATUS QUOPer our estimates,non-cash transaction volume globally will reach almost 1.3 trillion by 2023,a nearly 16.6%year-over-year growth rate.And by 2027,non-cash transaction volumes are expected to reach about 2.3 trillion,doubling since 2022

17、.This exponential growth is driven by the expansion of instant payment infrastructure in major markets,ongoing adoption of open banking frameworks,and more:evolving customer expectations,regulations,and industry initiatives are catalyzing the fast adoption of new instruments and instant payments.Man

18、aging the volume,velocity,and variety of these simultaneous changes comes at a cost for banks and payments firms especially when revenue sources are under pressure.Payment executives surveyed in this report indicate that nearly 80%of traditional payment revenue sources(fee,fund,and float income)are

19、stressed.In parallel,costs related to regulatory compliance,scheme implementation(including ISO20022 and SWIFT gpi),and payments modernization leave limited resources to invest in innovation.Banks and payment firms need to rebalance their focus between retail and commercial payments to maximize valu

20、e.Globally,the overall value of commercial payment transactions surpasses that of retail payments 56%versus 44%of total transaction value.Commercial payment instruments such as virtual cards,account-to-account payments,and digital wallets are gaining attention from corporate treasurers:very quickly,

21、commercial payments are catching up with the digitalization trend prompting banks and payment firms to act now and act fast to expand commercial payment capabilities.ENTERPRISE CASH MANAGEMENT IS A CHALLENGE TO BE MET Maximizing value from commercial payments requires banks and payment firms to enga

22、ge and meet the changing expectations of enterprise clients.Cash management is a constant and important challenge for corporations facing macroeconomic headwinds EXECUTIVE SUMMARYand uncertain growth.Yet,inefficient working capital management often traps cash within the enterprise-banking value chai

23、n.As businesses struggle to access a 360-degree view of their cash,79%of corporate treasurers complain about lengthy cash conversion cycles.Despite having multiple banking relationships,70%of corporate treasurers say banks cash management services are underwhelming.From slow client onboarding and la

24、ckluster bank-to-enterprise connectivity to inaccurate reconciliation and cash forecasting,banks face multiple challenges in offering efficient,lean,experiential cash management services to corporate clients.Outdated and increasingly expensive systems and slow or disconnected transformation initiati

25、ves result in underdeveloped cash management capabilities for banks and payment firms.Banks are missing a significant opportunity to create new revenue streams and cost-saving levers.FORGE STRATEGIC CORPORATE RELATIONSHIPS UNDERPINNED BY EFFICIENT CASH MANAGEMENTEnd-to-end digital transformation in

26、transaction banking,including effective cash management services for corporates,requires top-down commitment,cohesive planning,and a unified purpose for structural reforms.Despite the fact that large corporates have many banking relationships,there is still a sizeable opportunity for banks to step u

27、p as strategic partners at the regional or domestic level.We offer banks and payment firms a three-layered strategy to nurture strategic cash management relationships with corporate clients:Simplify the back stack to enable innovation and agility Perform with platforms to boost cash management effic

28、iency Engage with corporate clients as strategic partners,not service providers.When successful,sustainable value can be unlocked.Sixty-seven percent of bank executives acknowledged that strategically partnering with corporate clients reduces the threat of disintermediation by FinTechs and others;an

29、d 57%of payments executives said strategic banking partners enjoy increased cross-and up-selling opportunities because of these relationships.The time to solve the challenges of cash management services delivery to corporates is now.World Payments Report 20235Innovation,regulation,and profit dynamic

30、s shake payments status quoFor banks and payment firms,2022 was unprecedented.High inflation,waning consumer confidence,rising interest rates,recessionary fears,and tumbling stock markets left a volatile,uncertain,ambiguous,and complex environment in their wake.Thanks to unprecedented government sti

31、mulus,consumers and businesses began the year robustly across most major markets.But while the jump-start boosted market liquidity,global supply chains were stressed by inflationary pressure.Indeed,high inflation triggered cost-of-living crises across the globe.And as seen previously in the first ye

32、ar of the pandemic(2020)and during the 20072008 recession,cash use picked up during an economic crunch,decelerating the 13-year decline.1 According to the Nationwide Banking Society(UK),2022 cash withdrawal volumes increased by 19%year over year,indicating at least a short-term reversal in declining

33、 cash use.2Cash remains an important payment instrument around the world,alongside digital alternatives.Yet,despite its near-term convenience,global use of cash continued to dip during 2022.Non-cash transactions proved resilient amid global uncertainties Non-cash transaction volumes maintained upwar

34、d momentum as consumers and businesses adopted digital payment schemes.Our estimates suggest that from 2022 to 2027,non-cash transaction volume growth will continue accelerating at a 15%CAGR due to expanding digital payments infrastructure and a proliferation of new payment instruments(Figure1).Lets

35、 take a closer look at trends by geographic region.EuropeNon-cash volumes compound annual growth of 10.7%is expected from 2022 to 2027 thanks to expansion of instant payments,open banking regulatory(PSD3)enhancements,and an EU Digital Identity Wallet 2023 pilot initiative.While Eurosystem launched t

36、he Target Instant Payment Settlement System(TIPS)in November 2018,its Figure 1.Expanding digital payments infrastructure fuels non-cash transaction volume growth14.3201720212022F2023F2024F2027F548.01,016.31,143.91,334.01,538.12,296.724.529.591.6218289.8515.172.1204.7258.6456.444.3160166.6162.833.610

37、6.1231.6325.6637.156.9189.8298.1482.21269.638.8124.1245.8364.1765.3Global16.6%14.1%15.8%6.2%12.4%23.7%14.1%15.7%19.8%6.5%10.7%15.0%MEALatinAmericaNorthAmericaEuropeAPACGrowth22F23F22F27FCAGRSources:Capgemini Research Institute for Financial Services Analysis,2023;ECB Statistical Data Warehouse;BIS S

38、tatistics Explorer;Countries central bank annual reports.Note:Forecasted figures were used when data was unavailable.Figures are forecasted for 2022 and beyond.Volume in billions16.6%year-over-year growth rate in global non-cash transactions,2023 estimateWorld Payments Report 20236adoption was tepid

39、,with Single Euro Payments Area instant credit transfers(SCT Inst)accounting for just 14%of all SEPA credit transfers during the first half of 2023.The European Union proposed amendments to the 2012 SEPA regulation in 2022 to eliminate adoption barriers and streamline instant payment(IP)system use.3

40、 Moreover,the European Payment Initiative(EPI)is piloting an IP scheme in 2023 after acquiring iDeal,a Dutch payment method that enables consumers to pay online through their bank,and Belgium-based Payconiq,a mobile payment and processing platform.The EPI pilot will include digital wallets and an op

41、en-banking instant payment system in Germany and France.The European Central Bank(ECB)backed payment-integration initiative said the EPI scheme might eventually have buy now,pay later(BNPL)and digital identity features.4 In parallel,the Immediate Cross-Border Payments(IXB)initiative from EBA Clearin

42、g,SWIFT,and The Clearing House in the United States is aiming to enable instant processing of USD and EUR currency exchanges in 2023 to strengthen the US and European digital payment adoption rate.5 North AmericaAs the region catches up to the instant payment revolution,non-cash payment volumes are

43、projected to rise at a 6.5%CAGR(20222027).The US Federal Reserves FedNow Service went live on July 20,2023.FedNow aims to create a European-style real-time payments network and will function in addition to the RTP Network by The Clearing House,which has been operational since 2017.Noteworthy is the

44、fact that RTP and FedNow only supports push payments:this means payment types like recurring payments,subscription payments,and P2P payments that require pull capabilities are not supported by FedNow.6The new instant payment service will need further investments to build new capabilities and propel

45、the US market to double-digit growth.In parallel,the US Consumer Financial Protection Bureau is developing an open banking framework and rules that it expects to finalize by 2024.7 Canadas Real-Time Rail is slated to go live in 2023,8 and Canada has also announced open-banking launch plans for 2023.

46、The two initiatives will bolster non-cash volume growth in Canada.Asia PacificThe region lacked domestic digital payment infrastructures and had heterogeneous payment rails across key markets unlike in Europe,where SEPA instilled standardization.But during the last decade,government-backed(or led)de

47、velopment of instant and real-time payment infrastructure across critical jurisdictions(including India,China,Singapore,Australia,and Thailand)has been driving adoption of digital payments.As a result,APAC is now on track to comprise more than 50%of global non-cash payment volumes and will likely re

48、gister an accelerated 19.8%compound annual growth rate for 20222027.To further improve domestic and cross-border digital payments convenience,efficiency,cost,and acceptance,APAC markets are also building bilateral and multilateral payment infrastructures.For instance,in 2021,Thailands PromptPay and

49、Singapores PayNow real-time payment infrastructure were linked.9 In 2021,Singapore also connected its real-time payment infrastructure with Malaysias DuitNow.10 Singapore and India(UPI)also aim to join real-time payment infrastructures.Moreover,Singapore,Indonesia,Malaysia,the Philippines,and Thaila

50、nd have all announced plans to integrate regional QR payment systems.World Payments Report 20237Middle EastA growth trajectory similar to that being realized in APAC is unfolding here.The region has been heavily cash reliant despite high mobile penetration.However,regulatory reforms and maturing dig

51、ital payment infrastructure are poised to boost non-cash volumes CAGR by 14.1%in 20222027.Open banking reforms are already underway in the region.Bahrain,Saudi Arabia,the UAE,and Jordan are beginning to embrace open banking frameworks.11In parallel,several Middle East markets are also launching inst

52、ant payment schemes:Saudi Arabia launched SARIE in 2021,12 and the UAE is set to launch its instant payment platform in 2023.13 The region is also working to integrate payment rails through initiatives such as the Arab Monetary Fund-owned Buna payments platform and AFAQ,a regional payments system pr

53、ovided by the Gulf Payments Company in cooperation with Saudi Central Bank.AfricaThe continent is catching up to its neighbors in terms of non-cash transaction volume.Studies say 18 African nations are developing domestic instant payment systems.Moreover,three development projects aim to build regio

54、nal instant payment platforms.14 Such initiatives will likely boost non-cash payment capacity in the region.Latin AmericaThe region has been consistently developing instant payment infrastructure.Non-cash volumes in the region are trending toward 15.7%compound annual growth from 2022 to 2027.Ten Lat

55、in American countries are pursuing or launching instant payment schemes led by Pix,created by Banco Central do Brasil(BCB)in 2020.15 Since its launch,Pix has solidified its position as a preferred Brazilian payment option;BCB aims to expand Pixs reach for instant cross-border payments among a bloc o

56、f countries by 2025.16Evolving regulations and industry initiatives are driving payments competition and innovationThe dynamic payments sector has been at the forefront of innovation,with a reputation for adapting quickly to challenges and changes.Regulations and industry initiatives have kept pace

57、with changing times to ensure resilience,transparency,security,fair competition,and quick-to-market innovations(Figure2).In particular,four key industry initiatives and regulations bear further discussion here.A key trend in payments since 2020 has been the bilateral and multilateral integration of

58、real-time and instant payment systems between different jurisdictions.17 From Asia to the Middle East,Africa,and Latin America,markets are attempting to integrate instant payment infrastructure for greater cross-border payment efficiency,transparency,and speed at a lower cost.18 However,cross-linkin

59、g is complicated because of foreign exchange(FX)conversion,compliance checks,heterogeneous messaging,and varying technical standards.To overcome such challenges,the Bank for the International Settlements(BIS)built a network prototype,Nexus Gateway,to standardize the multilateral linking of IP system

60、s.The pilot was conducted in 2021 to connect the systems of Europe(TIPS),Malaysia(DuitNow),and Singapore(PayNow);in addition,BIS aims to connect instant payment systems in five Asian markets Indonesia,Malaysia,Philippines,Singapore,and Thailand during a 2023 testing phase.Scaling the Nexus initiativ

61、e should help ease cross-border transactions and digitalize remittances flow.19Nexus Gateway sets sights on cross-border payment efficiencyAli ImranCOO,Commercial Bank of DubaiPost-Covid,the shift to digital payments has stuck with consumers.Developing regional digital payment infrastructure and reg

62、ulations will drive the next phase of movement to a less-cash economy.Cross-border payment options will develop along leading trade corridors such as the Middle East to China,India,and Hong Kong further boosting non-cash payments in the region.”World Payments Report 20238TokenizationWithin the risk

63、reduction category,tokenization is essential as banks and payment firms pursue ecosystem orchestration so that financial data can flow among multiple parties safely,securely,and instantly.Tokenization is gaining traction in areas where cyber fraud protection is necessary around sensitive data.The mo

64、st popular is credit card tokenization,where an algorithmically generated token replaces the cards primary account number.Tokens can be saved in wallets or passed through payment rails without risking data exposure.The process simplifies payment card industry security compliance by limiting the numb

65、er of systems storing customers sensitive data.Beyond compliance,tokenization also improves payment processing speed and security as it:Allows businesses to offer card-on-file transactions for seamless subscription billing and recurring payments Enables one-click checkout for e-commerce sites Lets c

66、ustomers store tokenized cards conveniently in Apple Pay and Android Pay wallets.Central bank digital currenciesAnother key initiative shaping the future of payments is the development of central bank digital currencies(CBDCs).As of June 2023,130 countries representing 98%of global GDP were explorin

67、g CBDCs,a significant jump from 2020 when only 35 countries were considering a CBDC.20 Industry bodies like SWIFT are Figure 2.Key Regulatory and Industry Initiatives(KRIIs)are evolving to harmonize the payments landscapeEPI European Payments InitiativeDORA Digital Operational Resilience ActPSR-Paym

68、ent Systems RegulatorMiCA Markets in CryptoassetsIXB Immediate Cross-Border PaymentsSEPA Single Euro Payments AreaPCI Payment Card IndustrySEA Southeast AsiaFIDA Financial Data AccessRiskreductionStandardizationInnovationCompetitionand transparency2021202220232024-20252026Buy Now Pay Later regulatio

69、ns-UK(Consultation)and Australia(implemented)Confirmation of Payee-EURetail Payment Activities Regulations(“RPAR”)Digital ID frameworks(EU Digital identity)US Stable Act 2020(proposed)EU DLT Market Infrastructure-Pilot Regime 2023 MiCA Regulation(Crypto assets)(proposed)New payments architecture(NPA

70、)UKPayment Data Localization(Schrems II regulations)Payment Data Localization(RBI regulations-India)Tokenization-RBI tokenisation regulationTokenization-The PCI Data SecurityStandard(DSS)EU central electronic system of payment information(CESOP)Singapore Payment Services(Amendment)Act 2021(Consultat

71、ion)DORA(EU)PSR-APP rules(UK)EEEEEEEEIEEIIIIIIIIIEEEEERetail Payment System Act 2022 NZEU Mobile wallet interoperability(EMPSA)ISO 20022 migration-Domestic and Cross-borderEuropean Data Governance ActEPI Unified instant payment solutionBIS-cross border harmonization of API protocolsSWIFT gpiSEPA Pay

72、ment Account Access(SPAA)Credit card Network Portability RBI(proposed)FedNow IXB initiativeEU Data Act(Proposal Accepted)B2B E-Invoicing(France)PSD3 proposalCentral Bank Digital currencyVRP(Variable Recurring Payment)UKDigital Services Act(EU)Initiatives to promote contactless paymentsgrowth(e-RUPI)

73、Canada Real-Time Rail(RTR)UAE-New real-time payment platformSWIFT and Capgemini CBDC interoperability trialFIDA(EU proposal for open finance framework)SEA common QR code system for cross-border payments(ID,MY,PH,SG,and TH)EU Revised Cross Border Payment Regulation(CBPR2)Supervisory Reporting Require

74、ments Framewor(EBA recommendations and signposting tool)The American Data Privacy and Protection Act(New draft Proposed)Interchange fee regulation UK EEA cross border(under review)SWIFT cloudIEEEEEEEEIIIIIIIIIIIIIIIISource:Capgemini Research Institute for Financial Services Analysis,2023.Note:Elapse

75、d time is shown only for regulations and initiatives where key implementation dates are defined.IIntermediate implementation of the initiative/regulationEFull implementation of the initiative/regulationNew KRIIs introduced in WPR 2023Elapsed timeIIIWorld Payments Report 20239The European Commission(

76、EC)is setting global payments trendscollaborating with regulators and financial services firms to seamlessly integrate CBDC with existing payment infrastructures.In 2022,SWIFT and Capgemini demonstrated interlinking of disparate CBDCs with traditional payment infrastructure to achieve successful cro

77、ss-border transactions.This pilot paves the way for the interlinking of multiple CBDC systems via a shared platform.21ISO20022 migrationBanks and payment firms are also switching to a data-rich messaging standard,ISO20022,that allows financial firms to pass down more granular data;this new standard

78、requires tokenization as a security layer.In the World Payments Report 2022,we analyzed the adoption and benefits of ISO20022 migration:the SWIFT ISO20022 messaging standards aim to replace legacy message type/text(MT)and harmonize the payment infrastructure across jurisdictions.As part of our World

79、 Payments Report 2023,we surveyed payments executives who said they use one or a combination of four approaches for ISO20022 migration:outsourcing to an IT vendor,buying off-the-shelf solutions,building solutions internally,or collaborating with FinTechs.Responses indicated that:More than half of th

80、e surveyed payments executives indicated outsourcing as their preferred approach,followed by 43%indicating they were buying off-the-shelf solutions Nearly one in three payment executives said they are attempting to build an ISO20022 solution internally Despite the strong push,only 44%of payment exec

81、utives said they were in the final phase or had completed the ISO20022 migration A quarter of payment executives said ISO20022 migration is in process,while 27%said they are yet to start the ISO20022 migration journey.The EC is working to orchestrate an efficient and integrated European payments mar

82、ket that aims for harmonious rules across jurisdictions,a common instant payment infrastructure,strong consumer protection controls,and a wide choice of payment instruments.22 As the EUs executive arm,the EC began payments transformation in 2007 with the first Payment Services Directive(PSD1)to set

83、common rules in the European Economic Area(EEA)covering all non-cash payments.PSD1 laid the foundation for the single euro payments area(SEPA).EC launched SEPA in 2008 and fully implemented it in 2014 to harmonize payment standards across all member countries and eliminate distinctions between domes

84、tic and cross-border payments.PSD2 went into force in 2018 triggering Europes open banking revolution and inspiring several countries worldwide to launch similar application programming interface(API)frameworks.The strong customer authentication(SCA)requirement of PSD2 came into force in 2019 to mak

85、e digital payments safer and more secure for customers.EC adopted the digital finance(DigFin)package and retail payments strategy with four main priorities in 2020:remove digital fragmentation in the EU single market,facilitate digital innovation,promote data-driven finance,and address digital trans

86、formation challenges.The package further boosted the adoption of open finance and the regions platform economy.Also in 2020,16 major Eurozone banks launched the European Payments Initiative(EPI)to create a unified payment solution for European consumers and merchants.In 2021,the EC initiated instant

87、 payments consultation and amended SEPA to boost the adoption of instant payments in the region.In June 2023,the EC proposed further PSD2 improvements and set the groundwork for PSD3,along with proposed revisions to EU payment services legislation,and a proposal on an open finance framework,called F

88、IDA.World Payments Report 202310SWIFT global payments initiativeAnother critical SWIFT program,gpi(global payments initiative),was launched in 2017;SWIFT followed with gpi for corporates(SWIFT G4C)two years later.Both initiatives aim to improve the transparency and traceability of payments across th

89、e correspondent banking network.Only 38%of the payment executives we surveyed said their firms adoption of SWIFT gpi was complete.Nearly 29%said adoption is in process,while almost 24%are yet to begin.Swifts Shirish Wadivkar(MD and Global Head of Wholesale Payments and Trade Strategy)said,“As a mess

90、aging network,SWIFT is agnostic to value representation.We focus on global interoperable value transmission that is safe,secure,and instant across participants.We are enabling banks to leverage SWIFT capabilities(data,technology,and consulting)to deliver advanced solutions in payments and cash manag

91、ement.”Instant payment methods and rails are changing the industryExpanding digital payment infrastructure,regulations,and open banking are swiftly changing how customers and businesses pay.A comparative analysis confirms the growing prominence of new payment instruments(instant payments,e-money,dig

92、ital wallets,account-to-account,and QR code payments)relative to traditional methods(checks,direct debits,cards,and credit transfers).Per the World Payments Report,in 2022,conventional payment methods accounted for more than 83%of overall non-cash transaction volume,while new payment methods compris

93、ed nearly 17%.According to World Payments Report 2023 research findings,we believe that by 2027 new payment methods will make up around 28%of total volume,while the share of traditional payments will drop to nearly 72%of overall non-cash transaction volumes.New payment instruments are challenging lo

94、ng-dominant schemes,especially cards.Despite their convenience,speed,and security,cards are expensive.High penetration in developed economies left little choice for merchants but to bear the brunt of card providers high intermediary fees.During pandemic lockdowns,cards emerged as a customer-preferre

95、d payment method.However,as transaction value increased,retailers incurred significantly high costs for accepting card payments;for example,UK retailers incurred more than GBP 1 billion(USD 1.3 billion)in fees to accept card payments in 2020.23World Payments Report 202311Indias digital payment revol

96、ution driven by Unified Payment InterfaceWhen the Reserve Bank of India(RBI)established the National Payments Corporation of India(NPCI)in 2008,it laid the foundation for the countrys digital payment revolution.24 The launch of digital ID Aadhar followed in 2009,and real-time payments rails,IMPS,in

97、2010.25 In 2016,NPCI introduced the Unified Payment Interface(UPI),an interoperable payments system that powers direct and instant settlement across multiple bank accounts for C2C and C2B transactions.Finally,in 2021,India unveiled the account aggregator framework for consent-based encrypted data sh

98、aring for consumers and businesses.Multiple open APIs followed.26 Powered by a real-time network and open banking,UPI reported exponential growth of 1.9 times in volume and nearly 1.8 times in transaction value from 2021 to 2022.27 UPI transaction value and volume overtook credit and debit card tota

99、ls by a significant margin in 2022 as UPI A2A payments became the preferred payment instrument for consumers and businesses.28 UPI supports push and pull payments and event-based and time-based payment triggers(for recurring or subscription-based outflows).Indias central bank plans a new UPI feature

100、 single block,multiple debits(SBMD)which will enable consumers to block their account funds and complete payments after service delivery.The feature will likely boost UPI use for e-commerce and replace cash on delivery.It may also help consumers to invest in various securities in the future.RBIs Vis

101、ion 2025 document emphasizes UPI globalization for efficient and affordable cross-border payments.India is in talks with 30 countries regarding UPI adoption,and France,the UAE,and Singapore signed a memorandum of understanding in 2022.Account-to-account(A2A)payments have a competitive edge over card

102、s as they move money between accounts without an intermediary.Open banking and expanding real-time payment networks turn A2A payments into a formidable card rival.A2A leverages traditional payment rails(like ACH or SCT)or instant payment rails(such as RTP and SCT instant)to make exchanges.While A2A

103、payments are popular for consumer-to-consumer(C2C)transactions,we expect similar traction in consumer-to-business(C2B)use.A USD 100 purchase on a credit card can cost a merchant up to 3%(or three US dollars).In contrast,an A2A purchase of the same value will cost less than 1%(or nearly USD 0.60).At

104、scale,retailers and merchants,especially small-to-mid-size enterprises,can achieve significant cost savings.Of World Payments Report 2023 Executive Survey respondents:45%ranked A2A payments as the most preferred C2C payments instrument Digital wallets followed at 30%For consumer-to-business payments

105、,offline and online,nearly 40%ranked A2A payments as their preferred instrument,followed by digital wallets(at about 35%)Only 25%of payment executives selected cards as their top preference for consumer-to-business payments.A2A is gaining traction compared to card payments because of simple and conv

106、enient customer experience.However,cards still have room for improvement.Several initiatives such as Apple Pay and Click2Pay are already reinforcing card use for payments.Visa and Mastercard are boosting contactless payments,including transactions made by tapping a contactless card or payment-enable

107、d mobiles and wearable devices.Contactless payments are also helping card operators,including Discover,Mastercard,and Visa,develop new mass-market use cases.One example is leveraging contactless open-loop payments to cover mass-transit fares.The practice allows card operators to digitalize low-value

108、 transactions while encouraging contactless payments.Visa enables contactless payments in cities worldwide and,by 2022,has supported more than 550 urban mobility initiatives.From January to September 2022,Visas network processed over one billion contactless payments worldwide for mass-transit fares.

109、29 World Payments Report 202312Innovation and regulatory changes are increasing payment provider costsThe payment industry is undergoing a surge in global regulations,initiatives,and innovations,resulting in new payment instruments and use cases.However,managing the volume,velocity,and variety of th

110、ese simultaneous changes comes at a cost for banks and payments firms and it is significant.The payments executives we surveyed said managing risk,regulatory compliance,and scheme compliance(such as SWIFT ISO20022 migration)comprises 36%of total payment business costs.Maintaining and modernizing leg

111、acy systems followed at nearly 27%.Payment processing incurred another 17%of expenditures,and 9%went into talent-related expenses.Payment firms are left with barely 11%to invest in innovation(Figure 3).At the same time,revenues are under stress.Survey participants said traditional revenue sources fo

112、r a payment business include 37%fund revenues,13%float income,and 29%fee income,but these metrics are changing:Instant payments are reducing float-income and this trend will likely continue Fee income that includes interchange fees is under pressure,too:regulators in the United States,the UK,and Eur

113、ope aim to cap interchange fees to reduce payment costs for consumers and merchants Fund income primarily comprises interest income from credit cards and more recently BNPL products.Rising consumer debt and lack of regulatory clarity around BNPL can dent fund income growth.Consumer credit card debt

114、is increasing due to high inflation and its impact on the cost of living.In the United States,consumers total credit card balance was USD 986 billion in Q1 2023,according to June 2023 consumer debt data from the Federal Reserve Bank of New York;that total is unchanged from Q4 2022s record number,lea

115、ving the balance the highest it has ever been since the New York Fed began tracking in 1999.30 Debt balances of this magnitude trigger fear of payment delinquencies,which may also impact payment firms fund income.For instance,in 2022,AMEX and Discover reported year-over-year profit declines of 13%an

116、d 21%,respectively,as charge-offs and delinquencies increased.31 Card operators may also likely earmark funds for potential 2023 loan losses.In contrast,income from value-added services contributes 21%of total income,which cannot offset fee and fund revenue losses.Figure 3.High costs and stressed re

117、venues leave little room for innovationSources:Capgemini Research Institute for Financial Services Analysis,2023;World Payments Report 2023 Payment Executive Survey(N=115).Question asked to payment executives:What is the current payment revenue structure?What is the payment industry cost structure?R

118、evenues under pressureFund income37%Fee-based income29%Float income13%Value-added services21%Payment innovation projects11%Risk and compliance management 36%Rise in costsTalent9%Payment processing17%IT maintenanceandmodernization27%World Payments Report 202313Changing market dynamics trigger payment

119、 business restructuringBanks and payment firms across the globe are examining the implications of ongoing disruptions,cost stress,and evolving revenue models;the actual impact on each banking and payment firm depends on its market position and payment value chain capabilities.As a result,providers a

120、re grappling with strategic decisions,including whether to:Own versus outsource a payments network Forge alliances to boost payments volume Build,buy,or collaborate with third parties to manage technology infrastructure.Accordingly,we are witnessing a surge in strategic restructuring initiatives.Oft

121、en driven by margin pressure and rising competition from FinTechs,some banks and payment firms divest their payment function(partially or completely)to payment specialists.In November 2022,Intesa Sanpaolo,a leading European banking group,sold its stake in its retail payments partner Nexi.32 However,

122、not all banks and payment firms are considering divesting.Some are strengthening their capabilities or striving to improve market share with acquisitions.In late 2022,JPMorgan acquired cloud-based FinTech Viva Wallet,with operations in 23 European countries.33 And Fifth Third Bancorp acquired Big Da

123、ta Healthcare,a healthcare payments and remittance FinTech,to improve its value chain capabilities in the medical payments sector.34 Earnings pressure has also led to acquisitions in payment processing.For example,Canadian investment firm,Brookfield Asset Management,acquired UAE-based payment proces

124、sor Network International in 2023.Brookfield also acquired the payment business of First Abu Dhabi Bank PJSC in 2022.35 Banks are also forging strategic partnerships with payment specialists to consolidate payment volumes.For instance,in April 2023,Credit Agricole,a France-based international bankin

125、g group,partnered with payment processing firm Worldline to set up a joint venture to provide payment services to businesses.36 Banks and payment firms collaborate with third parties to offer new services or manage technology and payment infrastructure.In Q2 2023,British bank Standard Chartered part

126、nered with WorldPay to expand market coverage and launch a new Straight2Bank Pay feature for digital collections.37 And some banks are building internal capabilities and platforms.HSBC rolled out a banking-as-a-service(BaaS)platform in 2021 to offer enterprise clients embedded payment services.38Wor

127、ld Payments Report 202314Rebalance retail and commercial payment focus to capture expanding value pools The 2023 World Payments Report Executive Survey results indicate that retail payments comprise 59%of total transaction volume while commercial payments comprise 41%.However,in terms of value,comme

128、rcial payments make up nearly 56%,while retail accounts for only 44%of total payments value(Figure 4).Shares of value and volume change from region to region.In the Americas,commercial and retail payments account for 54%and 46%of total value,respectively.In Europe,commercial and retail payments acco

129、unt for 62%and 38%of the share,respectively.And in the APAC region,the split between commercial and retail payments value share is nearly 50%each.Globally,more than one in two payment executives agreed that commercial payments offer better profit potential than retail payments.In Europe,this perspec

130、tive is even more pronounced as nearly 56%of executives believe commercial payments have more high-profit potential than retail.Figure 4.Payment executives say commercial payments offer higher profit potential than retailSources:Capgemini Research Institute for Financial Services Analysis,2023;World

131、 Payments Report 2023 Payment Executive Survey(N=115);GlobalData Payments Market Analytics 2023.Question asked to payment executives:How payment share is split between retail and commercial payments in your region by value and volume?*The number of transactions include both cash and non-cash transac

132、tions for 64 countries for the year 2022.Enterprise paymentsRetail paymentsClient pyramid923 Billion*1,329 Billion*Payment volume(#of transactions)Payment value($)High value,low volumeLow value,high volumeCorporatesRetail customersSMBs41%59%56%44%High marginsLow margins56%of total global payments va

133、lue is attributable to commercial payments,outpacing the retail payments totalWorld Payments Report 202315Commercial payments are catching up quickly with digital payments trends,so its time to actGlobal non-cash commercial payments will grow at compound annual growth of nearly 11.3%(20222027),prima

134、rily driven by Asia Pacific.From a regional perspective,Europe leads the non-cash transaction volume share,followed by North America.APAC comes in third in value share yet is fast-trending to a 14.6%CAGR during the forecast period(Figure 5).Nearly three-quarters(74%)of surveyed payments executives r

135、anked the entry and building scale of new-age players(FinTechs and PayTechs)as drivers for growth in non-cash commercial payments in the forecast period.Most new-age players seek to improve their unit economics profitably,and commercial payments offer a stable source of revenue with a smaller pool o

136、f competitors and long-term engagement scope.As a result,challengers are launching commercial payment products and services to target SMEs,if not large global corporations.As one example,the UKs cloud-native Starling Bank launched a business ecosystem to target and nurture SME client relationships.E

137、nterprise clients demand retail-like payments from banks and payment firms,such as digital and efficient experiences.More than 60%of payment executives agreed that the demand for a better payment experience accelerates commercial payment digitalization.Marc Andrews,Vice President,Financial Services

138、and Insurance Industry Market Leader from Pega,said,“Commercial banking has been slower to implement digital automation and engagement capabilities in general.However,things are beginning to change as their clients seek real-time transparency into payment status and faster response to requests,espec

139、ially when there is a processing problem or need to make a change,which can significantly impact corporate cash management.”Regarding payment methods,around 60%of the corporate executives we surveyed as part of the World Payments Report 2023 ranked commercial cards as the leading instrument.Supplier

140、s become stressed during periods of high inflation if payments are delayed significantly from the invoice date.High inflation makes money less worthwhile over time.As a result,traditional payment instruments,such as paper checks,become less effective for all value-chain stakeholders,making commercia

141、l cards a preferred choice.Figure 5.Global commercial non-cash transactions to set for robust growthGlobal10.4%11.5%12.5%7.0%11.0%13.75%12.5%13.6%14.6%7.5%11.7%11.3%MEALatinAmericaNorthAmericaEuropeAPACGrowth22F23F22F27FCAGR201720212022F2023F2024F2027FSource:Capgemini Research Institute for Financia

142、l Services Analysis,2023Note:Commercial non-cash transactions:Transactions between businesses(not individuals)using a mode of payment other than cash.Figures are forecast for 2022 and beyond.101.412.437.532.317.71.52.3133.717.345.842.326.12.5146.819.249.046.529.52.8162.121.652.551.633.63.1179.624.45

143、6.257.638.34.5250.336.370.380.958.3Volume in billions74%of payments executives said new-age players are helping drive non-cash commercial payments volume growthWorld Payments Report 202316 Tokenization boosts virtual card acceptance for small-to-mid-size businesses and corporationsEnterprises use to

144、kenized cards to increase security and embed cards directly into digital wallets.In combination with virtual cards,tokenization offers enterprises more spending control and security.They can set unique codes in tokenized virtual cards to track spending and improve reconciliations.Control parameters

145、can restrict card use via the date,dollar amount,or supplier credentials.Tokenized virtual cards offer seamless integration with corporate enterprise resource planning systems to improve decision-making and payment tracking.The worldwide value of virtual card transactions is poised to reach USD 6.8

146、trillion by 2026,up from USD 1.9 trillion in 2021 indicating the strong demand among enterprise clients for virtual cards.40 Banks,card operators,payment processing firms,and new-age players are collaborating to offer tokenized virtual card solutions to corporates.In 2022,Californias Marqeta,a cloud

147、-based open application programming interface platform,integrated with the Mastercard Track Instant Pay virtual card solution to leverage machine learning(ML)and high straight-through-processing(STP)rates for instant payment of supplier invoices.41 In another instance,HSBC partnered with Extend in 2

148、022 to offer virtual card capabilities to enterprise clients.42Rising interest and acceptance of commercial cards are also fueling innovation.Card operators seek to deliver integrated value-added services such as highly configurable spend-control features,expense management,reporting,and budgeting t

149、ools for efficient and real-time visibility into enterprise spend.In 2023,AMEX and Microsoft collaborated to build AI-powered intelligent expense management and reporting features for businesses.39In addition to cards,nearly 45%of corporate executives ranked digital wallets among the top three prefe

150、rred payment instruments.Another one-third of corporate executives ranked A2A payments as the preferred payment method.With instant payments and real-time payment infrastructure maturing across critical markets,A2A payments and digital wallets are heading toward a watershed moment.However,traditiona

151、l payment methods are still relevant.For example,57%of corporate executives said credit transfers and direct debits on conventional rails(ACH,SCT,etc.)are suitable payment methods.Moreover,37%of corporate executives said they still use paper checks as a payment instrument.Commercial payments are fas

152、t catching up with the overall digital payments trend borrowing innovation from retail to meet evolving corporate client demands.And a particularly important aspect of commercial payments is cash management services.Cash management revenue for banks suffered during the global pandemic in 2020;howeve

153、r,in 2022,it is now back on a growth trajectory because of growing corporate deposits and high net interest margins.The accelerating shift away from paper-based processes,rising adoption of digital transactions,and FinTech collaborations are all contributing to fast evolution within the commercial p

154、ayments segment,offering new and expanding cash management value pools for banks and payment firms.However,maximizing value from cash management services require banks and payment firms to engage and meet the changing expectations of enterprise clients.World Payments Report 202317Enterprise cash man

155、agement is a challenge to be met Enterprise clients and their corporate treasurers are soldiering through ongoing macroeconomic and geopolitical upheaval.The odds of recovery in 2023 are uncertain worldwide,according to the US credit rating agency S&P Global Ratings.The number of firms operating at

156、a negative cash flow is on track to rise from 2021s 8%to 1116%by the end of 2023.43 Cash flow in the United States is not keeping pace with profit expansion,according to Bloomberg:simply put,cash inflows matched only 88 cents for every dollar of profits,the largest discrepancy since at least 1990.44

157、More than half of corporate treasurers across multiple industries told us that rising globalization of trade and ongoing supply chain disruptions drive demand for effective and efficient cash management services(CMS).Another third said evolving risks(geopolitics and cybersecurity)made CMS critical,w

158、hile nearly 30%called out rising inflation for their growing need for better cash management.Reliable around-the-clock CMS is key for operational efficiency,they added.Enterprise clients realize they must elevate their cash management capabilities to build resilience and navigate volatility.Cash rem

159、ains trapped as corporations navigate economic headwindsFor over a decade,capital has been easy to come by for large enterprises.However,since March 2022,as central banks began to increase interest rates,the cost of debt reached up to 13%.45 It has also become challenging for large enterprises to re

160、-finance their debts.In parallel,high debts and rising rates are increasing interest expenses,which means less cash for corporates to invest in strategic initiatives.As a result,corporate treasuries must focus on working capital management.Freeing up operational cash is cheaper than seeking external

161、 credit!Companies aim to improve collection management to shorten days sales outstanding(DSO),which measures the average time it takes to collect customer payment.However,a lack of automation,fragmented payment collection channels,inefficient dunning(communicating with customers to ensure accounts r

162、eceivable collection),and often missing invoices spark disorganized collection management.World Payments Report 202318On the other hand,corporations cannot extend days payable outstanding,which measures the average time it takes to pay suppliers.The inventory cost is also affected because businesses

163、 must maintain higher inventory buffers.Put these circumstances together and the result is a higher cash conversion cycle.In 3Q 2022,the cash conversion cycle of S&P500 companies deteriorated to 61.6 days,up from 55.4 days in 2021.46 Not surprisingly,79%of the corporate treasurers we polled agreed t

164、hat poor cash management capabilities contribute to more lengthy cash conversion cycles(Figure 6).Delays in the cash conversion cycle also lead to stuck working capital.According to the J.P.Morgan Working Capital Index,nearly USD 523 billion was stuck in the balance sheets of S&P 1500 firms in 2021(

165、compared with USD 507 billion in 2020).47 Organizations could have used this cash to fund strategic initiatives.Of the corporate treasurers we surveyed,78%complained about inefficient working capital management,and more than 70%said subpar cash management support results in higher operating costs,de

166、layed cash pooling,and ultimately high debt levels.Enterprise clients need more visibility into their cashOn average,an enterprise has more than 27 banking relationships to meet its treasury needs.Despite multiple connections,enterprise clients face payment challenges across procure-to-pay and order

167、-to-cash cycles.Over 70%of the treasurers we surveyed said they face issues in credit risk assessments,collection processes,and reconciliation.73%of treasurers said payments are often stuck and delayed due to false positives and manual operations handling 69%responded that they do not receive adequa

168、te payment options from their banks and payment firms.As a result,the enterprise has to rely on paper checks and traditional non-cash payment instruments ACH,SCT,wire transfers,and the like.More than one in two treasurers complained about missing invoices.Consider a multinational enterprise with a d

169、iverse global supplier base and sales offices in worldwide markets.In such an extensive corporate value chain,receiving cash from customers and paying suppliers is demanding and,at times,punishing.Money flowing through multiple jurisdictions with heterogeneous compliance and messaging standards make

170、s cross-border payments prone to failure and delays.Moreover,incomplete data fields covering information like payment purpose,type,and source can lead to false positives and compliance issues.These payments must pass through a network of correspondent banks,meaning treasurers cannot trace the money

171、flow and are often unaware of whether a payment is stuck or settled.Late payments exacerbate the problem and open corporate treasuries to FX volatility.Figure 6.Enterprises with ineffective cash management services are vulnerable to business upsetsSources:Capgemini Research Institute for Financial S

172、ervices Analysis,2023;World Payments Report 2023 Corporate Executive Survey(N=355).Question asked to corporate treasury executives:What business impact does your firm face because of poor cash and liquidity management?79%78%78%76%72%53%Lengthy cash conversion cyclesInefficient working capital manage

173、mentHigh operating costsDelayed cash sweeping and poolingHigh level of debtsCash forecasting inaccuracies79%of corporate treasurers agreed poor cash management contributes to lengthy cash conversion cyclesWorld Payments Report 202319Many banks still use 10-year-old technology,and upgrade only when a

174、bsolutely essential.They dont see the necessity for a complete IT estate overhaul.However,a shift to cloud is inevitable,especially with AI technology gaining attention and adoption.Banks that lag in cloud transformation will find it difficult to compete.”Sailesh PanchalDirector,Digital Transformati

175、on Advisory Ltd.,TSB Bank Consider the impact when millions of dollars en route from Asia to Europe become stuck for a week and FX rates change during that time:the company risks losing value on the generated invoice.For a treasurer,poor payment capabilities translate into a lack of cash visibility

176、and forecasting inaccuracies.In our survey of corporate treasurers,62%did not find cash management services offered to them by banking partners satisfactory.So,where are banks and payments firms lagging?A fragmented digital landscape hinders effective cash management delivery to corporatesExisting l

177、egacy systems remain as financial institutions biggest barrier to offering superior cash management services.64%of payment executives said a lack of data management and processing capabilities,incompatible and non-interoperable systems,and heterogenous messaging standards across entities create a di

178、gital disconnect 55%complained that their IT systems could not scale,which meant slow transformation of existing processes.We asked payment executives about the progress of their digital initiatives to transform cash management services.Not surprisingly,respondents rated cloud migration as an ongoin

179、g initiative.45%of payment executives said they had completed 3050%of the migration,while 44%indicated less than 30%progress Progress was comparable on building internal APIs to eliminate functional silos with 50%of payment executives rating progress as medium to high and nearly a third indicating l

180、ess than 40%progress On average,more than 40%of payment executives said their firm was far from completing half of these initiatives.Cloud-native applications are key to accelerating the digital transformation journey.Yet,more than a third of organizations said they had made less than 30%progress in

181、 building cloud-native applications.Almost one in two payment executives said their firms progress in rationalizing its IT footprint was less than 30%.Only one in three payment executives rated IT footprint rationalization at 3050%.Many banks and payment firms still follow the lift-and-shift model f

182、or cloud migration relying on redundant integration interfaces.This stop-gap remedy slows legacy system decoupling or decommissioning.Siloed digital transformation and a fragmented approach result in banks and payment firms failing to achieve cloud advantages(costs,agility,and scalability)and strugg

183、ling to embrace advanced technologies like AI and intelligent automation.When exploring advanced capabilities,nearly 70%of payment executives said they run multiple pilots to build and roll out their customized API library.About one in two said their firm is piloting various artificial intelligence(

184、AI)and automation-powered use cases around cash management services.However,with poor data capabilities and delayed cloud migration,high AI and automation efficacy is often out of reach,making firm-wide scalability of AI and automation use cases a concern.The Global Head of Institutional Payments at

185、 AWS,Nilesh Dusane,added,“Financial institutions store large volumes of data but need a lot of resources to derive insights from the data.Cloud-based data lakes and technology infrastructure allow financial institutions to avoid spending on inefficient AI/ML projects and instead leverage costs-effec

186、tive cloud AI/ML services to more easily get the most value from their data.”Outdated systems and slow/disconnected transformation initiatives result in underdeveloped cash management capabilities,hurting banks market competency.Many improvements in the cash management capabilities of banks and othe

187、r large payments providers are needed to meet the needs and expectations of corporate clients.Pain points across the cash management value chain have resulted in many challenges for providers to address(Figure 7).World Payments Report 2023201.Shrinking payments coverageFor transaction banks,global r

188、each is critical for building and sustaining enterprise relationships.Large transaction banks and payment firms rely on a network of correspondent banks to facilitate cross-border payments.However,high operational and compliance costs and declining profits have forced many banks to close or let go o

189、f their correspondent relationships.Instead,it makes strategic sense for banks and payment firms to connect with domestic payment schemes across multiple jurisdictions.Additionally,they can join or participate in industry initiatives such as Swifts IXB(cross-border)pilot based on existing real-time

190、payment systems and Project m-Bridge,a blockchain-based multi-CBDC platform to interconnect various central bank digital currencies across multiple jurisdictions(China,Thailand,and the UAE).However,interoperable payment schemes and participation in industry initiatives require banks to boost API and

191、 digital maturity a difficult task.Payment executives(72%)said they struggle with cross-border capabilities and delivering CMS beyond their regional(or local)jurisdiction.2.Lackluster bank-to-enterprise digital connectivity A full 70%of payment executives said poorly digitalized bank-to-corporate en

192、terprise resource planning(ERP)/treasury management systems(TMS)connectivity makes CMS delivery challenging.Banks and payment firms still use banking portals to manually download/upload to and from corporate ERP/TMS.Issues are significant for multinational enterprises working with scores of banks ac

193、ross geographies.Over time,banks have also embraced H2H(host-to-host)connectivity to overcome manual tasks.However,H2H requires banks and payment firms to build a customized connection interface.A corporation working with 27 banks may end up building and managing 27 H2H customized connections a stra

194、in on already stressed IT resources.Banks and payment firms struggle to embrace and shift to multi-bank connectivity channels(like SWIFT and EBICS)or API-based connectivity.3.Slow enterprise client onboardingBank and payment firms,on average,can take more than three months to onboard an enterprise c

195、lient.Onboarding is consumed by inefficient,redundant,manual KYC processes followed by account opening.Banks and payment firms often manually feed client data through disconnected internal systems,duplicating efforts and creating inefficiencies that result in delays.Surveyed payment executives(51%)s

196、aid onboarding and KYC are mostly manual,paper-based,and inefficient.Figure 7.Disjointed digital transformation leads to cash management challengesSources:Capgemini Research Institute for Financial Services Analysis,2023;World Payments Report 2023 Payment Executive Survey.ProductManagementMarketcove

197、rageConnectivity AuthenticationOmni-channelValidationKYC checksEntitymanagementCorrespondentset-upOnboardingChannel&OriginationClearing&SettlementServicing&ReportingBillingProduct ProcessingPaymentprocessingSanctionshandlingDynamicpricingFXsolutionsFraudmanagementVirtualaccountmanagementNotional poo

198、lingInterest calculationPhysical poolingMessagingFormatconversionInterbanksettlementEnquiriesBilling&invoicingRegulatory reportingCash forecastingNettingCash reconciliationTax management87645231Paul Van Sint FietHead of Cross-currency solutions APAC,JPMorgan Chase&Co Bank-to-corporate connectivity i

199、s a key challenge.Legacy and complex systems impede the delivery and analysis of information between banks and enterprises,and the use of custom-built and disparate file formats mean treasurers need to spend more time and effort managing the flow of data rather than using the data to generate insigh

200、ts and drive business growth.”70%of corporate treasurers reported current bank cash management services are underwhelmingWorld Payments Report 202321Rachel WhelanMD,APAC Head of Corporate Cash Management&Global Head of Payments&TFX Product Management,Deutsche BankBusinesses can streamline B2B operat

201、ions by seamlessly integrating workflows and value chains combined with a real-time payment solution.Real-time payments provide businesses with a range of advantages like improved cash flow management and faster payment cycles that can positively impact their financial performance,customer satisfact

202、ion,operational efficiency,and market competitiveness4.Delayed payment authenticationMore than half(65%)of payment executives told us it takes undue authentication time because their firm lacks structured processes and has poor inter-functional data sharing.5.Underdeveloped integration capabilities

203、Almost 67%said they still dont deliver instant payment capabilities,multi-banking integrations,and connectivity.And they struggle to provide value-added services such as virtual account management(VAM).Intuitively,banks and payment firms must shift from current batch processing cycles to year-round,

204、always-on,continuous transaction processing.In parallel,the goal should be to manage reconciliations and handle exceptions instantly when they arise.The Head of Transaction Banking at Nordea,Kirsi Wiitala,agreed,saying,“Corporate customers want transaction environments that are both real-time and se

205、cure.As we approach high-interest rates and diverse geopolitical scenarios,real-time payments become increasingly critical for corporates to manage cash flow.”However,such a future state requires overhauling and realigning existing systems.Some banks and payment firms may attempt to graft real-time

206、payment engines on top of their existing batch-processing system.But integration complexities may impede sustaining improvements over a long period,making it difficult to handle rising volumes.On multi-banking integration,each bank has created a unique set of APIs using their proprietary authenticat

207、ion standards and custom messaging formats for their enterprise clients.However,the lack of corporate API standardization may hinder multi-bank integrations.Similarly,integration and incorporation with a banks current operating model remain challenging for value-added services such as virtual accoun

208、t management that interact with multiple bank areas and functions and require several touchpoints(integrations)across the legacy systems.VAM success depends on the bank and payment firms cash management capabilities.Hence,at times,it simply becomes a reporting and reconciliation tool.6.Manual cash r

209、econciliationHalf of the payment executives we polled said reconciliation remains manual.The volume of data analyzed through spreadsheets takes significant time and effort and is error-prone.Missing data fields,delayed payment communication,and regulatory compliance during reconciliation yield low m

210、atch rates(high mismatches).Reconciliation also negatively affects the cash-netting process.Missing invoices and mismatched transaction details deter banks and payment firms from implementing cash netting.The ISO20022 messaging standard can enable richer,end-to-end,structured,and meaningful data,all

211、owing for improved automation and high reconciliation rates.However,poor bank-to-corporate connectivity results in banks often being unable to pass down the advantages of ISO20022 to corporates.Nearly 70%of corporate treasurers surveyed said they experienced very little to modest improvements due to

212、 SWIFT initiatives(ISO20022 and gpi).World Payments Report 202322Wim GrosemansGlobal Head of Product Management,Payments&Receivables-Cash Management,BNP ParibasThe emergence of e-invoicing is an important opportunity to streamline payments and collections and the entire financial sector has a key ro

213、le to play.7.Inaccurate cash forecastingMore than 60%of payment executives said offering clients cash forecasting and a single view of their cash daily and around the clock remains challenging.Issues for banks and payment firms include fragmented and inconsistent data,delays in consolidating informa

214、tion,and diminishing relevance of historical data in predicting future cash flow.Historical data is becoming inconsequential with the growing number of black swan events(such as the pandemic,ongoing geopolitical crises,and natural catastrophes).8.Heterogeneous invoicing standardsWithout a defined st

215、andard,e-invoicing processes are fragmented and transferred over email with PDF attachments,retrieved from supplier portals,or exchanged through electronic data interchange.This lack of uniformity and standardization fosters integration complexity and low interoperability between systems.Not surpris

216、ingly,63%of payments executives rely on paper-based and manual invoicing processes.Cash management challenges adversely impact corporate bank relationshipsBasic cash management services are a source for deposits and routine activities such as wire transfers,cross-border payments,collections and paya

217、bles,and check processing for banks and payment firms.However,it also opens doors to various offerings from loans and FX services to sophisticated merger and acquisition support,investment banking,liquidity management,and other customized bank services.Therefore,although obstacles exist,cash managem

218、ent can be at the heart of banker and enterprise client relationships:it can be an engine to drive broader banking growth.Complex processes and needs,and deep interdependencies,bind corporate and bank relationships.Such partnerships cannot end without business implications.However,poor cash manageme

219、nt services and related issues left unaddressed can lead to“silent attrition.”Over time,corporations forced to endure weak cash management capabilities begin to defect by narrowing their scope of services,transferring a share of accounts to a competitor bank,cutting transaction volumes,and reducing

220、business volume:the result is revenue leakage and business loss.During market uncertainties,silent attrition gains momentum as enterprises cautiously consolidate their relationships with banks that can provide efficient and effective cash management services.Banking firms often miss the signals as d

221、iscontented clients shift to competitors.One-size-fits-all offerings are a primary reason firms lose ground in transaction banking relationships.Each corporation has unique needs depending on its industry,geography,end users,and suppliers.But even recognizing and understanding these large difference

222、s between clients,banks and payment firms struggle to customize because of the inherent complexity of their own operating and IT models.National Australia Banks Shane Conway,Senior Executive,Transaction Banking,Enterprise Payments and Asset Servicing,Corporate&Institutional Banking,said,“Demand for

223、solutions that help businesses efficiently optimize their working capital is growing.Real-time cash visibility,automated banking processes,AI engines,and seamless API-first connection with banks enables corporates to run scenario analysis quickly and intelligently,based on economic conditions,disrup

224、tions,and client segment activity,to improve cash forecasting,risk management,and strategy development.”Leading banks will invest in building these capabilities.60%of payment executives said providing clients a daily 24/7 view of their cash remains challengingWorld Payments Report 202323FinTechs are

225、 up and coming as cash management competitors and partnersThe competitive landscape is changing,with new entrants in the corporate cash management arena.Indeed,44%of the corporate treasurers surveyed for this report told us that they are exploring collaboration opportunities with new-age players to

226、access better cash management capabilities.More than one in two corporate treasurers said FinTechs offer ease of integration and use of payment solutions.FinTechs offering solutions like instant payments,reconciliation,account payable/receivable automation,digital invoicing,and cash forecasting are

227、aiming to address key cash management pain points for corporates.For example,a global consumer goods company collaborated with FinTech Treasury Intelligence Solutions(TIS)to improve cash forecasting capabilities.TIS helped the corporate to improve forecasting accuracy from 50%to 80%with variance for

228、 some categories below 10%.48 Similarly,Coupa(a FinTech with spend management specialization)helped a leading telecom player to manage USD 5 billion of spend annually by optimizing the invoice cycle and providing a 360-degree view of supplier relationships.49 Another FinTech,TransferMate,is helping

229、corporates to streamline accounts receivable with automated collection and processing.New-age players like Stripe are also offering broader cash management services by leveraging banking as a service.Stripe launched Stripe Treasury in 2020 to enable corporates to embed financial services in their bu

230、sinesses.The FinTech is also expanding its banking network to include Goldman Sachs Bank USA,Evolve Bank&Trust(US),Citibank,and Barclays to enable standardized access of financial products using its APIs.50 While FinTechs do offer digital-first and seamless cash management capabilities,they are boun

231、d by limited geographical reach and lack ability to orchestrate wider bank partner networks that some large banks already have.Moreover,cash management services across jurisdictions also require significant regulatory guidance and advice where banks step up as the trusted partner.Finally,for many co

232、rporates,cash management services are a gateway to access more sophisticated financial products,including factoring and refinancing,M&As,and investment advisory services.For bank-corporate relationships,FinTechs pose less of a challenge as competitors and can be an enabler as collaboration partners.

233、From the US,Stripes Revenue and Finance Automation Marketing Lead Katie Ochieano said,“FinTechs such as Stripe complement banks when it comes to cash management.Banks have extensive experience in asset and liability management,and in managing relationships with clients as well as with regulators.The

234、y provide corporations with hedging,FX,risk management,capital,and extended liquidity lines.Stripe enables banks to deliver efficient cash management to enterprises with services including payments,invoicing,money movement,and fraud detection.”World Payments Report 20232424Stewart HallidayGlobal CIO

235、,Global Payments Solutions,HSBCAs a broader bank strategy,HSBC has invested in Global Payments Solutions to elevate transaction banking capabilities to address the needs of corporate clients today and tomorrow with a five-year committed investment plan.We focus not only on payment transactions but t

236、he entire corporate payment journey to provide digital-first,and efficient experience.With a strong and modular digital foundation and innovative platform capabilities,HSBC is at the heart of transaction banking relationships for corporates of all sizes.”Forge strategic corporate relationships under

237、pinned by efficient cash managementExisting legacy systems and their inherent complexities obstruct banks and payment firms from unlocking sustainable value.IT research firm IDC predicts the cost of running and maintaining legacy payment systems will climb from USD 36.7 billion in 2022 to more than

238、USD 57 billion in 2028 a 7.8%annual growth rate.IDC also says banks and payment firms operating within legacy constraints may be unable to compete for new payments-related income and risk missing 42%in incremental revenue while losing up to 21%annually in cost savings if they do not migrate to futur

239、e-ready platforms.51 In cash management,several departments own different parts of the value chain.For instance,Know Your Customer(KYC)and onboarding may be part of shared services,account opening in banking,or payments processing within payments BU.Distributed ownership can lead to a fragmented dig

240、ital environment,as each business unit may have a transformation plan,budget,and timelines.Hence,end-to-end digital transformation in transaction banking requires top-down Figure 8.A layered approach to nurturing strategic relationship with corporate clientsSource:Capgemini Research Institute for Fi

241、nancial Services Analysis,2023.Enterprise clientsPaymentshubDatawarehouseWeb portalMobileHost-to-hostBanking-as-a-service platformEnterprise liquidity managementVirtual account managementCore cash management capabilitiesSWIFT GPI/G4CAPICommercialcardsACH/SEPAInstantpaymentsDemanddepositsWalletsRobo-

242、treasuryPaymentfactory/IHBsCorporatemarketplaceSingle-viewCMS portalOnboardingOmni-channelTrade financeLendingPricing&FXAnalyticsAssessmentOrchestrationCash and liquiditymanagementClearing andsettlementReportingBillingReconciliationEngage as strategic partnersPerform with platformsSimplify back stac

243、k to enable innovationFRONT OFFICEMID OFFICEBACK OFFICEcommitment,cohesive planning,and a unified purpose for structural reforms.To overcome legacy obstacles,banks must pursue an end-to-end digital transformation journey:a three-layered approach to simplify,perform,and engage(Figure 8).World Payment

244、s Report 202325SIMPLIFY the back stack to enable innovation and agilityFor the past few years,banks and payment firms have expanded operations,acquired new firms and capabilities,and built new systems.This growth has led to multiple localized product portfolios,applications,and databases.However,it

245、prevents banks and payment firms from leveraging a unified view of the cash management value chain.Managing the full spectrum of products and offerings becomes challenging,and the result is often inefficient pricing strategies and risk management,as well as strained relationships with corporate clie

246、nts.Mick Fennell,Business Line Director,Payments at Temenos,agrees when he says,“Transaction banks have built layers of multiple systems,resulting in large legacy footprints,high operational costs,and slow time to market.Simplifying this requires a flexible,API-first platform that supports the compo

247、sable banking approach to plug-and-play various cash management capabilities in the cloud.Banks must leverage an open and secure cloud-native platform for composing,extending,and deploying capabilities at scale.”Banks and payment firms must orchestrate implementation of cloud-based point solutions f

248、or efficiency and agility.Fast-paced disruption has forced banks to prepare for multiple future outcomes.As a result,a composable digital stack that is“build-to-evolve”enables banks to embrace change on the go.Composability allows banks and payment firms to select and assemble capabilities to satisf

249、y business requirements.Banks and payment firms can integrate SaaS-based turnkey solutions into their existing systems quickly and economically.This also helps to future-proof the technology and data stack as the SaaS service provider delivers system upgrades over the cloud.At First Abu Dhabi Bank,G

250、autam Dutta,MD and Head of Global Cash Product Management&Innovation,said,“Embedding cloud-based as-a-service pre-packaged functionalities into the banks back-end architecture helps to reduce strain on resources,drives cost efficiency,boosts deployment speed,enriches capabilities and features,improv

251、es personalization,and enables standardization of processes like onboarding and KYC.”Industry cloud marketplaces are further accelerating the digital transformation journey of banks and payment firms with the ease of deployment of SaaS-based solutions.A cloud marketplace acts as an online storefront

252、 hosted by cloud service providers like AWS,Google,and Microsoft offering third-party software,applications,data and services.Banks and payment firms can re-design their digital landscape by leveraging the cloud marketplace and reduce time-to-value for digital transformation initiatives,streamline I

253、T procurement and decision-making processes,and automate deployment of solutions.Leveraging cloud-native solutions to simplify the IT landscape allows banks and payment firms to reduce operational costs and overheads,enhance efficiency,and improve regulatory controls and security.Nigel Dobson,Bankin

254、g Services Lead at ANZ,said,“Based on risk and cost considerations,banks often undervalue the benefits of decommissioning legacy systems.However,banks must prioritize and gradually move to cloud.ANZ has already migrated 40%of its target applications to cloud and were in the process of migrating our

255、domestic real-time payments infrastructure to cloud.”World Payments Report 20232626Treasury-as-a-service solution mitigates merger and acquisition obstaclesBusiness challenge Corporate clients often face challenges when creating new legal entities or spinning off a part of their business.The process

256、 can be painful for treasuries with limited resources and little time to set up a new-business treasury unit.When detached or acquired,an entity does not necessarily have all required functions particularly treasury.Corporations can replicate the parent company treasury structure or install a new pl

257、atform and recruit new treasury expertise in the market.However,both options are costly and consume time and energy,which can delay closing the deal.Business solutionBNP Paribas partnered with its strategic global corporate clients,from pharma to large industrial groups,to co-create and develop an a

258、ll-in-one solution called EasyTreasury,a plug-and-play treasury-as-a-service solution that helps new legal entities set up and operationalize a treasury unit within three to four months,including certified resources and a control framework.The complete packaged solution allows treasurers of new enti

259、ties to manage cash flows and pay employees salaries and suppliers invoices,as well as execute all basic treasury operations(spot,forward,term deposits,money market funds,etc.).It covers all elements of a new treasury organization,from technology to people,from onboarding/offboarding to connectivity

260、 and integration.Business resultsBNP Paribas reports that EasyTreasury has been well-received since its June 2023 launch.And although envisioned initially to ease the life of large corporations on the selling side(mother companies),it has also progressively been perceived as a buy-side match,with in

261、dustrial buyers and private equity companies valuing it for newly acquired companies,given the aggressive time to market and pricing structure.PERFORM with platforms to boost cash management efficiencyA robust,capital-light(low upfront investment),agile,and scalable digital foundation allows banks a

262、nd payment firms to build specialized solutions and platforms.With regard to cash management,three solutions create market differentiation.Banking-as-a-service(BaaS)capabilities unlock new revenue streamsIn its simplest form,the BaaS platform allows firms to expose their cash management functionalit

263、ies using APIs and embed them into corporate business environments.BaaS enables firms to collaborate and partner with enterprise clients and FinTechs to co-create customized cash-management solutions.First Abu Dhabi Banks Anand Sampath,MD and Head of Global Payments,Collections,and Client Implementa

264、tion,said,“We have started offering Transaction-Banking-as-a-Service to monetize its regulated infrastructure.The bank provides white label transaction banking services and treasury advisory to enterprise clients.”He added,“BaaS and API-first banking will emerge as universal channels similar to onli

265、ne and mobile channels.Hence,banks must build and maintain BaaS capabilities now.”Goldman Sachs BaaS platform,TxB,made its debut in 2020,offering embedded transaction banking services to enterprise clients.52 In 2021,Deutsche Bank launched its In-House Banking-as-a-Service(IHBaaS)platform for mid-si

266、ze and large enterprise clients.53 Along similar lines,HSBC developed its BaaS platform in partnership with Oracle.The bank has embedded international payments and expense management functionalities in Oracle NetSuites banking platform to enable enterprise clients to automate accounts payable,receiv

267、ables,and reconciliation processes.54 An explosion of business banking APIs also encourages embedded cash management services.Big and small banks now have API catalogs(or libraries)that allow enterprise clients to directly integrate cash management functionalities into their enterprise resource plan

268、ning(ERP)/treasury management systems(TMS).World Payments Report 202327At Singaporean multinational bank DBS,RAPID(real-time APIs by DBS)leverages nearly 180 business banking APIs to embed cash management services directly in enterprise clients business flow.55 Similar to DBS,several other banks lik

269、e Bank of America,Citibank,JP Morgan Chase,Nordea,Standard Chartered,and Wells Fargo offer corporate and commercial APIs.Annelinda Koldewe,Global Head of Payments Wholesale banking at ING,told us,“As business models evolve,corporates seek flexible financial services embedded within customer journeys

270、 via seamless API-based solutions.For instance,Amazon has embedded INGs lending proposition.Other retailers consume INGs payment request APIs.Embedded finance is bringing new payment offerings to corporate clients wanting to embed banking expertise within their customer experiences.We now see big po

271、tential for embedded transaction banking services with treasurers becoming aware of the possibility to digitalize interactions along their corporate supply chain.”These APIs also form the connectivity layer to improve the flow of information between banks and corporates.APIs allow for multi-bank con

272、nectivity,data aggregation,and integration of bank back-office with corporate ERP/TMS.APIs also improve SWIFT connectivity for banks as well as corporates.Two primary use cases of API connectivity include:BaaS sparks bank/FinTech teamwork to enhance cash management valueAccording to the World Paymen

273、ts Report 2023 Payment Executive Survey,71%of respondents said they prioritize collaboration with FinTechs to create and offer innovative cash management services.More than 70%said FinTech partnerships provide access to new technology,improve speed to market,and optimize IT expenses.Nearly one in tw

274、o payment executives also said cooperation helps expand client reach and new service development.When asked to name essential collaboration areas,two in three payment executives listed open banking services such as request-to-pay and multi-account aggregation along with other cash management service

275、s,including automated reconciliations,digital invoicing,cash forecasting,and AP/AR automation.Goldman Sachs shared its TxB platform with Irish/American FinTech Stripe to combine and complement each others transaction banking offerings.For instance,businesses using the Stripe Treasury banking-as-a-se

276、rvice API can now open TxB-powered wallets without directly interacting with the TxB platform.57 Goldman Sachs also partnered with San Francisco-based FinTech Modern Treasury to expedite client onboarding time.58 Similarly,DBS collaborated with Singapore FinTech Finlync to improve API integration wi

277、th enterprise clients.59 FinTechs,including HighRaidus,TIS(Treasury Intelligence Solutions),Kryiba,and TransferMate,are collaborating with banks including Citibank,J.P.Morgan,Barclays,and Socit Gnrale to fuel cash management capabilities.Aggregating bank balance and transaction data from multiple ba

278、nks Payment initiation through multiple payment rails.While some banks offer APIs that can be directly used by corporate treasurers,we are witnessing third-party API solution vendors helping corporates and banks reduce IT costs,time,and effort in setting up API connectivity.For instance,Deutsche Ban

279、k,which already had several corporate APIs,partnered with FinTech FinLync to leverage pre-built API integrations for improved bank-to-corporate connectivity.56 Nearly 70%of the corporate treasurers surveyed for the World Payments Report 2023 said open banking capabilities around FX solutions,request

280、 to pay,accounts payable/receivable automation,data analytics,cash forecasting,and digital billing/invoicing are important to them.Leveraging APIs to aggregate data and integrate with TMS/ERP systems helps banks to offer these open banking capabilities to corporate treasurers seamlessly.Anith Daniel

281、,Group Head of Transaction Banking Services at Emirates NBD Bank,said,“APIs have improved reconciliation by simplifying instant information flow between banks and corporates.Today APIs are helping in FX services,account validation,connecting to SWIFT gpi,and building subscription service.70%of corpo

282、rate treasurers said open banking capabilities are importantWorld Payments Report 20232828Virtual account management(VAM)offers smarter,leaner,and more efficient cash management VAM is not new as banks have offered it for nearly 20 years.Fundamentally,virtual accounts organize and report data in a r

283、eal,physical bank account.However,the inherent flexibility of defining virtual account hierarchies that reflect various business operations can help banks support multiple liquidity and cash management propositions from a single VAM platform.Of the corporate treasurers surveyed in the World Payments

284、 Report 2023,63%ranked automated reconciliation and reporting as the top benefit from VAM platforms,followed by improved tracking and transaction management(53%),simplified cash management structure(47%),and lower banking fees and rationalized banking relations(46%).Yet,despite several VAM benefits,

285、platform installation is a challenge for enterprises.60%of corporate treasurers said they struggle to optimize virtual account structure to meet organizational requirements,58%noted issues in managing tax implications,50%said understanding and navigating VAM regulations across multiple jurisdictions

286、 is challenging,and Nearly one-third cited difficulty with integrating a VAM platform with their ERP/TMS system.However,VAM platforms have evolved to solve technical and operational challenges.Next-generation VAM platforms are a virtual overlay implemented on top of a banks core platform with minima

287、l impact to the existing infrastructure.API architecture ensures a seamless interface and integration with corporate ERP/TMS systems,with self-service capabilities and extended account hierarchies(the ability to open unlimited accounts).Moreover,next-generation VAM platforms leverage emerging instan

288、t payment rails and open banking to offer real-time liquidity management services.VAM platforms are no longer limited to account rationalization and reporting purposes.Now they enable sophisticated cash-management services such as managing multi-currency liquidity,intercompany funding,interest,and m

289、argins,as well as centralizing and automating“on-behalf-of”structures.For example,in 2018,Citibank launched an in-house proprietary VAM platform across 16 Western European markets and 37 currencies.60 By 2022,the bank expanded the offering to US corporate clients and 41 currencies.Citibank plans to

290、expand its offering to Asia and Canada.Citibanks VAM platform can streamline the documentation process and reduce IT requirements for enterprise clients,significantly simplifying the account opening process.Citibank can now open accounts and make them transactional within 24 hours.Previously it coul

291、d take months!With multiple payment methods,VAM helps the bank provide instant payment capabilities for domestic and cross-border transactions.Corporate clients leveraging Citibanks VAM platform can access instant cash management capabilities like real-time cash concentration,account segregation,aut

292、omated account receivables/payables,and instant reconciliations.In 2022,Citibank reported an 82%increase in virtual account balance growth thanks to 33%VAM platform adoption.61World Payments Report 202329Blockchain and tokenization initiatives can boost the cash management value chainVirtual account

293、s can be grafted on top of blockchains(or permissioned DLT networks)to enable value and information transfer.This capability can also help to overcome the complexities of integrating blockchain in an enterprise client environment.Commercial banks are working on deposit tokens(equivalent to existing

294、deposits held by banks)to support a variety of use cases,including domestic and cross-border payments,trading/settlement,and cash collateral provision.How does it work?Consider a scenario in which Company A has bank deposits.The bank can tokenize these deposits and store them in Company As virtual w

295、allet or account.Transactions occur on a private blockchain network across the virtual account hierarchy.This enterprise setup can simplify cash sweeping and pooling exercises by eliminating intermediaries and automating reconciliations.Company A can also use deposit tokens in its wallet to pay Comp

296、any B by transferring them over the blockchain network.The banks of companies A and B can settle on a separate interbank network.Moreover,the programmable nature of deposit tokens opens doors to novel use cases leveraging smart contracts to trigger payments or conditional fund transfers and intra-da

297、y lending decisions and interest-payment disbursement.Automation significantly reduces human intervention and the scope of manual errors,resulting in highly efficient liquidity management.Gautam Dutta,MD and Head of Global Cash Product Management&Innovation at First Abu Dhabi Bank(FAB)said,“We belie

298、ve that the co-existence of fiat and tokenized systems will raise the level of interoperability among stakeholders,and this will be key to driving customer value.At FAB,we are currently evaluating tokenization through deposit tokens and soon we will explore tokenized assets and central bank digital

299、currency(CBDC)to determine how programmability can be built in for cash management use cases such as trigger-based funding,defunding,interest payouts,etc.Looking ahead,our initiative(s)can be extended for pilot participation in single/shared ledgers before we look at universal or unified ledgers to

300、create building blocks for new clearing and settlement systems.”In addition,underlying blockchain technology can bolster data collection and validation processes,giving corporate treasurers more precise cash forecasting capability.Treasury systems can use smart contracts and programmable deposit tok

301、ens to capture data from invoices,payment transactions,bank accounts,and inventories.As a result,employees are free from numerous manual data-entry tasks,and the enterprise eliminates data loss,duplication,and manipulation.In parallel,blockchain can ensure that data recorded in ledgers is authentic,

302、immutable,and traceable.Moreover,automation enables corporate treasuries to establish a consistent,reliable single source of truth for all data across different systems,stakeholders,and subsidiaries.J.P.Morgans blockchain unit,Onyx,is piloting various use cases deploying blockchain and deposit token

303、s,including creating customizable virtual account structures,multi-currency notional pools,programmable money,and cross-currency liquidity.In March 2023,the Swiss Bankers Association(SBA)released a whitepaper exploring deposit tokens as an alternative to private stablecoins.62 Similarly,DZ Bank in G

304、ermany partnered with four corporate clients to issue deposit tokens directly into a private blockchain network.63World Payments Report 2023303030An enterprise liquidity management(ELM)platform facilitates diagnostic decision-support intelligenceAn ELM enables actionability and operational interconn

305、ectivity between internal and external systems.Transaction banking API catalogs and VAM platforms with intercompany tracking capability laid the foundation for an ELM platform.ELM platforms bring together siloed resources and functionalities and offer corporate treasurers complete visibility on owne

306、rship of cash,working capital management,payment security,and liquidity risks(Figure 9).ELM is gaining traction as complexities in managing enterprise liquidity rise and the corporate treasurer role expands.Corporations expect strategic liquidity management advice from treasurers.Sometimes,ELM platf

307、orms are compared with TMS;however,we consider TMS as a subset of the broader ELM platform.The operations layer of the ELM platform groups application modules to run treasury(including TMS),payments,risk management,and working capital optimization.Next,the API-rich connectivity layer helps unify dat

308、a from multiple ERPs and standalone systems within the enterprise setup and externally(suppliers,customers,banks,etc.).Finally,the execution layer leverages artificial intelligence,machine learning,and data visualization to analyze data collected from disparate systems and support decision-making.64

309、Jan Rottiers Head of Liquidity Management Solutions for Corporates,BNP Paribas Liquidity management offers a single view and control over cash positioning.It requires harmonization across multiple TMS and ERP systems across the enterprise a challenging proposition.Thanks to APIs,banks can seamlessly

310、 integrate multiple systems and eliminate silos to help treasurers improve liquidity management.”ENGAGE with corporate clients as strategic partners,not service providersCorporate treasury teams are often understaffed,and disruptions such as COVID-19,high inflation,supply chain disruptions,and geopo

311、litical crises significantly strain resources and efficiency.Considering the evolving role of corporate treasurers,as true strategic partners,banks must offer transformational support.There are three key areas where banks can lead change and add value for corporate clients.PROCURE-TO-PAYINSTANT PAYM

312、ENTSORDER-TO-CASHINSTANT PAYMENTSBulk paymentsPayment approvalsSuppliers compliance checkReportingSupplier data analyticsAutomated invoice matchingE-contract managementCustomer data analyticsRebates&discountsPayment collectionReportingDigital invoicingDispute managementCreditscoringAUTOMATED ACCOUNT

313、S PAYABLEAUTOMATED ACCOUNTS RECEIVABLECentralizedtreasury(In-house bank)NettingRiskmanagementCash forecastingInter-companyswappingWorking capitalefficiencyVirtual accountmanagementFigure 9.An ELM platform converts operational data into actionable insights for quick decision makingSource:Capgemini Re

314、search Institute for Financial Services Analysis,2023.World Payments Report 202331Bank boosts high-traffic payments efficiency with automationBusiness challengeA global bank was experiencing difficulties managing various types of payment exceptions,typically requiring significant manual processes an

315、d multiple human touches to resolve.The banks operations team working on these exceptions had grown to 1,000 people as their payment volumes grew and they struggled to meet their service level agreements(SLAs).Business solutionThe bank leveraged US-based Pegas low code platform for AI-powered decisi

316、oning and workflow automation to manage all of their commercial payment exceptions.Real-time,bi-directional integration with SWIFT and other systems automates the capture and interpretation of information to determine the exception reason.Intelligent automation with advanced business rules are then

317、used to route cases to appropriate operations personnel for more rapid review and automate processing to reduce the level of manual work and review required,sometimes even resolving issues without any human intervention.The bank has even incorporated AI to gradually learn from common issues and incr

318、ease the level of straight-through processing(STP)over time.Business resultsThe bank can now automatically resolve about 80%of exceptions with no human intervention,and the average number of human touches per exception was reduced by 70%,leading to a 29%improvement in same-day resolution.In addition

319、,while the number of payments processed have doubled over the past several years,along with the number of exceptions,the bank is now able to resolve these exceptions with only 300 operations peoplean effective reduction of 85%in the number of people required.Nicolas Cailly,MD,Global Head of Payments

320、&Cash Management,Socit Gnrale CIB Leading corporates aim to centralize treasury operations to leverage real-time payments and a full suite of API connectivity to enable 24/7,360-degree visibility of their cash.Banks and payments firms are instrumental and play a major role in enabling corporate trea

321、surers transformation journey.”Robo-treasuryIn todays volatile environment,corporate treasurers require on-demand,always-on treasury support.Corporate treasurers need as much time as possible for strategic initiatives instead of spending effort on repetitive and low-value-adding tasks.Therefore,inte

322、lligent robotic process automation(iRPA)can be critical.For corporate treasurers,automation is important in payment execution and monitoring as well as accounting.RPA eliminates tedious and manual daily processes,enabling corporate treasurers to spend more time on value-added tasks.Banks that embrac

323、e iRPA in payment areas can deliver quantifiable value.In-house banks and payment factoriesIn-house banks and payment/collection factories are on corporate treasurers radars.Of those surveyed for the World Payments Report 2023,53%said they are exploring options to centralize treasury operations at t

324、he regional level.And one in three corporate treasurers said their firm had begun its centralization journey.Demand for high efficiency and transparency in managing cash and liquidity has made in-house banks(IHBs)top of mind for corporate treasurers.53%of corporate treasurers are exploring centraliz

325、ing treasury management at the regional levelWorld Payments Report 202332What do in-house banks include?Payment factory to control outgoing payments,manage POBO(pay-on-behalf-of),and automate reconciliation Collection factory to automate and manage account receivables,COBO(collecting-on-behalf-of),r

326、econciliation,and accounting processes Intelligent netting for inter-company payments and settlements Intercompany financing for seamless loan disbursement and automated interest calculations International risk management with FX and internal interest rate hedging Liquidity management with automated

327、 postings and centralized tradingBanks and payment firms with a robust digital foundation and platform capabilities are integral to corporate treasurers setting up an in-house bank.Next-generation VAM and enterprise liquidity management platforms are essential to building in-house banks and accelera

328、ting benefits for corporate treasurers.Corporate or B2B marketplacesFinally,several large corporations and B2B firms are orchestrating marketplaces and ecosystems.As more sales shift to e-commerce channels,they become a point of convergence for data and payment volume.Large transaction banks seek a

329、central role in helping corporations manage these emerging B2B marketplaces.Transaction banks with a strong digital foundation can work more closely with enterprise clients to set up corporate marketplace portals or support their payment ecosystems.In June 2023,Standard Chartered launched B2B market

330、place support for corporate clients.The bank is piloting B2B marketplace projects in multiple regions spanning various industries like travel,contract manufacturing,and commercial vehicles.65 Similarly,Socit Gnrale partnered with FinTech Lemonway to offer payment services for large European corporat

331、es entering the B2B marketplace arena.66Step-up with clients to build long-term sustainable valueLarge,diversified corporations with multinational presence work with several banks.Therefore,for one bank to emerge as a global strategic partner is challenging because of regulatory and geographical bar

332、riers.However,there is a sizeable opportunity for banks to step up as strategic partners at the domestic or regional level.We asked banks and payments executives how their firms could benefit through corporate client partnerships.67%of payments executives said firms strategically partnering with cor

333、porate clients face a reduced threat of disintermediation from new-age players(FinTechs)and industry peers 65%of executives said strategic banking partners could embed multiple value-added services within their corporate clients business flow and can expect higher margins from deep engagement 57%of payment executives said strategic banking partners could increase cross-and up-selling opportunities