How to form an enterprise automation strategy for payments

Executives from Azimo and PagoFX guide us on how to implement payment automation, including the benefits, challenges and post-pandemic potential.

Capable of optimising front-to-back office operations, the evolution of automation in modern finance is the story of exponential technological sophistication and a reimagining of workforce deployment. Enabling significant increases in speed, accuracy and scalability, payment companies’ gain becomes their customers’ also, yet some contend that the full extent of automation’s benefits is yet to be fully realised. Indeed, as with any technology, it is often how an enterprise chooses to combine human and artificial intelligence (AI) that influences the ultimate success or failure of its approach. 

To help us form our guide for an optimal payment automation strategy, FinTech Magazine spoke with two industry leaders: Cedric Menager, CEO at PagoFX (a Santander company), and Richard Ambrose, CEO at Azimo.

Benefits and use cases

For Ambrose, summarising the core benefits of automated payments is easy:

• Speed: “More efficient processing of payments means that recipients get their money faster. For instance, Azimo is capable of delivering 80% of our transfers in under an hour.”
• Accuracy: “Machine learning allows us to run smarter compliance and reconciliation systems with fewer errors or false positives.”
• Scalability: “Automated processes, like transaction reconciliation and contact handling, allow us to serve more customers with fewer people. As a result, we can scale the business faster.”

From a client perspective, automation serves to make the transaction process as simple and fast as possible. This will provide the most overt benefit, however Menager points out that there is also a less obvious advantage: cybersecurity. “When automated transactions are monitored, algorithms can check customer data and behaviour using pre-set rules and produce alerts. Usually information in the data set will be normal, but sometimes it will help you realise, ‘Hey, there's something we should look at’.” 

It should be noted that automation is highly reliant on data; the more information a company can capture, the easier it will be to optimise a payment from request to receipt. Constructing a strong enterprise tech triad comprising cloud, IoT and analytics software will keep an organisation lean and agile, adaptable and capable of making real-time decisions. “PagoFX is always exploring ways to make the company more predictive so that we can help customers make fast and informed decisions on when to move money,” Menager adds. Ambrose shares a similar perspective, relating that Azimo’s cost-efficient investment has enabled it to automate key financial operations, including transaction reconciliation, payment matching and treasury management. “The automation that we’ve built allows us to handle large volumes of payments very quickly and accurately with a much smaller team than a traditional cross-border payment business would need.”  

The importance of culture

Any form of digital transformation should acknowledge the fundamental importance of workforce ‘buy-in’, and companies must be willing to accommodate a significant culture change. How a company chooses to combine human and artificial intelligence can be pretty crucial, particularly as the optimal paradigm for operations has yet to be found. “AI is still in its infancy and at this stage it’s very much about learning and testing hypotheses,” says Ambrose. “Human intelligence is essential to achieving that, and there are millions of tasks that AI can’t yet even begin to understand.” Indeed, at this stage in automation’s application to payments, a human is irreplaceably required at the beginning and end of a process. 

Establishing a strong cultural element will have the added benefit of enabling a company to move flexibly with market changes, a significant advantage in the contemporary financial services market, where COVID-19 is reshaping the payments landscape. “We launched our first product in the UK in April 2020,” recalls Menager. “Launching in the midst of the COVID period was not ideal, but automated payments clearly held value for customers in that context.” He reflects that, prior to the pandemic, customers would still primarily use physical bank branches to complete international transfers. “Now, there’s been a shift towards digital adoption, especially because people are not able to travel as much as before.”

McKinsey summarised this point of view in its article ‘Accelerating winds of change in global payments’: “The industry has made a leap towards digital and automated payments and has covered the ground of almost 10 years in six months.” Ambrose adds that the global lockdown has initiated a significant shift towards digital cross-border payments, something which is invoking noticeable repercussions throughout the industry: “This shift in consumer behaviour will trigger an acceleration in investment in digitisation and automation of payments from both incumbents and disruptors alike.”

Automated payments post-COVID-19

Although this may suggest that automated payments are gaining significant momentum, both Ambrose and Menager agree that, on the contrary, the realisation of automation’s full potential has barely started. “As far as the consumer experience is concerned, automation has come a long way: customers can make a transaction easily and enjoy fast delivery times as a result of automated routing, matching, compliance checks and reconciliations,” Ambrose states. “However, there remain many large financial institutions where manual processes are still dominant. If they can’t or won’t replatform, they risk becoming hopelessly uncompetitive against the digital payments companies who can be faster, cheaper and more customer-focused through putting automation first.”

In the post-COVID-19 world, where everyone is searching for surety at a time of unprecedented uncertainty, digital payments have the ability to provide much-needed reassurance. “Paydays are so very important right now,” states Menager. “In this regard, there’s a lot of automation opportunity on bill payments: everything from payment to cash management. People are seeing what’s already been done and already consider payments to be ‘transformed’ already, but I think it's early days and there are still a lot of areas for further development.” Whatever transformation is left, he concludes, will crucially need to accommodate both the effects of COVID and the increasingly borderless structure of global payments. “Payments in Europe are pretty uniform, but the standards in Asia, the US and Latin America are very different. Any automation strategy needs to be flexible enough to be rebuilt or rethought depending on the given geographic area of operation.” 

Meet our commentators

Richard Ambrose, CEO, Azimo

Joining Azimo in 2017, first as COO and then attaining his current position as CEO in 2019, Ambrose’s prior career included executive roles at PayPal and eBay.

Cedric Menager, CEO, PagoFX

“My background is more on the tech side,” he explains. “I've worked in both startup and big tech company environments, such as PayPal.” In addition to his executive posts at PayPal, Menager was also General Manager at Intuit and Sales Director at BNP Paribas.