PAYMENT TRENDS & HOT TOPICS

Transcription

1 PAYMENT TRENDS & HOT TOPICS FGFOA Annual Conference June 13, SunTrust Banks, Inc. SunTrust is a federally registered trademark of SunTrust Banks, Inc.

2 REMEMBER THESE?

3 Communication has changed Then Now 3

4 Information Sources have changed Then Now 4

5 Social Networking has changed Then Now 5

6 Family interaction has changed Then Now 6

7 Making payments has changed Then Now 7

8 THE LANDSCAPE 8

9 TRENDING NOW Mobile technology will continue to transform the way we live, work, learn, travel, shop, and stay connected % of U.S. Smartphone owners by age who have ever used their phone to do the following activities Get directions, recommendations, other info related to location Listen to an online radio/music service (e.g. Pandora) Buy a product online, such as books, toys, or clothing Get sports scores or analysis Participate in a video call or chat Watch movies or TV through a paid subscription (e.g. Netflix) *Source: PEW Research Center, Forbes, PWC, Statista, MarketsandMarkets 9

10 MOBILE PAYMENT TECHNOLOGY THEMES Consumer and business demand for all-things speed and convenience will continue to propel the electronic payment industry P2P Money Transfer Volume in the U.S. & Industry Leaders Person-to-Person Payments: ~$90BN ~$10BN E Business-to-Business Payments: Current Backdrop for B2B Payments In 2013, U.S. commercial consumption expenditure (CCE) totaled $22.8 trillion, 19% of global CCE (1) 24% Small Bus. <$25M Europe, 26% Asia Pacific, 39% 19% Medium Bus. $25M-$50M LAC, 6% CEMEA, 8% 50% Large Bus. >$500M *Source: suntrustrh; Credit Union Times Magazine, Capgemini (1) Visa Commercial Consumption Expenditure Index USA, 19% Global CCE 4% 5-Year CAGR Canada, 2% 7% 10 Government

11 Mobile bankers reach 50% mark Half of US consumers now use mobile banking By 2020, 4 out of 5 consumers will conduct mobile banking While mobile bankers are still younger and higher income, those differences are diminishing As the proportion of mobile bankers grows, the size of the mobile first group also swells The growth trajectory of mobile banking is such that providers must shift their way of thinking about mobile banking from the second screen behind online banking to the first screen. 11

12 Households Use Multiple Methods to Pay Bills 90% of households use more than one payment method ONE 10% THREE 23% FIVE 14% TWO 18% FOUR 18% SIX+ 15% Source: Eighth Annual Billing Household Survey, Fiserv Inc.,

13 Households Use Multiple Methods to Pay Bills Source: Eighth Annual Billing Household Survey, Fiserv Inc.,

14 HOT TOPICS Blockchain FinTech NFC Faster Payments Bank Integration 14

15 15 15

16 PAYMENTS & AUTOMATION 16

17 Payment Channels and Instruments Create a WEB of Data to Manage Receivables Cash and Data Management Payables Biller Direct Payment ACH Payment Online Bank Bill Payment Accounts Receivable Platform Bank Files Accounts Payable Platform ACH Card Payment Vendor Files Card Mobile Vendor Acceptance Terms 17 17

18 You Also Have to Deal With Traditional Payments Remote Deposit Capture IVR Biller Direct Payment ACH Payment Checks Online Bank Bill Payment Accounts Receivable Platform Bank Files Accounts Payable Platform Card Fees Payroll ACH/ Card ACH Wires Checks Card Swipe Card Payment Acceptance Vendor Files Card Payments Smart Safe Mobile Vendor Acceptance Wires Lockbox Terms 18 18

19 Why does it matter? 80% 52% 56% Of CFO s rated cash forecasting as a top area targeted for performance improvement -The Hackett Group Of Financial Professionals expect operating costs to rise in the next 12 months. -Treasury & Risk Magazine Of Senior Financial Executives are focused on squeezing more cash from internal operations - Treasury & Risk Magazine 19 19

20 What is driving the push Top 3 Internal Pressures Driving a focus on E-Payables Stakeholder demand for improved operational efficiency. Mandate to reduce overall payment transaction costs. Lack of predictability in cash flows Source: E-Payables, Aberdeen Group 20 20

21 The Automation Spectrum Core TM Accounts Fraud Prevention Reporting ZBA Intermediate TM Non integrated electronic TM solutions Allow new AR & AP Payment Forms Advanced TM Integrated Electronic TM Solutions Increase in invoice visibility Improved Invoice Workflow Mastery TM Maximizing Working Capital Supply Chain Finance Dynamic Suppler/Buyer Connection AP Discount Management 21 21

22 THE BEST vs. Rest % risk free return on cash % 74% reduction in invoice processing costs reduction in invoice approval time Invoice Processing Time 23.3 Invoice Processing Cost 8.9 Early Payment Discount Capture Source: Aberdeen Group: From the Shadows to the Forefront Best in Class Ind. Average Laggard 22 22

23 Your Auditors will love you! Contrary to Popular Belief, Auditors Love Tech Paper is more difficult to track than electronic documents Expedited Reconciliation of AP documents Reduction in error rate Easily documented business/workflow rules Source: Creating a Payables Strategy 23 23

24 Optimize Payables Electronic is King! Payment Method Cost to Process Time to Process Check ACH Purchasing Card Wire Transfer $ days $ days $ days $ days Payment type used for paying suppliers. Does not include payroll or other payments. Source:2013 Aberdeen Group 24 24

25 It s a long and bumpy road. Top Barriers to implementing Electronic Payments Supplier Resistance Lack of Integration Shortage of IT Resources 34% 38% 42% Satisfied with Checks No Executive Sponsorship 27% 26% Source: Aberdeen Group

26 TODAY BEST IN CLASS Develop a Winning game plan RESOURCES VISIBILITY RISK Change Champ. Process Review External Advice Implement 26

27 SAME-DAY ACH & CARD 27

28 Same-Day ACH vs. Next-Day ACH Current: Next-Day ACH (standard) Day One ACH originator (company) initiates ACH transactions Day Two Receiver has funds available by the open of business (credits) New: Same-Day ACH Day One Day One ACH originator (company) initiates ACH transactions Receiver has funds by end of same business day (credits) 28

29 Benefits of Same-Day ACH Same-Day Payroll Provides flexibility for late and emergency payrolls and missed deadlines Business-to-Business Payments Enables faster settlement of invoice payments to trading partners, including remittance information with the payments Account-to-Account Transfers Provides quicker credits to your bank accounts at SunTrust and other financial institutions 29 29

30 Same-Day ACH Timeline Phase 1: Process Modifications ACH Credits eligible for same-day ACH processing Industry-wide requirements: ACH Credits only Valued up to $25,000 No International ACH Originating Depository Financial Institution (ODFI) must send same-day files to ACH operators by new deadlines Funds available to receiver by end of business day All receiving depository financial institutions (RDFIs) are required to accept incoming same-day ACH transactions but originating depository financial institutions (ODFIs) are not required to originate same-day ACH payments. Same-day activity must be identified by a same-day Effective Entry Date in the ACH batch header record Phase 2: ACH Debits eligible for same-day ACH processing Phase 3: ACH Funds must be available in receiver s account by 5:00 PM RDFI local time. Key Milestones September 23, 2016 September 15, 2017 March 16,

31 Cards - EMV will improve POS Source: Visa Corporate Tumbler, 06/17/

32 FRAUD TOPICS 32

33 Business Compromise Business Executive Fraud - accounts of highlevel business executives (CFO, CTO, etc.) are mimicked or hacked, and a transfer request is made to someone who processes wires Bogus Supplier Invoices - A business, often with a longstanding supplier relationship, is asked to wire funds to pay an invoice to an alternative, fraudulent account via Purchase Order - An employee s account is hacked, recent is reviewed, and fraudulent invoice requests are sent to vendors 3 33

34 Ransomware Hollywood Presbyterian 2/16 $17K in Bitcoin ransom paid Ransomware Types: Locker Disables access & control Crypto - Encrypts data In 2015 there were nearly 2,400 reported ransomware incidents Victims paid more than $24 million encryption keys to unlock phones, computer files and entire computer systems following the installation of this malware 3 34

35 Avoiding Security Breaches Best Practices Multiple Layers of Security are Critical: Train employees Empower employees Develop and communicate clear cyber-security policies Have off site data back-up and data loss prevention technologies Use strong passwords and change often Keep up-to-date anti-virus and anti-spyware software Leverage layered security methods (e.g. Trusteer Rapport)* Use dedicated machines for financial transactions Safeguard facilities and devices Don t trust 35 *Trusteer Rapport is a secure browsing software provided by SunTrust for certain online applications that are used by SunTrust clients. The software, which is downloaded to, or accessed by, your computer or mobile device, is provided by Trusteer, an IBM Company, Boston, MA. 35