Published: June 06, 2014
When you free treasury and finance teams from their desks, simplify banking transactions and make business data richer and more accessible, the roadmap’s drawn for smarter and more efficient companies. This, says Marcus Treacher, is where mobile payments are taking us.
It was not so long ago that businesses simply accepted the cumbersome conventions of paying and receiving funds, like bankers’ drafts and three-day cheque clearance. With new innovations in payments, these unnecessary obstacles to doing business are fast disappearing. Both domestic and international transactions are changing. It’s a revolution in the way we think about moving money through the supply chain and, according to Marcus Treacher, who heads HSBC’s Innovation and Client Solutions team, there will be game-changing benefits for companies.
It’s a revolution in the way we think about moving money through the supply chain
“We traditionally think about banking solutions that improve how a company’s treasury department handles money, but the knock-on effects of mobile payments will reach every part of a business. In fact, I see the lines blurring between the activities of treasury and the rest of the business. Treasurers are starting to be freed from their desks and from mundane tasks, and through improved data, are becoming much more aware of the nature and metabolisms of the businesses they support. They will have the time and mobility to get involved in the company in a more rewarding way.”
The popularity of mobile payments is reaching a tipping point. Instead of a concept that needs pushing uphill, mobile payments systems are starting to drive themselves. The UK’s recently launched Paym service, for example, makes instant payments via mobile phone an attractive proposition.
“It’s not surprising that it’s catching on so fast,” says Treacher. “The old way has been painfully difficult. Just as importantly, companies and individuals are operating globally more than ever before and they need the efficiency and the simplicity of transactions that aren’t snarled up between banking systems.”
This is especially true for smaller companies that have, in the past, found it difficult to expand internationally without spending a lot of time setting up and managing their banking services.
“Because historically only larger companies operated globally, the world’s banking systems were not designed for the convenience or simplicity that smaller companies needed. As a result, traditional international payment methods are geared to the needs of large companies that can justify the cost of treasury automation and enterprise resource planning systems, which are needed to plug into the world’s bank systems,” says Treacher. “Those conditions are changing and, through mobile innovations, companies will be able to more easily see and fund accounts in different parts of the world, and pay their employees and suppliers in local currency. The term for this is ‘frictionless payments’. As a result, new businesses will be able to get up and running quickly and cost-effectively, whilst for an established business, mobile payments can drive efficiencies across the organisation and beyond into its supply chain.”
Demand for streamlined ways to pay has come in tandem with innovations in the way information technology solutions are developed. Ideas that used to require a lot of financial backing, and therefore risk, to turn into a commercial reality are now easily created thanks to Cloud computing, which provides development tools on demand. There are also many innovation clubs and schemes springing up around the world. As a result, many creative developers are working on new ways to improve payments and apply mobile technology to banking, and from the plethora of prototypes, clear winners are starting to emerge.
The role of treasurers is also changing thanks to innovations in mobile banking combined with improved payment methods and advances in data analytics. Better informed treasurers are acting more as consultants across their business and are able to work anywhere with secure mobile connections. They can travel to meet and help colleagues face-to-face, knowing that they can access information at any point in the transaction cycle. Ultimately, they free themselves to do more. In fact, Treacher predicts that treasurers will become busier but in more rewarding roles that bring them closer to the business.
He sees this trend being kinder to small companies too, releasing busy, multi-tasking directors from the bureaucracy of financial administration to devote more time to running their businesses.[[[PAGE]]]
Mobile payments are also very effective in removing physical cash from corporate payment and collection cycles. Taking cash out of the process reduces the risk of fraud and eliminates considerable administrative overheads, especially when operating in remote markets. Treacher, though, believes the most significant benefit is that mobile payments have the power to provide better real-time data for treasury teams.
“When you have fast, direct information about what’s happening in the company and with your trading partners, decision-making is transformed and you can use your new understanding to improve efficiency,” says Treacher.
It seems treasurers are starting to share his enthusiasm. At the end of July 2014, 19,000 treasurers were accessing HSBC’s Corporate Internet Banking service (HSBCnet) via their smartphones, making a total of $20bn in payments per annum worldwide. In 2013, 5,000 HSBCnet users switched from desk-top access to mobile access globally; in 2014 we expect 10,000 more to switch also.
The next stage is to use mobiles for things we haven’t done.
“There are a lot of activities now and I think it reinforces the fact that the established professionals who we serve are just as comfortable using mobile devices for corporate cash management as they are as individuals accessing consumer bank applications on their mobile devices. Until now we’ve concentrated on re-creating our web-based HSBCnet on mobile devices – not changing our banking products, but changing how our customers use them. The next stage is to use mobiles for things we haven’t done before, and we have a number of payment service innovations under development that challenge existing paradigms, further tapping the power and potential of mobile devices.
“It’s clear that banking needs to fit people’s lifestyles and workstyles,” he says. “If banks unlock their services, then treasurers can unlock themselves from their desks, unlock more value for their organisations, get mobile and get creative in the ways they help their businesses succeed.”
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