FP&A teams need to rethink business partnering in a digital function

Despite ongoing modernisation, finance planning and analysis (FP&A) teams are still struggling to cope with the increased demand for decision support in an era of heightened economic turbulence, according to Gartner, Inc.

In a Gartner survey of 273 FP&A managers and finance business partners and 102 senior decision makers at organisations with more than US$250m in revenue, conducted from September through October 2023, only 15% of FP&A leaders reported having a sustainable delivery model where their teams can maintain a consistent level of decision and planning support across decision makers while supporting complex, new decisions without burning out FP&A staff.

“FP&A teams are over-extended: always in reactive mode, juggling complex requests that burn out staff, and they are still leaving service gaps because they can’t serve all the decision makers that need support,” said Randeep Rathindran, Distinguished Vice President, Research, in the Gartner Finance practice. “The typical modernisation approach of automating routine FP&A processes to create capacity for in-person decision support is simply not keeping pace with elevated demand in most organisations, and the current trajectory is unsustainable.”

The most common scenario in FP&A functions – the internal consulting model – is to use automation to free staff capacity so that FP&A teams have more time to spend on value-added activities such as finance business partnering.

However, leading FP&A organisations have discovered a far more sustainable and scalable way for FP&A to deliver value-added insights to the enterprise – the capability diffusion model – where technology is the default channel for providing decision support and in-person business partnering is the exception.

The rapid evolution in technology is making it possible for the first time to scale FP&A from a specialised finance team into an enterprise capability, where decision-makers can become more self-sufficient by using FP&A decision support that is embedded in technology tools.

“The key is to think bigger and look at technology as a way to extend FP&A into the wider business rather than as just a way to boost internal capacity,” added Rathindran. “New developments in the finance technology vendor market, and the prevalence of tools with embedded capabilities such as graph analytics, machine learning and generative AI make it easier than ever before for FP&A to transfer expertise to decision makers for complex decisions.”

Finance business partners (FPBs) should move towards a teaching and tool-training role, Gartner suggests. This could help decision-makers become more self-sufficient in using FP&A’s tool-based analysis and insights, easing demands for hands-on FP&A support. Once in-person FBPs are no longer the default for decision support FP&A will have greater flexibility to support the most complex or new-in-kind decisions.

 

Benefits and challenges of interlinking fast payment systems cross-border

The Reserve Bank of Australia (RBA) has released a report analysing the benefits, design choices and challenges associated with linking fast payment systems across countries. The report finds that connecting fast payment systems has the potential to considerably improve the speed and transparency of cross-border payments, benefiting both end users and service providers. Crucial to realising these benefits are well-designed governance, scheme rules and payments processing capabilities, which help to manage risk and ensure a seamless cross-border payments experience. However, establishing an interlinking arrangement poses challenges, including dealing with differences in legal and regulatory frameworks across participating jurisdictions and agreeing on governance arrangements and scheme rules.

Linking national fast payment systems is receiving significant international attention as a promising way to improve the cross-border payments experience. In light of these developments and Australia’s commitment to enhancing cross-border payments, the RBA recently collaborated with a number of Australian industry participants involved in cross-border payments to study the interlinking of fast payment systems.

The report contributes to the international discussion on this topic and encourages further analysis of key design considerations. This work will also help inform future discussions in Australia about the potential for the domestic fast payment system, the New Payments Platform (NPP), to be linked to fast payment systems in other countries.

As international payments activity continues to grow, there is an increasing need for efficient, competitive and safe cross-border payment services. The G20 countries, including Australia, have committed to making cross-border payments cheaper, faster, more transparent and more accessible. Fostering the interlinking of fast payment systems is a priority initiative in the G20 roadmap to enhance cross-border payments.

Enhancing cross-border payments is a strategic priority of the RBA’s Payments System Board, and the RBA is involved in a number of initiatives aimed at achieving better outcomes for end users in Australia and overseas.

“Cross-border payments are vital in an interconnected world,” said Brad Jones, Assistant Governor (Financial System) at the RBA. “Further efforts are needed to make them faster, cheaper and more transparent. This study marks an important step toward understanding the potential for linking fast payment systems to drive improvements in these areas. The RBA will continue to engage with industry, public sector agencies and international stakeholders to explore this and other avenues for the Australian financial system to deliver a better cross-border payments experience.”

 

Streaming prices transforming trading of US treasuries

Direct, continuous pricing streams are slowly but surely reshaping how US treasuries are traded, according to a report from Coalition Greenwich. The majority of the US treasury market is traded electronically. In 2023, 64% of the US$755bn average daily notional volume (ADNV) was executed via a combination of central limit order books (CLOB), request for quote (RFQ) and direct, continuous pricing streams.

For roughly the past five years, many market participants have been working on the assumption that streaming would capture a growing share of the market. However, only 9% of treasury volume is currently executed via direct streaming, with only 16% of investors using direct streaming to trade on-the-run treasuries.

“Despite seemingly lacklustre metrics, streaming now is at the heart of nearly all treasury volume traded today,” said Kevin McPartland, Head of Research at Coalition Greenwich Market Structure & Technology and author of ‘Streaming Prices Underpin U.S. Treasury Market’. “Looking only at that breakdown of the market misses the real story. The lines that divide execution methods and venues have blurred considerably, and direct, continuous pricing streams now play a role in most types of treasury trades.”

Every price available in a treasury CLOB is generated and kept up to date by an algorithm, which is fed by a direct, continuous pricing stream. The same algos respond to RFQs. For the voice business, the responding dealer is usually responding with a price calculated by the same algo.

Trading venues are effectively providing ways to move these algo-generated prices between liquidity providers and liquidity takers, allowing them to negotiate and hopefully lock in the trade. If an anonymous CLOB market allows a liquidity taker to filter out liquidity providers they do not want to trade with, is it still a CLOB or is it now streaming? And if a streaming market allows anonymous trading with the liquidity providers the client has access to, is that now a CLOB?

“Increasingly, these arguments are just semantics,” added McPartland. “What matters is that liquidity takers can access the market in whatever way they deem the most efficient.”

 

UK businesses must prioritise payment technology to stay competitive

The importance of UK businesses investing in new payment technology has been underlined in research from Lloyds Bank and FreedomPay. Two-thirds (59%) of UK retail, food and beverage (F&B) and hospitality companies were found to already put payments at the heart of their customer experience strategy, reflecting the growing importance of payment options to customers.

For retail-focused businesses, 59% believe that a good checkout experience is essential to building customer loyalty, with respondents believing it is as much a competitive advantage as having the best products. Meanwhile, 57% of retailers said that a poor payment experience could have a detrimental effect on their business, pushing customers to competitors who offer a better experience.

The findings come as payment infrastructure is increasingly viewed as a critical part of customers’ shopping experience. As high inflation takes its toll on both independent venues and enterprise chains, this research demonstrates the need for businesses to prioritise customer satisfaction and build brand loyalty.

However, despite understanding the importance of providing a good payment experience for customers, making this a reality appears to be a challenge for many businesses. Half of all businesses surveyed (49%) said they had not invested in payment solution updates at all, and only 27% of respondents felt confident in their omnichannel payment experience offering. This disparity highlights that businesses have a lot of room for growth, as investment in new payment technology could lead to significantly enhanced customer experiences and result in increased sales.

Other findings highlighted how businesses are using data, with many understanding that payments data can help them to make more informed decisions. Some 80% of respondents said they are using payments data to learn more about their customers to tailor services and products for them, which can be crucial to maintaining customer engagement and driving brand loyalty.

 

Ripple and HashKey DX bring XRP ledger-powered enterprise solutions to Japan

Ripple has entered into a strategic partnership with HashKey DX, a Tokyo-based consulting company of the HashKey Group, to introduce XRP Ledger (XRPL)-powered enterprise solutions to the Japanese market.

HashKey Group’s blockchain-powered supply chain finance solutions have seen significant adoption in mainland China. The solution was launched in July 2019 and currently has more than 4,000 companies registered, including 23 banks and 4,300 suppliers. The total trade amount recorded exceeds US$7bn, with financing transactions nearing US$3bn within the solution.

HashKey DX will now introduce these supply chain finance solutions to Japan through collaboration with Ripple and SBI Ripple Asia, a joint venture between SBI Holdings and Ripple. The solutions will be built on the XRPL. As part of this partnership, SBI Group companies will become the first Japanese corporations to use this supply chain finance solution. Looking ahead, the three companies say they will explore further collaboration on various enterprise blockchain use cases that will leverage the capabilities of the XRPL.

 

Finastra’s CoP solution supports ScotPayments with payment fraud prevention 

Finastra has announced the go-live of its Bacsactive-IP Confirmation of Payee (CoP) service with ScotPayments, a centralised payments platform that supports the digital transformation of public services in Scotland. The technology is designed to help businesses proactively prevent fraud or accidental misdirection of funds.

The CoP capability enables users to verify that they are sending payments to or collecting money from the right account holder. This gives users confidence in the process when making payments to the people of Scotland, avoiding accidental misdirection of funds and reducing the risk of fraud.

CoP gives direct debit and direct credit users a proactive approach to error resolution. By catching errors at the signup stage, users can swiftly address issues while engaging with customers on the phone or website, ensuring a seamless experience. This can accelerate payment timescales and significantly diminish the likelihood of transaction failures.

A reduction in direct debit indemnity claims is another benefit, as problems can be identified and rectified earlier in the process, preventing subsequent challenges and potential write-offs. For direct credit users, it is difficult to get money back if it is paid into the wrong account and on some occasions, lost payments are only flagged if a supplier or employee queries a missing payment.

CoP is available through the Bacsactive-IP solution in the UK via three channels: an open API module facilitating integration into client systems and websites, processing payment files prior to sending to Bacs, and adding and editing accounts entered in Bacsactive-IP. ScotPayments has used the open API module to seamlessly add CoP capabilities to its service, allowing automated real-time checking and error resolution.

 

Airwallex to provide faster international payments for Bill

Airwallex, a global payments and financial platform for businesses, has announced a partnership with Bill, a financial operations platform for small and midsize businesses (SMBs), to provide Airwallex’s local transfer capabilities as part of Bill’s payments offerings. Bill will offer its customers faster payment speed with the option to deliver payments same-day or next-day in local currencies through Airwallex.

SMBs require choice and speed to go global SMBs are increasingly transacting with employees, vendors, partners, and customers around the world. With access to fast cross-border payment options, SMBs can more efficiently manage their business. Transactions delivered directly to local banks abroad through Airwallex’s proprietary global infrastructure provide the opportunity to pay ‘like a local’ from anywhere in the world. This should mean that businesses can pay their vendors much faster, and in their local or preferred currency, without intermediary bank fees. 

Airwallex’s tech stack will enable Bill customers to schedule FX conversions and payouts at a timing and cadence suitable for the end customer, allowing them to automatically process and reconcile international bill payments at scale.

“International payment processes have historically relied on manual, bank-facilitated wire transfers, which can be slow, expensive, or inconsistent due to the involvement of intermediary third-party banks,” said Ravi Adusumilli, Executive General Manager, Americas, Airwallex. “There is a growing demand for agile and embedded global payment infrastructure built on local rails, unlocking speedier payments that arrive on time and as expected.” 

 

FSB discusses enhancing cross-border payments, AI and climate change risks 

At the latest Financial Stability Board (FSB) Regional Consultative Group for Asia (RCG Asia) meeting, members discussed recent financial market developments and vulnerabilities that warranted closer monitoring. Members also received an update on the FSB’s work programme and discussed how they could contribute to the FSB’s emerging market and developing economies-focused work. The group discussed ways to promote the implementation of FSB regulatory framework for crypto-asset activities across the region and recent developments in artificial intelligence, its growing use in the financial sector, and implications for financial stability.

Members reviewed progress being made within the region on addressing financial risks from climate change. This year, the FSB will focus on deepening its analysis of climate-related financial risks to financial stability and examining the relevance of transition plans for financial stability. Members discussed their work in supervising climate-related financial risks and how transition planning was feeding into this work.

Members also discussed progress on enhancing cross-border payments and the key challenges in making them faster, cheaper, and more transparent and inclusive. The FSB’s work under the G20 Roadmap has moved to a new phase focused on implementation and includes efforts to strengthen engagement with the private sector. The group discussed initiatives being undertaken in their jurisdictions and within the region to address current frictions in cross-border payments, including technological innovations. The group also exchanged views on areas where greater private- and public-sector collaboration could be of most benefit in the region.