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Newton’s law of motion and fintech: the strange synergy

The gradual progress of payments technology within the retail sector has left corporate payments stagnant and grasping for change. Within retail, the voraciousness of consumerism leads to demands like seamless mobility, cashless transactions, zero-count fees and instant payment processing. Fintech megaliths can't turn a blind eye to the consumer market segment, so they shift their R&D budgets to meet their expectations. With online shopping cannibalizing most other forms of retail and commerce, it is clear why that shift has manifested. Shoppers can now browse items, purchase clothes, groceries, furniture, etc. and make an instantaneous purchase from their pajamas. B2C-focused advents like digital payments and instant payments are tangible progressions of the disparity between the sectors.

What has this meant for corporate payments - which seem to have fallen by the wayside in terms of technological innovations? The lack of instantaneous payment processing has hamstrung corporate payments by ensuring lengthy transaction times, issues with invoices or shipped goods, supplier verification, payment security, multiple ERPs within a company leading to security risk, etc.

Treasurers are asked to maintain maximum intercompany transparency, ample liquidity for daily operations, and execute yearly financial forecasts while dealing with the stagnation within corporate payments. Innovations are beginning to sprout with Ripple and SWIFT gpi which are the corporate response to consumer-oriented services like instant payments and consumer-to-consumer cash apps. As the world shrinks, the delay for payment processing seems to be shrinking with it.

A strangely-Newtonian approach to treasury

Regarding financial technology, we now arrive at our analogical nod to the Newtonian law of motion: for every action there is an equal and opposite reaction. In this case, every positive fintech innovation seems to be the catalyst for a new iteration of cyber fraud or security threat. The timeless duel between innovation and the hurdles that follow suit remains a topic of analysis. And the burden lies on finance and treasury specialists to traverse those murky waters.

Payment fraud as the equal and opposite reaction

Payment security should be an area of focus for every finance department but often garners a set-it-and-forget-it approach. As processes evolve, departments experience turnover and automation transitions from buzz word to practical utility, payment security starts to be a hefty project not executable for a small treasury or finance team.

Cracks and crevices begin to fester, and the past has shown us that splintered corporations are mouthwatering prospects for potential fraud. Treasurers are too preoccupied with daily tasks to be able to carve out enough time to take a holistic view to assess the bare-bones structure of their payment processes. The metaphorical monster under the bed for treasurers can materialize in many ways like invoice fraud, duplicate payments, and false supplier invoices. 

*Cue ominously spooky music*

Payment process analysis

Where does fraud typically occur in the corporate payments life-cycle?

Regarding payment security, vulnerabilities materialize in crucial points in a payment lifecycle:

  • Payment approvals is a process that has stood the test of time. In the sense that despite a bevvy of tools and technology to maximize efficiency, it is one step in the payment process where automation can have some hurdles. 
  • Payment monitoring requires company-wide visibility of all integrations, banks and accounts, and a corresponding means to track incoming and outgoing payments from all subsidiaries. 
  • Payment transmission is the last bastion of the payment process. Ensuring the execution of payables and receivables is the lifeblood of the entire group. 

With a centralized platform, users have immersive control of all three phases. You manage and oversee all approval processes, can view the status and beneficiary of all payments, and can execute the payments seamlessly. All possible within one secure system.

The battle between treasury fortification and margaritas

The integration of automation bears boundless positive utility for B2B corporate payments processing. As history has shown us, the boundless nature of innovation opens the door for data breaches and fraudulent attacks. High-scale payment scams on large corporations remain the magnum opus for cyber hackers. The onus is on treasurers to not let splinter cell hackers sprawl out on sun-soaked beaches, sipping expensive margaritas with tiny straw hats, enjoying an early retirement at your company's expense. It is imperative to fortify your treasury with a centralized platform that will excel in automation while providing visibility and alert functionality to prevent fraud.

While Newtonian scientific constructs never explicitly pointed toward treasury and payment fraud, such constructs have a way of materializing in everyday life. The habitual seesaw nature of payment fraud provides us with a way to take a more preemptive approach. We know it is just as vital to consistently scope our solutions from the perspective of a fraudster. "Where are the potential cracks and crevices and how can we fortify them?" If we continue to adapt our technology by thinking a step ahead, we effectively carve a path for the treasurers and providers to follow suit. Newton's law remains briskly attuned to our industry and appears to be an unsolvable riddle for many companies. We may not have cracked the riddle in our industry, but we figured out its cyclical nature. 

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