Predicting the future of UK financial services for the balance of 2021 is no small feat. Banks of all sizes need to laser focus on cash management in an economy that is improving but is still fragile. At the same time, they need to continue investing in the digital transformation that made 2020 a mix of unprecedented innovation and unfortunate consumer dynamics from the pandemic and its related instability.

In short, UK banking is at a crossroads at which brilliant steps forward can be made in client, consumer and regulatory relationships. It’s also an intersection at which mistakes resulting from static strategies can prove to be devastating. As part of its 2021 Business Payments Barometer, Bottomline suggests three strategies for planning for the future of payments. The comments accompanying each one are taken from our recent roundtable of banking experts gathered to discuss the Barometer’s most important points.

The way Bottomline sees it, the following three elements can provide the structure for decision-making in the post-pandemic banking landscape:

The first is education, and it centers around regulation. Regulators need to become a visible support system to businesses, instead of their current role as an enforcer. Every regulation is meant to solve a business challenge, yet they are implemented and enforced without that challenge in mind. Third-party providers and banks also need to advocate for their clients and explaining the potential of new regulations in the context of real-life business issues.

For example, instead of memorizing the EU regulations regarding consumer privacy, it’s better to learn about banks that have upgraded their legacy fraud detection solution to a more relevant platform that leverages AI.

According to panel member Daniel Bellis, senior policy manager at the Federation for Small Businesses, SMBs have the most acute need for this education, especially since his membership is much more focused on surviving the pandemic than it is on regulations. For example, the FSB took an active role in educating its member about the ramifications of the IR35 tax regulations that can affect SMBs and their part-time workers.

“SMBs have a human element,” he said. “It’s part of their story. It’s more about the individual decisions people have made to keep their businesses afloat. And each and every one of those decisions has been critical of last year. As a result, there are very few businesses who have had the time, energy and resources to pontificate on our future regulations and what the payment systems might look like. They’ve very much been preparing for the next event, and the next set of statistics rather than the next set of restrictions.”

The second element is empowerment, and here the focus is on digital transformation.

Banks rarely find digital transformation to be quick and easy. Banks need to be a positive force for businesses on their digital transformation journey by showcasing how best to (or in some cases how not to) transition to digital platforms. It was an issue on the mind of panelist Naresh Aggarwal, Associate Director Policy & Technical at Association of Corporate Treasurers. He cautioned treasurers to be strategic and avert their gaze from the events of the past year.

“Look not only at adopting existing technology but also what is coming down the line,” he said. “I think organizations will start to see that they need a strategy for how to adopt (digital strategies), not because it’s just purely around payments but it touches other parts of the business such as CRM is a whole load of other systems that need to move at the same pace as payment technology is moving. “So I think for a lot of organizations, we will start to see more coalescing of payment factories teams that actually manage card payments, whether in the UK or scattered across the globe, and a greater concentration towards centralized payment hubs.”

The final element toward preparing for the future concerns establishing a stronger market position around advanced financial management tools such as automated payments processing, TMS and fraud solutions to help gain better visibility and control of data and processes. For panel member Gavin Maclean, Head of Product – Payments at Lloyds Banking Group, those advanced technologies must be undertaken aggressively, especially fraud solutions.

“With all the upheaval and all the changes that have taken place, we often focus on the opportunities to innovate,” he said. “And, unfortunately, the bad guys too, and they see it as an opportunity. They see the uncertainty and the disruption as a way to create processes and controls that might not have got through in normal times. I really think testing in a controlled environment is essential here. Revisit and the configuration of payment authorization processes and independently verify new payment instructions.”

The Bottomline: As businesses look forward cash management is more important than ever and businesses must not neglect the long-term vision for success. Focusing on education and automation must lead the charge to transform banking. Laggards leave themselves open to new and evolving financial risks in the future.

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Posted by Paul Fannon

As Managing Director, Global Business Solutions, Paul leads customers, partners and teams to stay ahead, stay protected and find more value across the global landscape of banking, payments and financial crime as it evolves. Whether that’s helping customers activate the shift from software to cloud, interpret changing international regulations, simplify cross-border complexity or win the fight on fraud, Paul champions the charge for customers across international markets. He is a strong advocate for the development and growth of team members in delivering customer delight on the journey. Paul has over 25 years of experience in payments, financial technology and international go-to-market strategy.