The omnipresence of smart mobile devices has triggered a paradigm shift in banking and finance. The introduction of email and various office applications have made mobile devices invaluable tools for banking businesses the world over. Corporate treasurers are the latest group of business users to benefit from enhanced mobile functionality of business-to-business (B2B) mobile transactions. However, the adoption rate could be accelerated.
Many corporate treasurers have concerns about the security of conducting mobile B2B transactions that deal with very large sums of money. As such, for mobile B2B payments to truly take hold there are various considerations that businesses need to factor-in for increasing the confidence of corporate treasury departments.
Within corporate banking, treasury has important functions to handle in terms of working capital management, facilitating cash obligations, financing capital-intensive projects and strategising investments with idle cash. These broad functions have multiple business scenarios that require treasurers to review information and act on it with a go/no-go decision. These approval decisions require that the treasury department use applications where report data is presented in a concise format while also providing drill-down for more detail.
Smart remote devices, such as smartphones and tablets, could be redefining treasury operations. The use of smartphones by corporate executives, including treasurers, is on the rise. Latest industry data shows that tablet sales will outnumber PC sales by 2014. Mobile devices with larger screens and touch screen user interfaces provide good and convenient options for creating B2B mobile treasury payment applications.
Successful B2B Mobility
Mobile devices have already gained momentum within the world of corporate banking. Some of the most well-respected global finance institutions have already taken the initiative in offering B2B mobility applications. For example, Wells Fargo’s chief executive officer (CEO) mobile service allows corporate customers to initiate and approve payments, manage commercial cards, and deposit cheques using a phone. Bank of America’s (BofA) CashPro mobile application provides corporate customers with a broad range of treasury management services, including freeform payments, a multiple payments view for approval with a single detailed transaction view, and personalised reporting. Citibank’s Citi Direct Mobile allows receiving alerts and creating, authorising, releasing and deleting batch payments for straight-through processing (STP). These applications allow customers to check account balances, transaction status as well as authorise transactions.
Mobile B2B Payment Strategies
1.Identify right-use cases
The first step in developing a mobile payment strategy is to identify right business use cases for mobility, such as treasury functions, salary disbursements, bill payment and standing instructions.
A focused approach in determining the right set of use cases should be developed using a scoring mechanism. Factors like seniority level of treasury users involved, users’ operation in multiple time zones, travel frequency and the positive financial impact of a faster use case decision should be considered. This helps determine scenarios where mobile B2B adoption delivers business value to the enterprise with faster decision-making and quicker resolution of exceptions.
Wells Fargo, for example, lets its WellsOne Commercial Card customers manage their accounts, and check expenses and available credit via their smartphones, while Deutsche Bank offers cross-border mobile payments to its global transaction banking clients in partnership with Luup.
2. Corporate customer preferences
Corporate customer preferences should be studied to understand the client base in terms of devices such as Android, iPhone, iPad, or Galaxy, by geography. For example, many banks offer a higher number of functions for smartphones, such as Android and iOS, while not offering the same level of functionality for tablets such as the iPad.
A number of functionalities differ from region to region for the same bank. Corporate customer preferences drive development options and prioritisation of application rollout on multiple devices. A country-specific approach may be required for customers in other geographies. In some countries, due to penetration of a specific mobile phone, the prioritisation of the application development needs to be revisited, based on the customer’s share of the overall business.
3. Developing scalable architecture
Channel integration should be established in the enterprise architecture since it could streamline payment and treasury functions over multiple channels, such as mobile, tablets and the internet. A common set of business services across these channels and a single interface to back office systems needs to be in place. Integration of all channels helps in reporting, analytics, and cost reduction while reducing time to market (TTM). Multiple channels from payment and treasury departments could connect to a channel integration hub. This will help the institution roll out applications that are accessible across multiple channels, with optimised process and deeper corporate customer satisfaction.
4. Optimum user experience
It is very important to define and apply a user experience strategy for mobile B2B applications. Understanding users of the B2B applications and features, their demographics, preferences and objectives in using the application can provide simple and smooth workflow and an interactive, secure and quick user experience. Since the treasury department would sharply focus on certain validations, such as auditing payments and integrity of transactions, the ease of checking an audit trail or a drill-down in a report for more detail will provide a heightened sense of user satisfaction.
Security is the key element in any segment and in wireless e-business solutions in the mobile B2B space. Clients require a detailed level of rigour since these transactions are high-value payments, which carry significant business impact if there is a breach. An end-to-end security strategy for mobile applications needs to be implemented to build confidence with the treasury department and corporate customers.
A survey of US consumers conducted by Infosys in February 2012 reveals that among mobile banking users, 25% of respondents felt a lack in confidence in their data protection while using mobile phones for financial transactions. Frequent vulnerability assessments and penetration tests need to be conducted and proactive remediation measures should be implemented. The strength of the application’s security on mobile devices needs to be measured and gauged against industry standards such as the National Institute of Standards and Technology (NIST) guidelines. Standards such as the Open Web Application Security Project (OWASP) are under development, which could be further strengthening mobile security once available.
If an institution is able to successfully integrate these strategies into their B2B transactions, there are a number of benefits that can result across these business scenarios:
- Payment initiations and authorisations: In certain treasury departments, payment initiations are done by the controllers and authorisation by the chief financial officer (CFO). Wells Fargo’s CEO Mobile service offers this functionality, which enables corporate customers to process payments faster and thereby achieve competitive advantage.
- Alerts: There can be certain triggers for violation of thresholds that proactively alert the business assurance team, treasury controller and CFO. HSBC’s HSBCnet Mobile provides alert triggers which can help to reduce possibilities of any fraud and ensure minimal risk.
- Access to real-time information: The hedging strategy for the company’s currency receipts can be refined by the treasury department based on real-time information on exchange rate movements. An application feature can show the financial impact of the hedging positions based on currency rate fluctuations. Such features can help banks in efficient treasury process and enable proactive decision making.
- Validation of transactions: A deal, such as an inter-account transfer or a foreign exchange (FX) transaction, can be entered by a treasury user. Further deal validation can be done by the treasury administrators. Based on the validation or invalidation, various alerts can be triggered to the treasury department hierarchy. This helps banks make effective decisions while ensuring tight control and smooth governance.
- Authorisation for settlement: A deal has been validated by the treasury administrator, but the final settlement has to be authorised by the treasury controller. Once the validations are complete, an alert could be sent to the concerned user. Validated deals are authorised for settlement based on the controller’s final review. This can help banks with decision making, faster transaction settlement and risk reductions.
Lack of a proper strategy in identifying relevant use case, ineffective user experience and the security angle are the key challenges that banks need to focus on while offering mobile B2B functionality. Banks are aggressively jumping into offering treasury and complete end-to-end corporate banking through mobile devices because they offer much convenience. If banks can focus on the above-mentioned five strategies, they can gain a strategic advantage and achieve faster digital transformation.
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