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CTC Forum: 3 Ways Technology is Impacting Payments, Treasury

  • By Andrew Deichler
  • Published: 5/24/2016

SAN FRANCISCO -- Monday Morning at the CTC Corporate Treasurers Forum, keynote speaker Jackie Reses, capital lead for Square, weighed in on how emerging payments technology is impacting key areas of finance and treasury. She pointed out three key ways that corporate can use developing technologies to improve their business.

Frictionless payments

Reses noted that the market for cashless and mobile payments will only continue to grow, particularly because they have the potential to remove friction from the payments process. She noted that consumers generally love the experience and the speed of Square transactions. “It’s a less than a 1 second transaction, compared to the eternity it takes for EMV,” she said.

Reses stressed the value of “invisible” or “contextual” payments. The less the customer actually has to do to complete the payment, the more convenient it is. For example, the actual payment transaction when a consumer uses Uber for transportation is conducted with data already in the system and there’s very little the consumer has to do on the spot.

“We see the best experience occur when payments blend into the background and become invisible, shortening the distance between product and user,” she said. “And that trend is gaining momentum, especially with the rise of contextual commerce.”

This can be seen with the popularity of Amazon Dash buttons. “If we were to score the Dash buttons in terms of removing friction and improving customer experience, their score would be nearly 100 percent,” Reses said. Indeed, the only friction in these transactions is pressing a button and delivery time.

Turning a traditional function into a revenue generator

Reses explained that new technologies are allowing traditional functions to actually become revenue generators for the company. Companies like Square have been using p2p payments as an engagement mechanism. “Think about what the opportunities are, when you take something that has historically been defined as a transaction register, and turn it on its head into something that is part of your sales tools,” she said.

She encouraged attendees to “reimagine” some of the areas in their organizations that are filled with friction, to see if there is a greater value that can be obtained from them. Reses has observed companies turn their legal teams into a revenue generating functions, and she stressed that financial teams and treasury teams can be utilized in much the same way. “If you think about what functions you have at your fingertips and whether you can turn them into revenue generating functions, I think that’s a challenge for everyone in this room,” she said.

Doing away with traditional data sources

New technology and data availability are allowing lenders to rely less on traditional data sources like FICO scores, Reses said. “FICO is a technology that should probably see its last days,” she said. “The data is old, the data is incomplete and the data is narrow. We have so many better ways to develop a point of view about credit risk than looking at what historically has been old data that is largely irrelevant and not predictive of future success.”

Moreover, traditional data sources are typically lagging indicators. A clearer picture of data can benefit companies in terms of lending, Reses noted. “Real-time data from daily payments, social media accounts and other new sources provide much better leading indicators of changes in a business’ health, allowing lenders to quickly react and adjust their pricing, underwriting and eligibility models,” she said.
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