By Maria Bruno-Britz
Standards has long been a topic of discussion in payments circles. The ability to provide clients with standard formats for payment reporting, submission, etc. could do wonders for customer relationships, say experts, in that the bank can offer its commercial clients a slew of value added services around a more straight-forward, integrated view of their payments. Then why is the world still operating with proprietary payments formats?Nick Alex, SVP, director of product management, treasury and payment solutions, with SunTrust (Atlanta), echoes the sentiments of many in the industry in that it's often difficult to define what should be encompassed in a standard. "The challenge is allowing your clients to define the 'data dictionary' terms within a transaction," Alex comments. "Is the data being provided in a form that can be read by both sides of the transaction? Right now, there is no universal dictionary that each industry can adhere to." Given the situation, banks do all they can to accommodate their clients and make transactions as seamless as possible. "The ability of banks to understand payments and financial terms is very important," he says.
He mentions that various financial services groups have tried to tackle the standards problems, such as NACHA and The Clearing House, but it's a tough nut to crack, especially since the commercial clients banks serve run the gamut in terms of industry sectors. It's up to the banks to sort things out in the end. "It's often difficult to interpret financial documents in commerce because there's a lack of standards and a common data dictionary," Alex continues. "So banks will have to continue to interpret all this information for our clients."
Things aren't too bleak on the standards front, however. Although the world should not expect a universal payments data dictionary any time soon, Alex says it still might be possible on an individual industry basis. "The auto industry has had some progress here because there are only so many automakers. They defined to their suppliers that they will do things one particular way," he explains. "But other industries don't wield this kind of weight."
Still, there is a fear that the business of payments services is in danger of becoming commoditized, and standards might actually contribute to this in some ways. Yet, banks will continue to remain at the center of their corporate clients' needs on the payments side, says Alex-provided they continue to innovate on service offerings. "Banks will maintain their value proposition to the extent that they can make it easier to automate clients' processes, and carry data and dollars together for them. Some corporates may choose a third party to do this because they think it's less expensive, but what happens when a problem arises and the data is separate from the dollars?"