Is the industry solving the wrong problem? Will Grace, VP, product management in the global treasury management group at KeyBank (Cleveland; $105 billion in assets), thinks that banks may lose focus on the needs of their clients if they continue to only focus on the technology issues their own back offices are facing.
"It's a back-office technology challenge the financial institutions have," he told BS&T at the NACHA 2009 payments conference. "The clients don't care about the banks' problems, as long as things work. Banks needs to be cognizant of this and at the same time, be able to differentiate between a bank-related issue and one that directly impacts the client. But at the same time, we are trying to get them to understand that there can be challenges to a bank's back office."
Grace says banks are committed to finding solutions for their clients. Yet, there have been times corporates have been directed to tap into multiple areas to make payments and handle their transactions. Instead, Grace says the ultimate goal is "to streamline the entire payments process, incorporating electronification as well as paper processes."
He looks at the backend systems in terms of what the clients want and their challenges. "Getting working capital efficiency and how to engage with trading partners more easily is what they want, especially at this time," he says. "The end benefit is to give clients visibility into the whole payments stream and visibility into the supplier end."
Grace acknowledges electronification as an important tool to efficiency, but "we're not giving clients a way to solve the real back-office issues. Why do they have to take multiple data streams from all these applications? To me, everything would be driven out of the ERP systems."
Grace may not be a lone voice in the dark when it comes to this kind of thinking. Banks have been talking about creating better integration to clients' ERP systems for the last several years. The challenge is actually doing so and he hopes to be able to encourage some grassroots interest in what he is espousing.
"It's a bank and nonbank provider issue—not a client issue," Grace explains. "Their problems are related to process and how their internal systems interact with banks' payment systems. Something like a payments hub is tactical and sets the stage for this. But from a strategic perspective, you have to look at what the end game is and that involves approaching things from the client's perspective."