Outsourcing, Hybrid Style: A New Blended Approach to Payment Processing
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Overview: Rapid change is occurring in the payments space to keep up with new demands and
new channels. Some are investing in new technology to keep up with demand, most notably integrated receivables platforms that run in tandem with new and existing receivables channels. But the competition for capital at many banks is making investments in receivables processing systems daunting.
Other banks are outsourcing their lockbox networks altogether, leaving third-parties to determine the right mix of technology, while leveraging greater economies of scale to drive lower operational costs. A major contributor to this movement? A sharp decline in check volumes.
As check volumes decline, thereby increasing the unit costs on remaining paper-based transactions and driving usage of new payment channels, the business justification for enhanced lockbox operations will likely push more financial institutions towards outsourcing.