Mercator Blog

Commercial and Enterprise Payments Advisory Service Update - June 2018
Date: June 21, 2018
Steve Murphy
Director, Commercial and Enterprise Payments Advisory Service

Hello,

Hello, welcome to the June 2018 edition of the Commercial and Enterprise Advisory Service newsletter. We provide a recap of recent publications, including detailed reviews of the international commercial card markets, the growing usage of APIs in commercial banking, as well as use case scenarios for AI. We also preview coming research as we move into Q3 of 2018. 

Highlights include the following:

Payments Hubs: Renaissance in 2018

Mercator Advisory Group defines a payments hub as a form of middleware optimized to handle multiple payment and product types (which include domestic, cross-border, bulk, or single payments) from multiple geographies and submarkets and all banking channels. A payments hub can integrate multiple payment systems and allow a financial institution to approve and transmit corporate payments centrally to any counterparty regardless of department or technology.

Over time, the hub providers have adapted to the changing business, regulatory, and technology landscape by developing solutions that can be delivered as cloud services, which extends the appeal to smaller institutions. Now that the era of faster payments and open banking solutions is upon us, financial institutions are considering use of hubs as a realistic option, and they are revisiting project opportunities that align with the need for the digital transformation required to compete today. New vendor models are also appearing that take advantage of open source and API programming advances to deliver more easily deployed solutions. In this Viewpoint we examine this space and provide insights on how FIs should be moving forward. 

See more at: Payments Hubs: Renaissance in 2018

 

International Commercial Card Market Outlook: 2016-2021

The world continues to move in the direction of electronic payments, and this movement represents ongoing opportunity for card schemes across the globe. Companies in both developed and developing regions seek more efficiencies and value from business-to-business (B2B) invoiced payments, which card schemes can provide through credit facilities, potential revenue share, and “risk-minimized” virtual card accounts. The major regional commercial credit card markets outside North America continue to grow, although the pace varies depending on location and product. 

The research examines Western Europe, Asia-Pacific, and Latin America and Caribbean (LAC) commercial card markets with respect to specific market trends, key issues, and spending volume growth through 2021. Detailed reviews are presented of the possible regulatory impacts from various legislative initiatives, both in effect and follow-on, particularly PSD2, EU IFR, and Australian rate caps. We include drill downs into key Asia-Pacific markets (including ASEAN) regarding trends and growth potential, and new coverage detail on LAC, including key market discussions for Brazil and Mexico, along with market spending forecasts by commercial card products through 2021. 

See more at: International Commercial Card Market Outlook: 2016-2021

API Usage Expands in Corporate Banking and Payments 

The era of open banking is now upon us since the revised Payment Services Directive (PSD2) took effect in the European Union member nations this past January. While the level of compliance with the first instance of PSD2 is not universal, the legislation has wide implications across other regions regarding banks’ competitive readiness in the strategic use of modern technology. As in other cases of shifting technology usage, application programming interfaces (APIs) found early client utility in consumer financial services for mobile banking applications. Forward-thinking corporate banking business entities are now finding key service opportunities in a broader range of use cases as institutions continue to formulate and build on their digital strategies.

In this Viewpoint, we provide a clear and nontechnical discussion of the different categories of APIs and ways in which a financial institution can utilize or deploy them in different business cases depending on the institution’s stage of implementation. We cover the regulatory and market implications of API adoption before moving to specific use cases for corporate banking, including ways in which some global institutions are employing the technology. We include examples of vendors that provide broad enterprise platforms and APIs solutions that can help financial institutions to deliver against strategic goals. 

See more at: API Usage Expands in Corporate Banking and Payments

 

Artificial Intelligence in Corporate Banking

Technology advancement during this decade has led to both risks and opportunities for financial services institutions as they attempt to determine which modern capabilities to apply and how best they can serve the organization. Artificial intelligence (AI) has attracted much broader attention from corporate executives in just the past two years. As with blockchain, some aspects of AI are unclear. However, unlike blockchain, the actual deployment of AI in banking has been underway for several years.

There is a growing recognition of AI use cases through machine learning in corporate banking, risk management and lending decisions being two of the primary areas of opportunity. There are also secondary use cases. These include operational efficiencies for cash cycle management through enhanced payments accuracy and receivables matching as well as an improved understanding of client needs for products and services. In this Viewpoint we discuss specific and potential use cases for AI in corporate banking. We provide examples of current AI usage and a high level review of some vendors who are offering specialized services. 

See more at: Artificial Intelligence in Corporate Banking

Coming Research 

During the next several months, we will be addressing various topics such as:

  1. Procure-to-Pay Vendor Comparison
  2. Mobile Payments in Commercial Banking
  3. Supply Chain Finance Trends and Adoption
As always, feel free to reach out to Mercator Advisory Group to talk about anything payments and potential research topics that would be of interest to you and your team.

Thanks, and feel free to send a message to me at any time. My email is smurphy@mercatoradvisorygroup.com. You can also call me at 1-781-419-1710. 

Regards,

Steve 

Steve Murphy
Director, Commercial and Enterprise Payments Advisory Service