In our 2015 outlook, we highlighted five trends that would impact how billers might approach managing remittance processing: Cash Management, Outsourcing, Payment Transformation, Compliance and Risk, and Investment in Security. In this white paper, we cover remittance industry outlook from the perspective of 5 dominating industry trends.
Starting last August, 3 Point Alliance published a series of articles covering the five trends that we see still dominating the industry landscape going into 2016. (For further reading, each article is linked below.) You will note the order of importance has been shuffled.
Here is how we see the New Year shaping up:
Compliance and Risk Management. Due to the ongoing roll out of Dodd-Frank and related regulations from the CFPB, managing compliance and risk is the biggest challenge facing companies today with nearly every industry sector experiencing the effects cumbersome regulations.
Compliance management programs and systems must be structured to suit individual organizations and taking into consideration unique industry challenges. A weak understanding of any practical elements of a compliance program can jeopardize compliance effectiveness.
Cybersecurity. Even though security breaches are not making as much news, IT spending on cybersecurity increased significantly in 2015 and it will continue to be a key industry focus 2016.
What is your strategy for 2016?
Some market projections shared by Cybersecurity Ventures based on various research firm market findings on cyber security:
- Market research firm Gartner says global spending on IT security is set to increase 8.2 percent in 2015 to $77 billion, and the world will spend $101 billion on information security in 2018.
- The cyber security market is estimated to grow to $170 billion (USD) by 2020, at a Compound Annual Growth Rate (CAGR) of 9.8 percent from 2015 to 2020, according to a report from Markets and Markets.
- The “PwC Global State of Information Security Survey 2015” found that U.S. information security budgets have grown at almost double the rate of IT budgets over the last two years.
It is evident from these and other available studies that the pace of investment in cybersecurity in many industries including manufacturing, financial service, health care, utilities, telecoms, real estate and many others is steadily increasing and showing no signs of slowing down.
Even though companies are largely outsmarting hackers, everyone predicts that cyber-espionage efforts will only continue to increase. Embracing comprehensive, state-of-the-art cybersecurity measures – especially for any company even tangentially involved in payments – cannot be avoided. A comprehensive strategy to combat cybersecurity risk to a competent third-party provider with cyber-security expertise is a solid alternative to adopting an in-house solution.
Outsourcing. Companies are still devoting time and resources to finding the right outsourcing solution provider to meet their remittance needs and they want more than just a lower cost-per-item. Companies now seek providers with broad-based strategic consulting expertise as well.
Beyond Cost-reduction. For the balance of this year into 2016, businesses can expect improvements in B2B payments four areas:
- Cybersecurity Risk Mitigation
- Regulatory Risk
- Electronic Presentment
- Business Payment Networks
The outsourcing landscape for the remittance industry is diverse – some providers that focus solely on quality processing can streamline the process easily while many providers are known for revolving door ownership that creates its own kind of risk.
Cash Management. In addition to lowering costs, managing cash flow as part of a comprehensive payment optimization strategy can no longer be ignored.
Perfect Payment Strategies. For nearly every type of business a lockbox provider offers an efficient low-cost way to better manage cash through improved processes, enhanced visibility into the payment cycle and better customer service that enhances customer retention.
Look into these three ways to begin optimizing payments this year: 1) Improve customer service with a comprehensive lockbox service that provides access to real-time data which keeps customer retention high and enables cross-selling; 2) Finally integrate payments via an integrated receivables hub for better channel management, risk and compliance tracking and streamlining error processing; and 3) Offer multiple payment options and flexible billing schedules to enhance customer retention.
Innovation. Like cybersecurity, the industry is investing more in innovation (or fintech) to keep up with the fast pace of change.
Change at your own pace. Adoption rates for new technologies can be slow despite the hype surrounding the need to innovate. Decision-makers in the payments landscape have more choices than ever for how they run their payments operations. The choices may not be viable, may not scale, or simply may not suit your needs. One thing is for sure – the pace of innovation is not letting up. Exploring solutions internally or with an expert third-party provider is the first step to addressing the problem.
To Learn More
To get started with an outsourcing or payment strategy tailored to your needs, contact a 3 Point Alliance remittance processing expert, here.