Enterprise Payments Strategies Gaining Ground & Washington Gets Some of the Credit

November 2005
American Banker, Bank Technology News, and U.S. Banker

Following are excerpts from a special November 2005 supplement to American Banker, Bank Technology News, and U.S. Banker.

Enterprise payments strategies – the notion of a unified payments platform that cuts across operating silos, slashing costs and improving operating efficiencies – has been kicked around banking circles for years.  But the arguments favoring such strategies have never been compelling enough to force the dismantling of well entrenched operations fiefdoms, like retail payments and cash management.  Now there’s a growing consensus that the time is right – that the opportunities to secure greater efficiencies, revenues, and customer loyalty through unified payments operations are simply too good to ignore.

It’s a trend that’s been underway at many of the nation’s largest banks for the last three to four years, added J.D. (Denny) Carreker, chairman and CEO of Carreker Corp., a Dallas-based consulting and software house.  Carreker said a recent poll of the nation’s top 20 banks, conducted by his firm, found 75% had enterprise payments councils, or were in the process of setting up such entities to coordinate payments initiatives across silos.

“Everyone is beginning to realize that we don’t have a choice,” said Carreker. 

For starters, there are vast sums of money up for grabs.  Payments is a $200 billion business in the United States, according to most estimates.  Plus there are threats that non-banks (think Wal-Mart) pose to the banking industry’s payments franchise.

Then there’s the Check 21 Act and what has come to be known as the “electronification” of check payments.

If that isn’t enough to push more banks toward enterprise payments strategies, beefed up requirements for monitoring customer transactions under the nation’s anti-terrorism and money laundering detection statutes surely will prove a powerful tipping point.

“Banks are in a new world where they have to understand on a holistic level what exactly is happening at the customer level,” added Suzette Massie, president of global payments consulting at Carreker.

The implications for change management can be significant.
       
National City Corp., a $139 billion asset bank with 1,260 branches and a large book of payments business was able to implement advanced check image capture and exchange technologies in near record time, thanks to the support of a recently installed enterprise-wide payments council.  The council includes representatives of the corporate chairman’s office, as well as senior managers from individual business lines, operations and technology units, and risk management.

“We went from nothing to having full image exchange capabilities in a period of about 24 months,’ said Connie Rose, senior vice president for operations strategy at National City.  “This was directly related to the level of support we got from senior management.”

It’s this type of enthusiasm that Massie said will drive enterprise payments strategies.  “We talk about P&L, but that’s just the start of the journey,” she explained during a presentation this Spring at the NACHA Payments 2005 conference.