One of the most commonly used phrases at the NACHA Payments conference this week is "corporate payment hub." All the big-booth vendors offer one, consultants and analysts say banks must have one. Not only is a universal payment platform needed to satisfy the needs of corporate clients who insist on being able to make any type of payment (ACH, EDI, wire, check, etc.) through one channel and have that payment information routed directly into their accounting systems, these proponents say, but adding a new payment type to an antiquated payment platform is an expensive mess, costing around $250,000 per new interface. A services-oriented, plug-and-play style payment hub that's flexible and scalable is a coveted ideal. Another ideal is the ability to process payments, such as wires, more quickly and let customers repair exceptions such as missing information, themselves right away. Newer payment programs attempt to validate data in real-time, alerting the customer immediately to missing or suspect data elements.Cynthia Murray, senior vice president, innovation and development executive at Bank of America Merrill Lynch, said that when she was with ABN Amro the company offered a user interface that accommodated straight through processing, and that the company did significant ethnographic research to understand customer workflow. Bank of America Merrill Lynch is now building a payments hub that incorporates Fundtech's GlobalPayPlus product. The bank processes payments in more than 25 countries - high value and low value - and many countries have their own unique payment types. The new payments hub will automate the initiation for the client and achieve a much higher STP because the STP rules will be built into the front end process. "We hope to achieve straight-through processing for any payment," says Murray. The bank is setting up country-specific rules for high and low value payments; for instance, in Brazil it's building the ability to process payments through SWIFT and the local clearing house. The payment hub will support multiple file formats, which it will be able to convert to a normalized XML format and then into whatever formats are needed to feed downstream payment systems. Eventually the bank plans to use the payment hub as way to interface to clearing networks in other countries such as India. In each location, the bank is also building the ability to route payments through the cheapest network available to save corporate clients money.
Murray noted that building this capability completely in-house would have taken at least 18 months, but using Fundtech's templates is shortening the development time.
BofA started this project in June 2009 and the first phase will be rolled out in October of this year. The next three phases will be rolled out over the next nine months. "We'll never be finished," Murray notes, suggesting that the bank will continually add new features and support for new payment types. The work of recreating back-end functions and interfaces to new clearinghouses is not trivial and the bank is making a significant investment in the project (Murray would not divulge specific dollars).
One challenge to a project like this, Murray notes, is getting small businesses to accept electronic payments. When BofA's payment hub is done, it will offer the ability to attach an image of the invoice or an Excel file with all associated data along with support for sticky notes in the user interface, all to make smaller clients more comfortable with automated payments.