Convergence: When Payments Start to Play Nice Together

By Maria Bruno-Britz

If you're in the payments side of the business at a bank, you can't go anywhere without hearing the word "convergence". In recent years, the push to bring together all the IT systems within the bank has intensified so that financial institutions have a more unified view of their business and customers. Beyond this is the drive to bring together the payments systems in the organization. Banks are siloed enough, and the issue is even more apparent in the payments organization where there are usually separate systems for each kind of payment: checks, ACH, wire, credit cards, debit cards, etc. Eliminating these silos alone is a mammoth task, but one that banks will need to undertake to remain competitive going forward.The process has already begun at banks. Annette Hazapis, SVP and manager, payment and deposit, with Cleveland-based KeyBank, says the financial institution brought together its check and ACH systems to help accommodate the needs of its commercial clients. "How do you leverage this link to make the process transparent to your clients?" she poses. "Customers usually don't care where in the bank something is done, whether it's wire or ACH. They just want things to be simple."

When you get into the reporting piece around payments transactions, a huge challenge arises, Hazapis continues. "They want to follow an audit trail on all payment transactions. So building that bridge seamlessly is critical so that corporate treasurers are able to track payments better." After all, with the numerous accounts of treasurers being jailed for failing to meet audit standards, banks need to be sensitive to such needs.

Of course, the process of convergence isn't easy, but there are logical starting points, like check and ACH, says Hazapis. "Traditionally, the ACH payments systems were completely separate from the check payments systems at banks. But times are changing and you're seeing banks merge these silos. ACH and check is the clearest combination where you have an opportunity to bring some silos together. And that's where you find opportunities to meet client needs as well." KeyBank's offering in this area, for example, provides users with an online portal where they can view transactions in one place.

Hazapis is also a member of the NACHA Conference Planning Committee and has been active in the Herdon, Va.-based payments organization for several years. Even in this bastion of ACH, the idea of unified payments is gaining traction. Since joining NACHA, the focus of the group has gone from almost entirely ACH to a more inclusive one, she says. In fact, convergence appeared to be the main theme she noticed as the organization began planning the agenda for its annual payments conference that was held last month. "When I first joined NACHA, it seemed like it was only ACH. Now NACHA gets the fact that no one payment mechanism is king. How can we bring all these payments systems together to provide more value to clients?"