Payments and Cash Management: Get me one of those…From Blame Game to Better Execution

Byline: Maggie Scarborough, Managing Director
(c) 2010  FinServ Strategies. All rights reserved.

The NACHA Payments 2010 Conference is coming up quickly and it is time to decide where I will focus my research and advisory while attending. Improving business and technology execution is a good place.

Last year about this time, I had a conversation with a banking industry executive who said that the online cash management and payments part of the corporate banking business has poor business execution. I couldn’t agree more. In this blame game, all participants are included: the financial institution’s business side that vaguely defines feature requirements based on what they “think” customers need; the FI technology side that is not considering the business of the business, but rather the business of IT; fintech vendors that know banks poorly execute and aggregate up the costs of poor planning through unbelievably high overruns on professional services; core vendors that still believe that they can “not help” in order to maintain competitive advantage; and last but not least the new kids on the block, procurement, which often protract costly negotiations to meet their own unit’s goals rather than the business and compliance objectives of your own business unit.

What is needed are discipline and success. Fast following does not necessarily equal good execution. In the rush to follow leaders, banks often lose sight of execution quality. There are examples of deliberate and focused execution. For example, when Wells Fargo finally brought ACH origination to its Business Online Banking platform in 2006, it seemed like it took them much longer than some of their peers, many of which implemented packaged solutions. But, Wells Fargo took the time to understand customer needs, built the solution in an integrated way that allowed growth and stable support, and innovated to improve its business customers’ processes. Its Direct Pay ACH solution is integrated with Business Online platform capabilities such as alerts and service, plus it improves and simplifies ACH exception handling processes so its small business customers can more easily use it and use it more frequently. Plus the solution was and is STABLE. So, with that example in mind, here are some credos for better execution.

1) Align with the organization. Understand the reward and align business objectives with activities. By the way sell up, get buy in across the organizational silos, acculturate (big word), and report back. The organization itself may not be properly aligned to support the goals it has asked your unit to perform. Find a way to explicitly get the support (authorities, responsibilities, incentives, cross-organizational collaboration requirements).

2) Live in the moment, but know what CUSTOMERS want. Banks and financial institutions should clearly and reasonably define what they want based on knowledge of their customers’ needs and business processes. I can’t say “customer business process” enough.

3) Don’t passively rely on enterprise projects to provide the solution. Manage your own solution and migrate to the enterprise ideal over time. Enterprise projects always get pushed way out beyond the ideal delivery time and they tend to change in scope. Control your own unit’s technology including that enterprise that will supposedly get delivered in the future. Work toward the enterprise ideal, but have a plan B.

4) Partner with Fintech vendors that help you execute with customers more efficiently. Does the vendor have a platform that helps you easily develop new services to meet niche needs and market opportunities without long custom IT projects? Does it bring its own partners to you to help you expand services?

5) Does the vendor provide an efficient and sustainable platform? Stay away from vendors that are all about the enhancement queue.  Does the platform reduce reliance on expensive IT development and testing resources for frequent new releases? If the vendor does focus on queue management ask them for aging reports and understand how software can be customized without major releases or code branching.

6) Be realistic about supporting on-premise solutions. Mid size and large community banks need to be very realistic about supporting on-premise solutions. There are many hidden costs including security, as the threat environment increases in intensity and becomes even more dynamic.  Once you bring it inside, it will be years before you can outsource it.

(c) 2010 FinServ Strategies

–end, please comment
Maggie Scarborough, Managing Director, +1 410.685.2324


2 responses to “Payments and Cash Management: Get me one of those…From Blame Game to Better Execution

  1. Pingback: Better Execution In Corporate Business Banking «

  2. Maggie:

    I particularly like #4, partner with vendors. I know from several sources that vendors are being beaten up on pricing and other services these last 2 years. Partners will take care of you when you REALLY need them.

    Scott Mills, APR
    William Mills Agency

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