The Payments Hubbub

There has been much debate and discussion about what banks actually mean when they speak of a ‘payments hub’ and how that might be implemented. What is often overlooked is that the concept of a payments hub (also commonly known as a payment factory) is gaining traction in the corporate world, as companies seek significant gains in financial efficiency.

The implications for a bank can be far-reaching, as it can be expected to consolidate various payment types, pass them through the most efficient settlement method possible, and to deliver information on those payments to the accounting and accounts receivable systems of the company in a timely and comprehensive manner. On the accounts payable side, the aim is to automate the invoice handling process and to apply straight through processing. And fraud detection and payment security are growing concerns.

As banks grapple with the need to transform their payments operations, they would do well to heed the requirements of their corporate customers and ensure that, as the banks aggregate their payment business services, a tighter integration between their own corporate front-end systems and their back-office payment engine is an explicit goal.

The emphasis should be on systems interoperability – payment engine to online banking to the corporate’s own payments hub. In that way, the bank is positioned to provide extra value to its corporate clients. And puzzling over what a bank payment hub actually is becomes something of a redundant exercise.