By Parth Desai
By reducing manual intervention and increasing STP, banks can be freed to provide their clients with the services they truly need, and offer value added services on top of these basics.
Labour intensive areas such as exceptions processing can make the payments business appear to be more of a cost centre than a profit centre, but this does not have to be the case. Despite recent technology advances in virtually all parts of business life, payments processing can often remain an expensive process due to the continued inefficiencies in the methods and technologies used. It can typically represent up to 40% of a bank’s operating costs, and often contributes to less than 30% of revenue—not a very attractive proposition from the outset.
Exception processing can itself take about 42% of total payments processing costs. There are however proven tools and technologies that can have a measurable and significant impact on this negative cost/revenue ratio.
Going beyond cost reduction
By reducing manual intervention and increasing STP, banks can be freed to provide their clients with the services they truly need, and offer value added services on top of these basics.
Exceptions are caused by a plethora of reasons, including a lack of proper connectivity between aging and legacy infrastructures, the use of duplicative payment systems, changing industry standards, regulatory change and client demands. This means that banks must deal with message repair and enrichment, payment initiation, routing and enquiries and investigations.
Investment in specialised payment solutions that utilise Artificial Intelligence (AI) disciplines that provide intelligent repair and routing capabilities, such as Pelican, allows banks to deal with all these problems and benefit from automated repair of payments messages. Pelican uses advanced AI and semantic understanding in order to provide automated exceptions processing. This can drastically reduce the cost of operations, by taking these mundane tasks out of the hands of those engaged in manual processing, and lowering charge back costs.
Typically savings of around 70% can be achieved in this way. Headcounts can be reduced for repairs and customer support due to higher levels of STP, and better deployed in value added and revenue generating activities.
Furthermore, exceptions are not always a cost centre; they can represent positive opportunities in which to generate revenue and increase profit margins. Positive exceptions can be used to create new products and services such as profit-based incentives for customers and differential pricing, thereby generating revenue and simultaneously improving customer satisfaction and ensuring banks are able to retain their market share.
Isn’t it time your organisation looked again at its existing legacy payments processing workflow and technology? Your competitors certainly are!
