The need for payments analytics

Physical supply chains have been always considered generators of costs, so techniques and practices to analyze data to improve operational execution and cost efficiencies have been well developed over time: total quality management, just-in-time inventory management, lean manufacturing, and kaizen are but a few of the management weapons in every supply chain manager’s arsenal. The same cannot be said for financial supply chains (FSC), of which payments represent a significant part. Until the 2008 financial crisis financial institutions mainly focused on reducing internal back office inefficiencies, giving superficial consideration to the financial flows exchanged with corporate users. On their side, corporate users did not pay overly attention because the relatively easy access to finance would offset any necessity for improvement. That left FSC processes very underdeveloped, with poor information sharing between buyers and suppliers, old-fashioned static payment and discounting terms, and largely manual pricing negotiation.

In my opinion this video nicely anticipates the next trends in how the optimization of FSC processes (starting with payments) will develop over time.

Payment analytics enables new new value added revenue producing services, improved productivity, lower risk related losses and higher customer satisfaction via

1. Delivery of better customer and market insight

2. Risk rating improvements for you and your clients

3. Better delivery of liquidity management information to clients and the bank

4. Enable improved sales and servicing efficiency