Is an Integrated Receivable Hub the Key to Innovation?

In early November 2014, finance executives converged in Washington, D.C. to attend the annual AFP Conference. Attendees from both large and small organizations participated in discussions on topics ranging from investments, payments, banking and technology along with the future of finance. As I walked the aisles and visited a number of the exhibitors, I also was curious of the some of the same topics, having been involved in the financial services industry for most of my career. What are the key initiatives shaping the future of the finance? Will Bitcoin have a significant impact in the future? Where is the innovation in banking? What are the new industry buzzwords? These are some of the questions requiring answers.

However, in my opinion, the answers to these questions are not always found on the exhibit hall floor or discussed in the sessions. It is the side bar conversations when engaged with colleagues and peers. In one of these discussions I had a major break-through. Her e is what happened. The week prior to the AFP Conference I was a co-presenter in a webinar entitled “Receivable Hub Implementation: Strategies and Best Practices”. Over thirty bankers participated and I heard first-hand about the opportunities, challenges and benefits when a bank implements a Receivables Hub.

In my financial services practice, as an industry payment strategist, I am familiar with the challenges banks and Corporate have to retain customers. Innovation is now a game changer and banks and Corporates must embrace technology in order to achieve their objectives. However, in discussions with banks regarding the implementation of a Receivables Hub, the definition of an Integrated Receivables means different things to different bankers. Some of the current challenges banks face is to support multiple channels that are both batch and real-time along with all the payment streams such IVR, web, check etc needed to support their customers. I also convinced that moving to an Integrated Receivables Hub can save a bank’s customer money and create efficiencies with downstream customer benefits.”

However, in my discussion with my fellow colleague, I was informed that a Receivable Hub will have very little value to a bank’s client compared to the cost to implement. Therefore, the ROI (Return on Investment) justification is limited. This was in direct conflict with some of the interviews I conducted with industry professionals. In fact, one response from a vendor with extensive experience with Receivable Hub implementations stated the following “there is a strong value proposition when an organization implements an Integrated Receivables Hub. Many organizations collect payments from various channels that require reporting, reconciliation, and posting to a file. Consolidation results with one set one set of reports, with one reconciliation, and one Accounts Receivable interface. In the long run, having one hub will result in cost savings to the corporate bank client and increased stickiness.

I would think this could be a benefit to the customer and perhaps the bank. However, banks today are challenged to show a high ROI for projects. IT resources are limited and are allocated to the projects yielding the highest ROI. However what the value placed for client retention?

So although my colleague believes that an Integrated Receivable Hub it is just a buzzword with little meaning, I remain confident that it is more than that. Companies must continue to push back on their Treasury bank and demand efficiencies and innovation. They hold the keys and the overall client relationship. Banks will need to remain competitive and create products to increase “stickiness” with their clients. An Integrated Receivables Hub is key to this strategy.

Wayne Brown, the managing partner of The Walker Group, and has several decades of experience in financial services. Before starting The Walker Group, he held product management roles at Citigroup, Deutsche Bank and Fidelity Information Services. As managing partner of The Walker Group, Wayne works with FinTech companies to expand both their product and client reach through his extensive bank contact network. He can be contacted at wbrown@walkergroupnyc.com