Making The Cloud Pay

The ability of cloud-based systems to deliver faster payments—and treasury insights—took on added importance during the pandemic.

Samuel Guillon knows firsthand the pandemic challenges faced by corporate finance officers. He was working as CFO of Colas, a global road and transport construction group, in the early days of the pandemic, when “even the largest companies in the world were in fear of being bankrupt.”

“Nobody could have said before that all operational cash flows will stop flowing overnight,” he says, thinking back on it. “But that was my case as a CFO. I’d been doing simulations for weeks to check that we were not going bankrupt.”

With liquidity needs heightened during the pandemic, finance executives increasingly found benefits in tapping cloud-based payments. Innovation in cloud services, previously focused on consumers, was rapidly deployed toward a raft of new and improved tools for CFOs. Guillon, who joined Kyriba in November as senior vice president of Strategy, says the cloud is bringing continuous innovation, ease of implementation, greater reliability and security to the world of corporate finance.

An FIS survey of 336 corporate treasury and payments officers found finance professionals bullish on the role the cloud can play in helping them embrace digital technology. With cloud-based solutions, companies can accelerate technology modernization initiatives, while avoiding the need for costly infrastructure and the disruption associated with the maintenance and upgrade cycles.

Simulations illustrate one way cloud power delivers value in the finance function: By crunching data in minutes rather than hours, it allows treasurers to run multiple scenarios in a day.

The cloud also fosters innovation and eases adoption of new technology tools. The recent FIS Flavors of Fast report found accelerating innovation in payments globally. Expectations are great for request to pay, which debuted in the UK late last year and is now slowly being taken up across Europe, to have a major impact in this space. Known variously throughout the world as R2P, RTP, RfP and UPI, these are messaging services that originate payments discussions on the invoicing side and tie the messaging to the payments with a secure record of transactions. Cloud computing facilitates the creation and delivery of this service.

For small and medsize enterprises (SMEs) in particular, says Silvia Mensdorff-Pouilly, head of Banking Solutions Europe for  FIS, R2P offers flexibility to their customers and easily track their finances. They can use it to collect money from customers, send invoices or manage supplier payments. “This functionality will be much more easily implemented for customers who already have a cloud-based solution in place rather than those starting from scratch,” she states.

While cloud-based payment solutions allow businesses to offer a wider variety of payment options without undue cost burdens, Mensdorff-Pouilly warns there is a risk of creating ‘payments spaghetti’ with individual components for each scheme sourced from multiple vendors.

FIS developed payments as a service, accessed through a single API. “Real-time payments come as standard, as does reconciliation, settlement and AML screening options so that businesses start with full end-to-end service available to meet their requirements,” says Mensdorff-Pouilly. “This is now the base level of required delivery.” Businesses can easily scale up by adding services.

Some new services could be developed on, an open development cloud platform and app marketplace for the financial industry, created by Finastra. Pedro Porfirio, global head of Capital Markets at Finastra, says it takes away the lags and confirmations associated with international payments by enabling smaller banks to tap into the apps and transaction capabilities of the major international banks.

More than 90% of DBS’ infrastructure is on the cloud, and the Singapore bank offers the highest number of APIs in the world, by a bank. LIM Soon Chong, DBS’ group head of Digital for institutional banking and group head of Global Transaction Services Product Management, says the transformation of corporate payments is being driven by demand for real-time information and instant fulfillment—which he says is becoming “a significant competitive advantage.”

For example, “DBS has worked with several leading insurers in the region to offer an enhanced customer journey, whereby their end client can receive their claim payout instantly with just a few clicks on their mobile phones,” Lim explains, noting the cloud made it possible.

Cloud Rules

Lim says the cloud could be a game changer in corporate banking, where payments involve substantially greater complexity than at the consumer level due to contractual obligations, regulatory requirements and financial-policy compliance. The cloud’s massive data-analysis power can be leveraged for rules-based processing and analytics that enhance payments and collections. “Beyond data aggregation, the cloud opens up the potential for corporates to scale at pace,” Lim says. “It also offers a more seamless platform for interconnectivity across systems.”

A treasurer’s biggest nightmare is idle cash. Guillon says that Kyriba, which pioneered a cloud-based treasury management solution based on the software-as-a-service model, is currently piloting with some clients the capacity to combine rules-based automated payments with a tool for forecasting incoming cash flows. Receivables due overnight can be lined up to go out as payments immediately, “so when the treasurer wakes up in the morning, he doesn’t have any idle cash on his bank accounts and has paid some suppliers,” Guillon explains.

Steve Wiley, vice president of Treasury Solutions at FIS, says companies are facing lingering, pandemic-related cash flow challenges, where credit and collections teams have had to rapidly adapt to virtual working conditions, while many customers’ payment behaviors have permanently changed. “Digital technology can play an important role in helping companies overcome these challenges by providing better ways to improve processes, optimize cash flows and reduce costs,” he states.

Consumers have embraced digital wallets with gusto, according to Mensdorff-Pouilly, and she doesn’t expect growth to taper  off any time soon. “The benefit to corporates in implementing these alternative payment methods is they are answering consumer demand for more secure, frictionless payments.”

So far, their corporate value has been somewhat limited to travel and expenses, in part because these new tools raise unresolved tax issues. “Generally speaking, digital wallets are well suited to replace anything remotely close to ‘petty cash,’ as they offer a simple digital solution to some operational inefficiencies. The use cases for this are many, so we expect digital wallets for business to continue to grow significantly in the coming months and years,” says Nabil Ibenbrahim, deputy managing director at HPS, a payment solutions company. At the same time, he acknowledges, “there are still some challenges ahead.” 

The cloud also improves onboarding of corporate clients because, almost by definition, it does not require software installations on either the bank or the corporate side. “This eliminates the procurement and compatibility testing cycles formerly required for many onboarding projects. Also, it is possible for both banks and corporates to avail themselves of software-as-a-service/plug-and-play style components for mapping file formats, validations, statement generation and more, which otherwise have to be procured as individual software components,” explains Vinay Prabhakar, vice president of Product & Corporate Marketing for Volante Technologies, a cloud-based payments provider. 

In addition to saving at least 40% in onboarding costs, he says cloud systems also perform better than software running in traditional data centers. “The end result is significant acceleration of onboarding time. Processes that used to take weeks or even months can be completed now in days.”

In comparison to complex legacy IT, which is difficult to change, the cloud offers banks opportunities for rapid scale, quick rollout, reliability and security. “Banks can create a new vertical slice of their business and offer a seamless experience by taking advantage of a new ISO20022 payment infrastructure,” says Tushar Chitra, VP of Product Strategy & Marketing at Oracle Financial Services. “They can use this to do real-time payments and combine it with virtual account management and liquidity management in the cloud to provide their customers with a differentiated cash-management service. As these solutions are built on microservices and offer rich, easy to integrate API’s, the ability of the bank to rapidly tie in such a differentiated offering to their existing landscape is much easier and cost effective.”

The increase in real-time payments around the globe, enabled by cloud power, means corporates are now expecting payments to come in faster, and with richer data. “The ultimate goal,” says Chitra, “is for the corporate to be able to put their money through more churns of the business cycle than ever before.”