The rate of change influencing the way companies do business is accelerating across multiple fronts, encompassing customer expectations, business models, and technology advancements. Payments have emerged as a significant differentiator in every sector. Evolving regulatory frameworks, payment infrastructure and the geopolitical landscape are also shaping business strategies.
To assist treasurers in navigating this change, the HSBC team has rounded up industry insights and best practices.
1. Real-time payments are now the new norm: Corporations are increasingly considering instant payments to complement or replace traditional payment options like ACH and checks. This shift is evident in areas like instant payroll, mobile wallets, reward points funding, and across the manufacturing value chain. The case for treasury infrastructure modernization has never been stronger. Harmonization of ISO 20022 XML payment format standards, advancements in Application Programming Interface (API) technology and the emergence of instant payments options are empowering treasurers to lay the foundation for successful digital transformation.
When embarking on digitalization initiatives, treasurers need to think about future proofing the treasury function whereby working capital management incorporates real-time "end-to-end" solutions, this includes connecting bank account management, payments operations and liquidity management into a frictionless experience for employees and customers.
2. Innovations in cross-border transactions: Technology innovation is unlocking a suite of opportunities in cross-border payments. Adoption of ISO 20022 standard for financial messages enables interoperability between financial institutions, payment infrastructures and treasury technology. The XML-based format transmits detailed and structured data compared to older format SWIFT MT messaging, which helps improving communication and reducing the risk of errors between financial institutions.
Foreign Exchange and Treasury APIs make cross-border payments easier, faster, and more secure for corporations with international operations. These APIs provide access to real-time FX rates and automated transaction data, helping to improve the accuracy of cash flow forecasting. Treasurers can better predict cash requirements in different currencies, aiding in more effective liquidity management. HSBC Treasury API and Global Disbursements API, as the ubiquitous payment initiation APIs covering all types of payments, drastically reduce corporate’s integration effort.
International payments providers are offering multi-currency accounts to simplify cross-border transactions. Platforms, such as HSBC Global Wallet, allow businesses to hold, manage, and transact in multiple currencies, therefore reducing transaction costs, FX exposure and the need for multiple accounts across geographies.