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Payments investigations: a market opportunity

January 17, 2024

  • AML
  • Automation
  • Banking

By Simon Wilson, Managing Director of Payments Automation at Valantic FSA

The vital importance of outstanding customer service is becoming increasingly difficult for financial institutions to ignore. Research has repeatedly shown that there is a strong link not only between customer satisfaction and revenue but also between stock prices, customer churn rates, and employee productivity.

In today’s incredibly competitive market, banks must provide a high-quality experience at every stage of the customer journey, including when problems arise. Although payment exceptions and investigations handling are not a direct revenue stream for banks, the fast and efficient resolution of cases is a chance to differentiate and offer industry-leading client service – particularly as transaction volumes increase. As a result, finding and implementing ways to optimise the process is an often overlooked and underestimated commercial opportunity.

Simon Wilson
Simon Wilson, Managing Director of Payments Automation at Valantic FSA

Exceptions can occur for a variety of reasons, including mistakes, misunderstandings between parties, procedural mismanagement, human wrongdoing, and technical failures. They are characteristically thought of as a post-settlement event, and most post-settlement exceptions relate to problems with the beneficiary information. However, exceptions that require management can also arise prior to the payment being generated, for example, blocked accounts, insufficient funds, amendment to payment details, and cancellation requests.

Without the right processes in place, exceptions can expose institutions to both financial and reputational losses because of the amount of time it can take to identify, assess, and resolve them. Managing exceptions and investigations has traditionally been a very labour-intensive activity for financial institutions. The lack of message standards has been partially to blame for this, making automation more of a challenge. However, automation is possible, even prior to the migration to ISO20022, and with the help of case management technology banks can transform their investigations handling.

Benefits of automation

An intelligent case management application enables banks to improve the efficiency of their payment exception and investigation processing, while simultaneously reducing costs. By automating many tasks, skilled investigators can be freed up to focus on more complex investigations, and with both the quantity and quality of available data enhanced, it is easier for them to identify patterns and anomalies.

Case management applications also enable banks to centralise query and investigation processing across the entire organisation (including subsidiaries and partner banks) to a ‘single point of truth’. The increasingly complex application architectures within banks, with most utilising a range of SaaS and ‘on-premise’ services, have increased the need for this approach.

Integrating all stakeholders in the bank – branches, fraud, AML, sanctions, booking and settlement, and client management – tightly into the investigation process and having all queries processed in a single place using a common interface helps to improve accuracy as well as efficiency, reducing errors.

With the appropriate technology in place, banks can expect to reduce investigation time and processing costs by as much as 30-50%.

Choosing an application

The applications that will provide the best productivity gains for financial institutions will have been designed to process queries and investigations with a dedicated focus on financial transactions and market schemes.

When choosing an application, banks should look for:

  • Full support of Swift MT, ISO20022 CBPR+, RTGS and SEPA standards
  • Easy integration into their back office via standard customizable interfaces
  • Full case management capabilities, including audit trail, statistics, and reporting
  • Rule-based processing for best parametrization of standard investigation handling
  • Seamless integration with external sources of information like Swift GPI

In a highly commoditised market such as payments, finding the right technology partners is key to reducing costs, increasing efficiencies, and maintaining an excellent reputation. By leveraging back-office operational applications, such as exception management platforms, financial institutions can increase efficiencies and reduce risk in the back office all the way through to the customer service process.

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