Sue McBride
RTP (REAL-TIME PAYMENTS) from The Clearing House is the most significant digital transformation in payments in more than 40 years. RTP capabilities are the first step to digital transformation across consumer and corporate services. It’s a catalyst for digital banking and modernizing our clients’ payments process. This new tool will empower our clients to improve working capital by enabling payments to be sent and received with just the right amount of speed, transparency, and ease of reconciliation. It will optimize our clients’ payment experience, including the ability to facilitate immediate access to goods, services, and information.
For some time now, companies have been achieving greater operational efficiency and fraud reduction by shifting from paper to electronic payments. Recently, this shift has largely involved migrating from paper checks to traditional Automated Clearing House (ACH) payments and card transactions. With all the industry excitement about the introduction of faster payments technology in the United States, many financial managers are asking fair questions about how to prepare and adopt.
At BB&T, integrating with the RTP network was a strategic investment in a platform that supports BB&T’s digital transformation objectives to improve payment services and efficiency and increase choices for consumers and businesses. As an early adopter of RTP, BB&T is committed to driving the industry forward and continuously enhancing our capabilities to provide clients with solutions that improve their payables, receivables, and cash management payment-flow processes.
CLIENT ADOPTION: THE RIGHT TOOL, FOR THE RIGHT JOB, AT THE RIGHT TIME
With RTP, we’re able to offer clients another tool in the corporate payment portfolio to address their needs. RTP can co-exist with other instruments, such as ACH and wire transfers. For BB&T, it’s about providing clients with the tools that offer flexibility in mixing and matching payment methods so each payment instrument uses the settlement method that’s best for both the buyer and supplier.
We also realize users are attached to their current payments solutions – customers have been using them for years, and they are proven and reliable. To introduce a new payment solution, the benefits have to be clear and compelling from the start. RTP clearly offers immediate value and will enable clients to reconceptualize how they engage their trading partners, customers, and employees. Businesses will have a new way of interacting with customers and meet their needs more precisely by leveraging the best available payment option.
RTP WILL FUNDAMENTALLY CHANGE BUSINESS
For most businesses, payments currently move through a systematic and defined process that has followed the same slow, steady schedule for decades. With RTP, corporate treasury units have a new option to accommodate funds transfers that move at unprecedented speeds, giving corporate clients the means to optimize their working capital and improve visibility into cash positions in a secure, efficient manner.
And with this process change and speed, RTP has the potential to create better opportunities for corporations to interact with clients. But the adoption of RTP is a step-by-step process that treasury units and banks must take together. This process must always begin with a deep understanding of the unique needs and characteristics of each company’s payment system. Businesses implementing RTP need to begin by considering what their current systems look like, what their needs are, and which payment method can best accommodate each of those needs. RTP is one of several payment methods that will need to be woven into consolidated accounts payable and accounts receivable systems.
THE ADOPTION PATH FORWARD: MORE THAN SPEED
With the introduction of RTP, some of our clients see these RTP discussions as an opportunity to reevaluate the entirety of their end-to-end systems. They’re looking to invest in technology upgrades to fully integrate RTP into their enterprise resource planning system and develop back-end functionality to support the rich data around their existing systems and processes. However, typical treasury units don’t have the resources or budget to undertake a fundamental transformation from the ground up. They must figure out how to overcome the obstacles within their own offices.
By RTP’s very name, it’s easy to conclude that speed of funds settlement is an inherent benefit of the system. It’s not just a payment system but a secure real-time conversation between parties. The thoughtful design includes many other features that result in improved business processes, allowing our clients’ payments to catch up with the way they do business. RTP’s larger benefit can be found in the information that accompanies each payment.
Through RTP, corporate treasury units can make disbursements or payments to clients and business partners around the clock, sending requests and receiving instant confirmations of the transactions. RTP also enables senders and receivers to interact by having more detailed, instant-messaging-type conversations about each payment. That’s because both counterparties to a transaction have access to an array of standardized message types, designed to handle common scenarios in the life cycle of a transaction. They facilitate communication when a transaction completes successfully and enable the counterparties to discuss exceptions.
RTP will enable commercial clients to reconceptualize their businesses and how they engage their trading partners, customers, and employees. For example, they can have an interaction directly within the payment system, communications don’t require counterparties to switch to an email system to compose a free-form email or interrupt their workflow with a phone call or fax. RTP’s messaging and automation capabilities take ad hoc, unstructured follow-up out of the equation. Instant communications among corporate counterparties around requests for payment, approvals, or rejections, and payment confirmations produce value up and down the company’s customer and supplier networks. Both the speed and granularity of communications in RTP messaging can accelerate resolution of exceptions.
Moreover, the detailed payment messages simplify account reconciliation and help companies develop an accurate snapshot of their current and upcoming cash positions. When treasuries trade the short-term advantages of float for the increased visibility of a real-time payment, they enable business to be conducted with far more certainty. In fact, as the settlement process comes close to real time, the payments themselves become a conversation. Suddenly, corporate treasury departments are provided with a rare chance to interact with customers, wholesalers, suppliers, vendors, service providers, and other trading partners, 24/7.
YOUR PATH TO ADOPTION: CATCH UP TO THE WAY YOU DO BUSINESS
We live in an “instant” world of immediacy and constant feedback through social media and text messages. Now imagine an “instant” world for payments, where you can have secure real-time conversations between parties and corporate treasury departments can lead dialogue around customer interaction. With RTP, your business can catch up to the “instant” way you live your life every day.
All BB&T U.S. domiciled accounts are currently eligible to receive RTP through the network. BB&T clients can also send RTPs through our commercial online banking platform. Additional messaging enhancements will soon follow in 2019. RTP’s larger benefit can be found in the information that accompanies each payment. RTP will enable our clients to reconceptualize their businesses and how they engage trading partners, customers and employees. We understand the transition to using RTP won’t be simple, but when this new payment option reaches critical mass within the business community, it will result in major improvements to treasury services and payments systems alike. RTP should reach critical mass in 2020.
At BB&T, we’re working with our clients to start on the path to adoption. Beginning with a comprehensive assessment of their payment strategies and processes, we then explore how RTP can fit within their plans. Considering joining the path to adoption? We’re here to help.
