Legacy Systems and Cyber Security Top Payments Concerns for US Companies

Cyber fraud and technological solutions are top of mind for finance and treasury professionals, according to a survey conducted by TD Bank at the 2019 Nacha Payments conference.

Despite craving innovation, 42% of respondents cited organisations’ struggles to improve legacy systems as the greatest challenge facing payments professionals today. Last year, 36% of survey respondents expressed that their companies need to update legacy infrastructure. This growing frustration demonstrates slow and minimal efforts to improve payments and processing systems over the last 12 months.

Treasury professionals named cyber security as their second greatest challenge this year, coming in at 30%, which is in line with 2018, when 32% reported this as a top obstacle. Few respondents expressed concerns about other challenges such as cross-border transactions (11%), potential for fintech regulations (7%) and data regulations such as GDPR or PSD2 (6%).

Payments automate while industry stagnates

Casualties in the delay to improve antiquated internal technology are accounts payable (AP) automation and straight-through processing (STP) of payments. As a result:

• 26% of survey respondents do not yet have any payments automation or STP.
• 28% of respondents whose organisations currently use both automated and manual processes say it will take more than two years to achieve full automation/STP.
• 23% of finance professionals state their company has achieved full automation and STP.

“Payment capabilities currently are changing at a rate that organisations cannot yet accommodate, so lagging adoption of fully automated processes within corporates is an expected outcome,” said Rick Burke, head of Corporate Products and Services at TD Bank. “Although the need to adopt new payment methods is a global pressure from an efficiency and security standpoint, faster and automated options do not yet have a foothold within many US organisations.”

Cyber security an unwavering threat

TD Bank’s Nacha Payments survey shows that concerns about cyber security remains consistent: In 2018, 84% of payments professionals noted that they anticipated payments fraud and cyber security to become a bigger threat in the next one to two years. This year, 85% expressed that same sentiment.

The bank’s studies show there is consistent fear across the payments industry of cyber fraud becoming a greater hazard or lacking containment but there is growing interest from companies to take control of and share responsibility for security internally and externally. A majority (88%) of respondents believe their organisation should employ in-house security techniques, while 12% prefer to outsource prevention to an expert. Desired in-house cyber security measures include:

• Deploying improved security technology to protect internal networks (53%).
• Providing training to employees who deal with finances and sensitive information (23%).
• Testing employee understanding of cyber fraud and social engineering using fake spear-phishing emails (12%).

Slow and steady race for real-time payments

Payments professionals in the US note they still have not fully identified a use-case for and implemented real-time payments, according to the survey results. More than half (56%) of participants said it will take at least one year, if not more, to implement real-time payments within their company. Only 22% stated that they would participate in real-time payments within the next year.

“The US has been behind several other countries in implementing faster and real-time payments but is gaining momentum,” said Burke. “Dialogue about payments is increasing among banks, lawmakers, policymakers and practitioners, and this is likely to drive faster change. It will be interesting to see how faster payments evolve over the next few years, especially with the Federal Reserve’s announcement that they will develop a new real-time service called FedNow.”

Methodology

TD Bank surveyed finance and treasury professionals onsite at the 2019 Nacha Payments Conference held in Orlando, Florida, on 6-7 May 2019. A total of 498 payments industry professionals participated in the survey.