There’s no question that the successful management and application of financial software is table stakes for modern companies. Regarding payment operations in particular, embedded finance, faster payment rails, and the advent of AI have forever shifted what’s possible. But so far, few financial workflows have changed to meet innovation. As the landscape changes, companies need financial infrastructure ready to adapt to it; here’s what companies can prioritize to modernize their fintech stack.
1. Strong bank and tech partners for embedded payments products
Embedded finance may not be new, but its recent acceleration is novel. The significance (and potential) of embedded fintech and embedded payments at this moment results primarily from two factors.
First, domestic financial networks are incredibly strong but on-ramps are outdated. Secondly, market dynamics in recent years have tested companies across the board, pushing teams to prioritize user experience and profitability. Solving customer pain points with focused, deep value products is more important than ever.
Customers want seamless payment experiences that are fast,transparent, and in their natural path. Embedded finance offerings (such as digital wallets and invoice factoring) can unlock exponential growth channels while boosting stickiness.
The backbone for ensuring these products work seamlessly, is building a strong relationship with banking and tech partners. Companies who let users credit and debit funds through their products have ultimate control when they sit in the flow of funds and are integrated with their bank, because they have clarity on all accounts involved in each transaction. Having a tech partner who can help drive this integration via APIs can reduce labor cost and time-to-market.
2. Real-time reconciliation for real-time payments
The rise of real-time payments like RTP and FedNow puts new onus on companies to upgrade their reconciliation workflows. Without instant and continuous reconciliation, businesses simply can’t enjoy the potential benefits of these rails (including increased efficiency and improved customer convenience). The pace of reconciliation must keep up with the speed of payments.
Today, as recent data shows, over one-third of payment operations at midsize and enterprise companies are still done manually. Batched, manual reconciliation (often managed via spreadsheets and email) disrupts financial and accounting workflows, increases costs, and impacts ability to scale. It also creates data silos and impairs visibility, making finance teams less likely to catch errors and less equipped to optimize cash positions.
But automation alone isn’t sufficient for high-growth companies when it comes to reconciliation; ongoing real-time reconciliation is crucial. Real-time reconciliation is faster, more accurate, and less risky—reporting and audit preparation are much simpler when teams can instantly leverage up-to-the moment financial data.
3. AI-augmented and automated workflows
Payment operations involve the moving, tracking (or ledgering), and reconciling money—for B2B payments, this often happens across multiple bank accounts. Within each of those actions, there are places where AI (and specifically LLMs) can play a powerful supporting role. In particular, AI is well-suited to supplement manual payment operations including repeat spreadsheet workflows, data translation, and transaction disambiguation.
Reconciliation is a model use-case for AI, given that historically (and still today) companies tend to “throw more bodies” at the process. That said, reconciliation also serves as an important argument for the judicious incorporation of AI, anchored by an extremely low tolerance for inaccuracy and ambiguity. That’s why it’s important that AI be a tool used to augment workflows, but still have human oversight when it comes to managing money.
Disruption Readiness
It’s not enough to know about how innovation is disrupting finance; companies need the right tools and infrastructure to implement them optimally. Embedding finance requires banking APIs and an operating system to manage money movement from end to end. Real-time reconciliation demands a robust method for ingesting data from banks, validating the data, and then running it through normalization, instantly and continuously. To uplevel this process—as well as the movement and tracking of money at scale—with AI, also necessitates the safeguard of infrastructure that securely (and with full visibility) manages payments throughout the entire lifecycle.
Modern Treasury helps companies move, track, and reconcile money in real-time, at scale. Join us for Transfer: Beyond Payments to get the latest from payments leaders and industry experts on these topics and many others changing our financial ecosystem for the better.
