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AutoRek Evaluates Readiness for Real-Time Payments

AutoRek releases its predictions for the future of payments and regulation in its latest survey.

AutoRek, a reconciliation and finance automation fintech, has released the findings of its global payments survey regarding real-time payments.

The survey defines the most current issues facing payments firms today. These include future trends, regulation, compliance and payments reconciliation.

Responses include 500 mid-level professionals working in payments firms across IT, finance and operations in both the UK and US.

On course for regulation

The survey found that 63 per cent of payments firms believe their regulatory burden will increase by 2024.

This is especially prominent in the US, where 47 per cent of US respondents acknowledge that compliance expenditure will increase.

In the UK however, a smaller 29 per cent of firms anticipate a spending increase. This is especially true given the differing cost of compliance.

UK firms spend $400,000 on average to ensure compliance, compared to a $350,000 average in the US. As such, 64 per cent believe that the US will adopt a similar approach to the UK’s safeguarding rules.

Customer protection, operational resilience, crypto payments and data protection are expected to be key points of focus for future regulation.

Ready for real-time?

With rising consumer demand for real-time payments, the entire payments industry has been forced to adapt to meet this growing need.

While most global payments firms will be ready for real-time payments in the next year, there are still stark differences in readiness between the UK and US.

US payments firms are more confident in their ability to accommodate real-time payments, with 70 per cent being already prepared. Comparatively, only half of UK firms feel as prepared.

As for the survey’s other payment predictions, 42 per cent of UK respondents expect their number of cross-border payments to decrease, compared to 28 per cent of US firms.

Similarly, 60 per cent of firms expect payment methods and volumes to increase in the future.

Up for automation

While the payments industry has been much quicker to adopt technology than their banking counterparts, 65 per cent continue to use spreadsheets for critical financial control processes.

Over two-thirds of US respondents admitted to being overly reliant on spreadsheets. Just half of UK respondents admitted the same.

Manual processes lead to inefficiencies, with 29 per cent of US firms noting that their back-office costs grow in direct proportion with growth in payment volumes.

This is in direct contrast to UK firms who reported that their back-office costs grow at a slower rate than payments volumes. This result is fuelled by the wider adoption of back-office automation.

In this sense, 14 per cent of payments firms are recognised as unprofitable, while a third are only breaking even. The survey found US firms to be more likely to be profitable than those across the pond.

Gordon McHarg, CEO of AutoRek Real-time payments
Gordon McHarg, CEO, AutoRek

“While we anticipate the payments sector will double its revenue by the end of the decade, the current recession means payments firms will likely be facing their biggest challenge to date,” confirms Gordon McHarg, CEO of AutoRek.

“Keeping operating costs low while new regulations come into play will be crucial,” he continues. “Firms need to continue innovating and adapting to rid themselves of inefficiencies and keep ahead of any negative economic impacts.”

Nick Botha, payments lead at AutoRek, adds: “Our payments report has demonstrated clear differences between UK and US regulatory landscapes, strategic priorities, and future outlooks.”

Botha recognises 2022 as a turbulent year for both UK and US payments. Despite this, he reassures that a variety of payment methods and volumes are still expected to increase in the near future.

“We hope this report highlights challenges and areas of opportunities for the global payments industry,” concludes Botha.

Author

  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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