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Payment Automation

OVERVIEW

The financial administration team for a client company in the fund
management industry faced a daily challenge of executing more than
100,000 payments and collections, with volumes reaching in excess of
1,000,000 during the month end period.

In addition to making these payments on the banking systems, a
time-consuming data quality and audit level checking process was also
required and, in order for payments to be made on time to the various
investors, all payments needed to be completed before the banking
cut-off times. Finding a time-saving solution to the payment process had
become critical as missing these cut-off times would risk the client
company becoming liable for interest and penalty charges to their
clients.

THE CHALLENGE OF AUTOMATING THE PAYMENT PROCESS

The finance team was bound by several constraints in the previous
environment which made the payment process not only time consuming but
also meant running the risk of the potential errors inherent when manual
intervention is required.

Massive Time Sink

Every part of the payment process had the potential to be a massive
time sink and even a task as simple as transferring a resource from one
client to another to help manage the volumes could require a lengthy
paperwork process in order to setup a new user on the banking systems.

Control Checks

Various control checks also needed to be done as per industry audit
requirements before a payment could be completed. More so, the system
which builds the bulk payments files that are uploaded by the users
could also take additional hours to generate due to high volumes at the
end of the month creating a bottleneck in an already time critical
process.

Banking Cut off Times & the Payment Regulation Authorities

Banking cut off times not only varied with regards to the types of
payment/collection options available but were also subject to the rules
and regulations defined by the Payments Association of South Africa and
SARS. With exception cases, the process needed to be conducted manually
which further increased the risk of finger errors and decentralised
audit trails.

Additional Processing Rules & Regulations in African Countries

This was further aggravated by the fact that many of the African
countries in which the company operates included additional processing
rules and regulations which added to the amount of these exception cases
and a greater reliance on manual interventions.

The Overall Development Effort

Finally, there was also a significant development effort required
to build the modules to generate the bank instruction files whenever the
company would take on a new client. These modules were purely limited
to reporting and generation of files and any manual intervention had to
be done outside of the system.

As each banking institution could support one or more unique
instruction file formats, each development effort needed to include a
significant amount of time to build and test these respective formats.
Once developed, the system was then also limited to these formats for
the respective client.

THE SOLUTION

In order to find an automated solution which could streamline the
payment process, while also reducing as much of the manual effort as
possible, Digiata engaged with the client to perform an assessment.

An onsite team of analysts had already identified several repetitive
elements in the process that were capable of being automated. In areas
where full automation was not possible there was an opportunity to
automate the system to the extent that only the exception cases would
require manual intervention by a user.

In order to meet all key requirements for automating the payment
process, the client company required a solution that could also separate
the sensitive payment data and user access between the respective
clients.

The solution needed to seamlessly integrate with the existing line of
business systems to retrieve payment instruction data with minimal to no
development required to these systems while also having a full audit
trail of all actions on the system. Furthermore, the automation needed
to have strict security and access controls due to the nature of the
environment as well as being able to integrate directly with the banking
systems via Host to Host channels and to reduce risks associated with
any manual processing that was still required.

A Tried and Tested Application

Based on the analysis, Digiata proposed a solution which made use
of the tried and tested Central Park application developed by Twenty57.
The application had been used by several investment houses in South
Africa to automate payments, as well as collections, with most of the
major banks. The application itself continues to be updated by the
Twenty57 team to include support for new bank formats as and when they
are needed so the enhancement cost to the client was limited to the
implementation of theses updates.

More so, the architecture had already been designed for speed,
security, domain isolation and integration with external line of
business systems. Having a solid track record with other high profile
companies also helped win business confidence for this business critical
system and with the solution already built, the Digiata implementation
team was able to focus on the configuration at the client site.

This allowed the accelerated delivery of the solution to just a few months immediately following approval.

THE RESULTS

Thanks in no small part to the flexibility of the Central Park
application, the implementation team was able to coordinate the on
boarding of all existing clients onto the new platform, in addition to
taking on their new clients directly onto the application.

This meant that each of the clients now operated in their own “domain”
within the solution and were able to transition to the new solution at
their own pace once testing and bank integration had been completed.
With the core solution already setup and configured according to the
industry regulations, the on boarding of new clients now requires
significantly less time and effort, which translates into direct savings
to the end client, and has resulted in a better value proposition for
the client company’s service offering.

Since implementation, the financial administration team have more time
to focus on the exception cases now that the daily repetitive tasks have
been automated. One of the more significant gains has been the
flexibility to generate payment files in any of the supported bank
formats on the Central Park application. This feature allowed the team
to process high volumes of critical payments on alternative banking
systems when needed, thus saving time to manually capture transactions
due to the older system only supporting the primary banking platform.

In addition to the operational efficiency gains, the transaction and
audit data stored on the system has also introduced several
opportunities to improve the processes as well as additional services
for the company. The client company now looks towards including
reporting and feedback to other systems, adding even more value to many
of their service offerings.

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