Interview: ION Enterprise Payment Hub Product Launch
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Ali Curi: Welcome everyone. Today we're speaking with Michael Coleman, Chief Product Officer at ION Treasury about the launch of the new ION Enterprise Payment Hub.

Michael, it's good to see you again. Congratulations, this is a major milestone in payment innovation. 

Michael Kolman: Thanks, Ali. It's good to be back on the podcast.

Very excited today to introduce the payment hub and talk about how it's transforming the payment operations for a number of companies. So thanks for having me. 

Ali Curi: It's great to have you here. Let's start with the basics. Who is this solution designed for? 

Michael Kolman: The payment hub is not restricted to any specific type of organization or industry.

It's really made for organizations where the business complexity of managing payments has become, has become challenging. So that the payment hub does is it really takes a lot of that complexity, tries to simplify it through centralization and standardization of processes and systems to ensure the same capability is being applied across any payment, leaving an organization.

So it solves for simplified payment operations, reduced maintenance of those payments, solves for scalability. If volumes are increasing, it solves and make sure that there are controls in place to manage payments. And ultimately one critical piece is it really integrates across the financial ecosystem of systems that can be sources of payments.

Ali Curi: And now for the big question, what problem does it solve? 

Michael Kolman: So I think it solves a number of of different problems. I think one primary problem is created, that's created due to a fragmentation of payment processes. And this fragmentation is really created over time. So, in some ways the solutions that have been put in place, were put in place to resolve a problem or a need at a certain point in time without necessarily thinking of a longer term, of the longer term implications. This could be simply that some payments in some parts of the world or for some banks are made directly using a bank portal. While other payments are made with connectivity from a treasury system or from an ERP system directly to the bank. So when you think about that, now you have payments that can go out the door because somebody logs into a bank portal, you have payments going out the door from multiple different systems, and this can get out of control and out of hand quite quickly.

How can you ensure that all the payments receive the same level of control in terms of workflow, but also control in terms of messages? Somebody able to open up that message, alter the message in some way, and then send it out the door. So the Payment Hub ensures that once all payments are identified in the source system, they go through the proper workflow, it comes and centralizes all of that activity into one hub. If any missing functionality or control is unavailable upstream of that, we have that capability in the hub to, to supplement. It also ensures then additional services can be added to those payments, whether it be for fraud detection, for sanction screening and then as well you can centralize connectivity to your banks. So we can send those messages to the banks to ensure the payments are being sent over as well as receive acknowledgements back from the banks.

Or even when we talk about the payment hub. Really this is also a central centralized solution to gather all the bank statements that the company might be receiving. And then the process works in reverse where the payment hub is actually distributing those bank statements to the various sources that may need it.

To summarize, it really is taking a fragmented world and bringing it together in a centralized and standardized way. 

Ali Curi: One other big question that I'm sure is gonna come up, how does the ION Enterprise Payment Hub stand out from other payment solutions? 

Michael Kolman: Other payment solutions, I think are set up to solve a specific need in a specific area.

So I gave the example before of payments coming from, let's say a system within the organization could be an ERP system, and there's no connectivity to the bank. So therefore, there perhaps is a file that is created from that system that is then uploaded directly to the bank portal. So that's one payment solution.

But that is a solution that's going to solve the need to execute payments from a single bank, perhaps even a single bank in a single location. Or perhaps that one downstream system is used for a certain business unit within an organization with many business units or perhaps that source system might be for one individual country or location.

So you can see how various systems are serving different needs for different purposes. And there is a need to manage you know, AP and AR and ensure that payments are being made timely, invoices are being tracked, receipts are actually being received. And so each of those source systems payments might actually be a secondary function of that and it may fully support the need and it may not fully support the need.

So now imagine you have this organization where it has locations all over the place, multiple source systems, and there's just no consistency. So while every individual solution works for that individual need, it exposes the company to a lack of controls, a lack of consistency. And now let's say that you want to add an additional service and you want to be able to say, "I wanna layer on my fraud prevention software onto all of my payments around the globe." If you had 60 different payment solutions around the world, now you have to do it 60 times over. Would be a much bigger project, much harder to handle.

Same thing with now in the industry, we're seeing a move away from older messages, older MT Swift formatted messages to ISO 20022. Now that has to change in multiple systems, whereas, in the payment hub, you could actually control the messaging and the formats all in one place.

So that's when we talked about saving costs on maintenance, saving time and the controls, the payment hub is really centralizing all of that activity together so you can get rid of all of those one-off solutions and replace them with one common solution, with one central point of connectivity, both from the source systems and to your banks.

Ali Curi: Michael, why launch this product now? What's important about the timing of this launch? 

Michael Kolman: Yeah, that's a great question. One, there are a number of global payment initiatives that are shifting the landscape. We saw a number of years ago, Europe introduced SEPA payments. We're now seeing realtime gross settlements, realtime payments, being a potential area of focus. There's new technology in terms of APIs, which are being driven by open banking. There's some regulatory changes that are also driving acceleration of adoption of new payment methods.

So you have a lot of options now. Sometimes you can rely on these options and it can lower the cost of how you actually... so lower the cost of the actual payment. So perhaps there's a payment rail you can take that's actually a lower cost method to use. And so when you take together the technology, you take together initiatives like the ISO 20022 migration. Now all of a sudden you have a lot of moving parts and you're realizing how complex this is to manage. So connectivity is getting better and companies have always wanted to get almost real time visibility to cash. So with APIs in place with better reporting in place, this is all now becoming possible.

But where it becomes really challenging is when the payment activity or when the distribution of statements is just so disaggregated, because then you have to again, change things in multiple places. And you have this payment landscape where you have the ability to centralize the payments.

So I mentioned fraud. I've seen reports anywhere between 94 to 98% of companies have experienced fraud in the last year. That's just a massive number, which is then putting additional emphasis on greater controls around payments. So when you start to do business with a new counterparty, when you have a volume of counterparties and your fraud prevention is not consistent. Now you actually wanna put some layers of protection in place and the enabler to do that is to be able to centralize all activity in one place. And so I think that centralization is a common theme, that is a strong driver for, "Why the payment hub?, Why now?" And I said technology was getting better, but technology not just from the banking side, but also integration technology. So APIs are now quite prevalent and able to be able to share information between systems much more easily than they were in the past.

I would just wanna mention one other thing, which is, let's call it an "indirect reason" as to why this is important now. And I think that is really more around digital transformation. And for treasurers, one of the biggest challenges continues to be, around cash forecasting and the ability to create a cash forecast in an efficient way and get accurate data.

One way to get accurate data is to be able to centralize all of that data into a single place and then be able to reuse it for other purposes. So while you might be centralizing here in the payment hub for the purposes of payments, perhaps we should also be considering how that payment data, how that statement information can be then used to train machine learning models to generate forecasts, to create actuals that can be compared to forecasts.

And gather that intelligence that's needed for other downstream activities. And this digital transformation really is across the office of the CFO. And we're seeing this convergence between various functions that were perhaps owned by treasury in the past, or not owned by treasury in the past that are coming together. Not necessarily in form of operations and who is actually clicking the buttons, but more in terms of data and visibility to that data, to then use it to drive further insights. And in this case, specifically talking about cash forecasting, 

Ali Curi: You mentioned cost savings. Let's talk about cost savings for a little bit. How does it help businesses to save on costs?

Michael Kolman: A lot of the cost savings is gonna come partially from reduction of let's say redundancy. So if you have multiple connections into your bank, now somebody is managing all of those multiple connections. If the bank requires some changes and you have four different connections to the bank, now you have to make the change four different times. It also goes to around controls. In that example, you have four connections. You're now ensuring that the controls are consistent across all of those four connections. So, are files encrypted as they move? Can they be opened up in the process? Whereas you can take those four connections, you can centralize those connections into a single connection and you can ensure that whatever flows through there is going to have the exact same disciplined control that is in place. So I think there'll be a lot of savings that are coming from the removing, repetitive, or redundant activities that can be done in a centralized way. So I think that's one area of cost savings. The other area of cost savings is efficiency. In terms of making sure that the payments you're making are being done in the most efficient way.

So are you using the most efficient payment rails? Both from a speed perspective and from a cost perspective? Another area is around cost savings, is time savings. So if you have access to people, sorry, if people, users, have access to multiple systems, now you're managing multiple people in multiple systems.

So the maintenance of that, what happens when one person leaves or one person joins, you have to add them to four different places, that's no longer the case. One benefit of the payment hub is the integration. So you have the ability for single sign-on and you have the ability to obviously connect to their security control provider.

So really the payment hub can integrate fully within the infrastructure of the organization so that when any individual potentially leaves the organization they no longer have access to the payment hub. They no longer have access in the authority that they had in the past. Whereas, if you compare that to someone at a bank portal, somebody who has access to the bank portal, unless you go and individually remove them from the bank, which is outside of their security infrastructure then they still have access. So this is providing a lot more control. And it reduces cost because you don't need so many people to have access to the bank anymore.

There are a number of areas where I think you'll see cost savings that are quantifiable. Then there are some areas of improvement that are potentially not quantifiable, and that's areas around controls. If your company has a certain risk tolerance, perhaps there's a risk tolerance level that is set and there's compensating controls to ensure that risk tolerance is managed. And so perhaps, layering on that fraud prevention is something that you can potentially quantify. Might be a little bit more difficult, but certainly that aspect that you are checking every payment that goes out the door to ensure the counterparty you're intending to pay is actually the one you're paying. Or that you're not receiving funds or paying funds to any sanctioned party that you're not supposed to be paying to. And hence, avoiding fees that could be assessed upon you. 

Ali Curi: So share with us, which industries is Enterprise Payment Hub best suited for? Which ones will benefit the most?

Michael Kolman: I think there's certainly some industries that have maybe higher volume of payments. Industries like insurance maybe municipalities, utilities, where there are a number of payments being made or direct debits that are being made. And so volume can be quite high.

Volume can also be quite high in industries and in some manufacturing industries where the number of suppliers is quite significant. And manufacturing could be spread globally across the world. That could then lead to a large number of payment activities and also a large number of source systems.

And so maybe stepping away from industry as well, and just look at the company, or an organization that potentially has grown over time and grown inorganically, so grown through acquisitions. That's, in some ways, like bringing a number of smaller companies together to make one larger company.

And if those companies came over with the technology infrastructure that is in place, then that is also going to create complexity. So you can think of perhaps maybe the companies that this is best suited for. Companies where the number of systems, that are the sources of payments is more than two or even more than three.

The number of banks that are being connected to and the number of connections across those various systems also becomes to be excessive. Now all of a sudden that is leading to the problems that are being created that ultimately the payment hub is trying to solve.

Ali Curi: I think a big question for those institutions with a treasury management system is how easily will the ION Enterprise Payment Hub integrate? 

Michael Kolman: Yeah, I would expect that most companies who are interested in the payment hub or have a need for the payment hub are likely going to already be using a treasury management system.

And so then the question there becomes, " What's the benefit of the payment hub together with the treasury management system?" And I think for many, if you're trying to ensure, if you're looking at your cash position and you wanna have global visibility to cash and you aggregate all of your cash in your treasury management system today, and you're already doing that, that's great. You have that full visibility. 

The challenge that you don't know is, "Will the transactions you expect to happen actually happen when you expect to happen?" So you might have visibility to the invoice payment or some supplier that's supposed to happen and scheduled on a specific date. But in fact that payment was made early. Perhaps that payment was made late and now your position is off. And you wind up saving an additional buffer in your cash position. So by having the payment hub in there and the Enterprise Payment Hub, it can connect directly into your treasury system and actually be, in some ways, a greater, and let's say more reliable source of payment activity than perhaps where you're getting it today. Which could be an upload of a spreadsheet, it could be from a source system that may have just the payment date, but not necessarily control when the actual payment is being made. So there's a number of things that separate sort of the theory and what should happen versus what actually happens.

The payment hub, when a payment comes into there and it goes through the workflow, you know exactly when it's released. And if that is communicated into the treasury system, then you have real visibility and a lot of confidence that payment is gonna be made. Now with the ION Enterprise Payment Hub, we have native integration into our enterprise treasury management system, Wallstreet Suite.

So it's natively integrated and I think this makes a bit of also a differentiator when you're thinking about the broader landscape and you're thinking about that treasury is responsible for payment policies but not necessarily responsible for payment execution.

So there's a gap between setting the policy and being able to monitor the execution. Now, if you have all of your payment activity, both the treasury payment activity as well as the operational payment activity all in one place, that provides treasury even greater visibility and control that ensures the payment policies are being followed and they're being followed consistently.

You also then have real time updates into all of the payment activity that is happening across the company and allowing company to be able to then shift any decisions that it might make on that day for investments, whether it be investing excess funds or actually needing to redeem some funds to meet the needs of the day.

Ali Curi: So now you've shared with us how well it integrates with TMS systems. What about integration with other existing systems, say legacy systems? 

Michael Kolman: I think this is probably the most fundamental and primary benefit of the payment hub, is that the hub really by definition is the center of activity, right?

So we are centralizing all activities related to payments into one hub. That means we need to ensure that the capability to easily integrate and to easily talk to other downstream systems is there. So downstream systems may be able to support APIs, which would be ideal, it ensures an easier way to integrate.

It allows us to get more real time data but not all downstream systems are gonna be capable of that. And so we might have to rely on file-based transfers where we have scheduled transfers of any new transactions that come up. And we're able to import those. So the payment hub provides flexibility on how we can integrate, so there's really no limitation on the system that we can integrate with.

Ali Curi: Now, as you know, security is a major concern in payments. How does payment hub address that concern? 

Michael Kolman: It is the primary concern and really controls is paramount to everything having to do with payments. With the payment hub, again, we're able to ensure that there is proper control of the data that's flowing into the payment hub and out of the payment hub and control while within the payment hub.

If there are sensitive files that potentially come from an HR system that move through the payment hub, there can be controls put in place that nobody can touch the payment message, the payment message cannot be altered. There is encryption end-to-end and it flows seamlessly through the connectivity to the bank.

In some cases, messages will require some transformation. Again, this is another form of cost savings. We are able to centralize all the transformations of those messages through a common technology, building up a library of those transformations, and then again, sending it out to the bank.

So it's very controlled in terms of anything that's being transformed on the message. The last thing you want is the ability for an individual to open up a message to individually alter it, and then save it, and then it goes out to the bank. And the alteration they made was to the bank account that was being paid. And now all of a sudden fraud has been committed. So there are typical downstream protections that companies put in place to ensure that the payment instructions are valid and are the right ones. So companies typically rely heavily on callbacks. So they will find an independent party at the company that can validate the payment instructions prior to making a payment. This could be for new counterparties. This could be triggered by a change in settlement instructions. Or it could just be a periodic check. There are some companies that have thousands upon thousands of calls that are being made. That takes a ton of time. It's sometimes difficult to find an independent person at the company who can validate this. And so there's time savings there that are associated with the compensating control. Now there's some new technology that can be put in place that can help remove some of those callbacks. But it can only be put in place when you have that central repository of all the payment activity. So that's another area of controls and security. 

I also mentioned security in terms of just access. Are the access control within the enterprise, the ION Enterprise Payment Hub is connected within the company's infrastructure? So it's ease of use in terms of single sign-on, and it connects to their security provider to ensure that any changes to a person's status are effectively managed in the payment hub as well. So I think as you mentioned, security is a major concern. We have also, from a cybersecurity standpoint, we have a fairly robust cybersecurity program where we are running a number of tests and ensuring that we close any vulnerabilities, should they exist very quickly.

And just imagine the fragmentation and the various systems and ensuring that is all being done for a process that's so critical in terms of payments. Actually moving cash, the company's cash, from one destination to another, you really want to ensure that system is quite protected.

And so we've got this security program in place to do that as well. 

Ali Curi: Michael, have businesses adopted this payment solution already? And if so, what's the response been like? What kind of feedback are you getting? 

Michael Kolman: Yeah, so we have had a number of adopters that fall into some of the use cases that we've already talked about.

I think one common denominator is that they all have multiple sources of payments, some more than others. And I think that is the common denominator across all of them is that there's not just one system that is the source of the payments, but there are multiple systems where a payment can originate.

The other is, not all, but some have extremely high volumes. And where throughput of that volume was somewhat limiting in the past. We have the capability in the Enterprise Payment Hub to go extend to extremely high volume of payments. Now that translates also to high volume of payments and then also how you use the rest of the capability.

So if you're using the payment hub as a standalone solution, that's fine. If you're using it as an extension of your treasury management system, then that can translate into some benefits in terms of automated reconciliation and accounting for that high volume of cash. The other thing I wanna mention as well that makes the ION Enterprise Payment Hub a bit unique as well, is when you're dealing with high volumes or you're dealing with multiple systems and lots of moving parts, what you need is automation. And then when the automation doesn't work, what you need is, you need an alert. You need something that alerts the user to the problem that is at hand. And so that's one of the things, one of the features that the Enterprise Payment Hub offers is it offers that capability to draw a user's attention when there is a break or when there is an exception that is required so that payments are not missed. That's another piece of value of the centralization is that you have your operating cutoff times from around the world, you're ensuring that no payments are missed. That all the payment activity flows to the bank successfully.

If a payment potentially is rejected, let's say, in the Enterprise Payment Hub, that there is a notification sent back to the source system to notify them that payment was rejected. Perhaps there's holiday calendars that are not available in the source systems. But a payment is scheduled on a holiday. So now the payment date has changed. That notification needs to go back to the source system to notify them of the payment date change. There's a number of areas where those, let's say, "practical benefits," are being realized by companies that are using the Enterprise Payment Hub today.

Ali Curi: Now you've shared a lot of the robust features, security features, so what's next for ION Enterprise Payment Hub? 

Michael Kolman: Great question. I think we always have an ear to the ground when it comes to incorporating AI into the solution. We have capability for payment anomaly detection. So this is essentially looking at the activity of a payment and identifying any anomalies, and that's available within the ION Treasury Management systems. And the reason that it is in that system is because it's the source of those payments. Now, potentially companies could explore looking at the payment hub as the source of the payment, or integrating in the process even earlier. Payment anomaly detection on the payment workflows, on the payment amounts, those sorts of things can be applied. And we have the capability to do so, and would look to take advantage of that when the need arises. I think also in terms of driving insights. So I already mentioned the potential benefits of having your payment system then contribute to your cash forecast, and that communication in there. And then I think in terms of, advanced capabilities, I wanna also be clear that one great benefit of the Enterprise Payment Hub is the real time visibility.

Anything that is between the payment hub and the treasury system, for example, that's connected via API, that visibility is available in real time. And that native integration, especially on the enterprise side with our Wallstreet Suite application, everything flows throughout the system in a real-time manner.

And so I would expect as integration from other source systems can be improved and we rely more and more on APIs, really the true real-time capability will continue to improve. 

Ali Curi: Let's get a bit of an inside scoop. Besides this payment solution, what else can we expect from ION Treasury? What other breakthrough technologies are you working on? 

Michael Kolman: I think that I think that the momentum in the market and even in our personal lives around AI is really changing the landscape and is really changing the way that that we think about how we operate our, just our daily routines, both personally and then within our professional lives as well.

So that's certainly influencing the way that we think the about coding our systems, the way we think about design, the way we think about the actual work that's being done by people using the systems. When it comes to, let's say forecasting as an example. When a forecast changes from one time to another, the next step for somebody is to explain what changed.

I think that's an opportunity for us to be able to leverage AI to help explain those variances. So there's so many, there's so much potential out there with AI and I think that is proving to be a real area of, I would say, "exploration" at this phase in time for another number of companies.

We have actually had machine learning capabilities in our treasury systems since 2019. And we've done a lot of exploration, but the real full adoption and replacement of what happens, it takes time. And I think that's a reality, but we have to experiment and I think we are experimenting quite a bit in the AI space. Whether it be with AI agents or it be machine learning, that's a big area of exploration for us. I think that then dovetails into making greater predictions, so predictive analytics and a real focus on data.

And I think that's also another area of where the payment hub comes in. Payment hub provides an opportunity to really centralize a large volume of data that can then be used for multiple purposes. And so the question there is, "Well, how can it be used? How can companies leverage that?" So I think, there's some opportunities there as well. And without going into specifics, I would encourage finance leaders out there who are thinking and considering the putting in a payment hub solution to really think about their vision of how data can drive the future way of working in their organization and how centralizing different types of data, especially around payments, in this case, can be an enabler to achieving their vision. 

Ali Curi: And aside from ION Enterprise Hub, how is ION Treasury helping corporate treasuries transform?

Michael Kolman: I think bringing about solutions like the Enterprise Payment Hub we provide automation, providing real-time insights, real-time visibility, seamless connectivity. The ability to automate, but also ensure that time from users is being spent in a productive way. So focusing on aspects like exception management, like that I had talked about, focusing attention on more analytical tasks than operational tasks. And that's really gonna allow treasury teams and the broader finance team to move away from activities such as, reconciliation activities and data gathering activities and really be able to centralize that data, have a common set of data, have common analytical tools that bring that data together.

So it puts time back in their pocket to focus on potentially more strategic items. 

Ali Curi: Michael, you have a lot of exciting projects going on. Thank you for sharing how ION Enterprise Payment Hub is set to revolutionize payments. Always good to see you and again, congratulations. 

Michael Kolman: Thanks, Ali. Take care.