Digitizing Accounts Receivable: Banks as Frontrunners

Digitizing accounts receivable for commercial clients: banks’ imperative to shift from products to workflows.

Figure 1: The Tipping Point Challenge - Supporting Suppliers in their Digital Migration

Technological advances are gradually taking the paper out of the accounts receivables workflow while reducing exceptions and driving up straight-through processing rates. Banks that harness these advancements and become an integral part of their business customers’ financial supply chain stand to gain market share and earn new revenue streams.

The ability to alleviate the growing pain along the accounts receivables (AR) value chain through technological advances presents a significant opportunity for banks to deepen customer relationships, glean additional insight into customers’ needs (e.g., credit), and generate additional revenue streams. But it requires reimagining what integrated receivables services are and cannibalizing the lockbox. The lessons learned by Kodak and others have shown that, if a company does not sacrifice its historic revenue engine and invest in the next generation, another company will. This is no mere metaphor. Fintechs are enjoying rapid growth at the expense of lockbox revenue.

In this report, we examine the pain points along the accounts receivable value chain and profile third party providers alleviating the pain by digitizing processes with a variety of technologies from the basic intelligent character recognition (ICR) to robotic process automation (RPA) and advanced artificial intelligence (AI). We examine the evolution of providers’ competitive advantage from physical footprint and traditional economies of scale to scale advantage based on data and analytics. We discuss the importance for banks of harnessing these new technologies and differentiating themselves.

A companion report, Integrated Receivables Vendors 2018: ABCD Vendor View will evaluate 13 providers. Herein, we provide an overview of the best of these players.