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Digitising Reconciliation in the Payment Landscape

Tuesday, April 5, 2022

Over the last decade, the PNG market has been organically transitioning from an analog to an increasing digitally inclusive market. Our customers are transitioning to digital and self-serve banking practices reflected in the 90% of all bank customer transactions processed through a Digital Channel and a positive reflection of the growing appetite for online payments and increased customer demand driving the need to continuously enhance our services.

As we see the progressive increase in real time digital transaction volumes from our customers, we are also seeing a growing need for seamless and instant reconciliation of transactional data and our clients accounting systems.  We acknowledge that there is a key pain-point shared by our clients in both the private and public sector is the challenges associated with obtaining transaction data from the banks and reconciling it in an efficient manner against the financial management system records. Financial teams encounter manual or semi-manual issues, as they scramble to validate debits against credits. Transaction matching has become a tedious and pain staking process to undergo on a monthly basis, and many times present a high probability of data inaccuracy. It has been recorded that up to “59% of a financial department’s resources are spent on managing transaction-intensive processes, whilst 95% of this effort is wasted on transactions that already match, rather than problem entries that actually require attention” as per a survey by Trintech, a leading financial software developer. Inefficiencies certainly impact Executive management’s ability to make sound and timely decisions and could result in costly decisions based on inaccurate data and furthermore, missed business opportunities, due to lag in timely production of the organization’s financial report.

Globally, it has been recorded that an estimate of 519 million transactions were sent through payment network during the first six months of 2020, 63% increase in transaction volume over the previous year, emphasising the need to automate reconciliation to avoid data manipulation through manual processes. Commercial Banks globally, such as the Citibank, have gravitated toward real-time data transaction matching compared to the extended batch clearing files at end of day to further increase efficiencies for its customers.

Picture: The treasury of the past, present and future.

The PNG market is not immune to this reconciliation nightmare, our business and government houses are subject to this persistent financial bug that impedes the progress of effective turn-around time of reconciled reports, and prolongs the ability to maintain data accuracy without the profound need and time consumed in constantly reviewing to avoid costly mistakes. The challenges with ease of reconciliation persist as we apply the ongoing manual processes; undoubtedly, “Excel” alone, may not always be the remedy to resolve all financial reconciliation challenges coupled with complex financial systems, especially for the Government sector.

A large emphasis is placed on transparency of payments funneled through our Government departments, we understand the customer challenges in paying for Government services. Hence the recent Partnership with the Dept. of Finance, BSP collaboratively plans and works toward providing an online payment solution that addresses the payment and receipting of non-tax revenue fees paid by citizens utilizing the BSP payment rails – Mobile Banking, the Internet payment gateway , targeting the formal or informal sector.

BSP offers its very own bank feed API that allows for transaction data to flow seamlessly to our clients secure file system or alternatively directly into their financial management system without the dependency on an end of day settlement report, businesses can now receive bank data within efficient time.

In addition to DOF, we are in process of providing this remittance service to IRC, and highlighting Nambawan Super Ltd as a subscribed user actively utilizing the BSP Bank feed for receipt of transaction data within the their specified timeframes.

Picture: A bank feed is a digital link between your bank account and accounting software, automatically importing bank transactions into your accounting software on a daily basis.

The implementation of the proposed E-Gov Services will improve transaction matching by allowing for instant remittance of payments, and the provision of payment tracking by the Department of Finance online payment solution, which, will be an added benefit to reconciliation. A positive step toward full automation, whilst we also work on key partnerships with Xero and other accounting software providers to allow for integration into their systems, with the aim to cater for all segments and not just to the SME segment with our offerings.

Improving the Government services becomes a main priority to ensure that citizens are provided the ease of doing business, while, rendering the necessary services through paying online or via Mobile Banking; this will in effect limit branch visits, reducing queue time, and provide convenience in making a payment. BSP aims to provide collaborative support in providing digital payment solutions to improve Government Service and the customer experience of our citizens.