Perspectives 2019 2020 Public Sector

36 Improving Public Sector Collections However, tackling challenges associated with domestic and international payment has been difficult. Historically, there has been no solution in which multiple components could be managed via a single platform, including multiple, flexible payment methods, domestic accounts in other jurisdictions, foreign exchange, and the provision of digital information to facilitate straight-through- processing and automatic reconciliation. As a steward of taxpayers’ money, governments cannot absorb the costs often associated with an offering that gives greater flexibility to remitters. Leveraging bank capabilities Financial institutions with global footprints often have strong local currency account services and industry-leading FX and transaction capabilities. Some also have a proven track record of partnering with best-in-class fintechs to deliver innovative solutions such as electronic invoice presentment and payment platforms, artificial intelligence (AI) and machine learning (ML)-driven reconciliation tools, and gateways offering alternative payment methods. Such banks are therefore well placed to create a solution that fulfills the needs of government and public authorities worldwide when they collect from domestic and international payers. However, until recently, no bank has been able to bring together the disparate range of products required to create such a solution. The goal in developing solutions for domestic and international payments is straightforward: to improve every element of the payment lifecycle by digitizing it from end-to-end and integrating every component — from invoice presentment, to payment, to reconciliation, including the high friction FX component. In practical terms, such a receivables solution would replace a paper-based invoicing process with a digital invoice, issued using electronic invoice presentment. The payer interacts with a custom-built payment gateway to view the invoice in either local currency or the currency in which it was issued. They are then offered a wide variety of payment options, affording them the ability to pay using familiar instruments in the country where they are a resident or where the government is based, in addition to direct debits, debit or credit cards and alternative payments, such as mobile wallets. Again, the citizen or company can pay the amount due either in local currency or the currency in which the invoice was issued, as FX is fully embedded into the solution. Costs associated with the payment, including FX, are borne by the payer. However, these are completely transparent; they have the choice regarding which payment method to use and therefore how much they want to pay. An instant FX conversion capability is embedded in the solution to give the remitter the choice of currency to pay in, using market rates with a spread pre-agreed with the government or public authority receiving the payment. At the same time, the flexibility for the payer is achieved without increasing costs or risks for the entity making the collections, receiving exactly the amount they expect, at the time they expect. Crucially, the payment is automatically associated with the paying individual or company, making reconciliation more straightforward. The solution deploys technology developed with a cloud-based software company that leverages AI and ML technology and the bank’s assets. It increases the efficiency and automation of the cash application process of matching open invoices to payments received.