Interview with Blake Newman, Head of Product at Cambrist

In a recent interview, Blake Newman, Head of Product at Cambrist, sheds light on the complex nature of card payments data. He delves into the challenges faced by Banks and Fintechs in establishing a high-performing payments operations function that can fully leverage the potential of this data.

What are the biggest challenges Banks and Fintechs face when managing payment card data for financial reporting and reconciliation?

Managing payment card data is like putting together a jigsaw puzzle every day. Except this jigsaw puzzle contains pieces in different shapes and sizes, produced by companies using different standards.

This is a really big challenge facing operations and finance teams across the Banking & Fintech sector, especially when a business scales to include multiple card schemes, multiple products and multiple currencies across multiple processors.

The reality is that >80% of today’s card issuers and programme managers continue to rely on spreadsheets and manual work to perform reconciliations. Obviously, manual work is never optimal, particularly as businesses scale.  What’s even worse is that >85% of finance and operations teams within these card issuers believe that their payment data lacks the transparency and standardization required to perform accurate reporting and reconciliations consistently.

This has all sorts of knock-on effects such as slowing down decision making or processes, increasing the likelihood of mistakes or human error and resulting in wasted time and effort that could be better used elsewhere.

How do these challenges differ for institutions with a diverse portfolio of card products, schemes, and customers (e.g., issuers with multiple brands)?

Everything gets more complicated as you scale a payments business. The reporting and reconciliation cycle can be relatively straightforward for an Issuer with a single scheme product.. However, once you start adding “multi” into any of those dimensions, be it becoming a dual scheme issuer or working with multiple processors or settlement currencies. It gets significantly more complicated.

That’s why almost 2/3rd of payments companies don’t see any real scaling benefits in their operating costs and, in fact, almost 30% see costs rising faster than volumes as they grow. The key for managing data in any card payments company is to keep control of the rising complexity by driving some standardization through your data. This avoids duplication of effort, simplifies internal processes and reduces the risk of human error.

However, the process of driving that standardization can be complicated for Issuers. That’s why many Issuers turn to external providers who are experts in Card Payments data sets and can drive that standardization for them. This has the obvious benefit of solving for the initial complexity but also means that you have a partner that is dedicated to ensuring that they stay current with the changing data standards.

For Issuers, which areas involve the most manual tasks or repetitive processes that could be significantly improved through automation? Are there any specific bottlenecks or delays caused by manual interventions?

This is a difficult question to answer as nearly every BIN Sponsor, Card Program Manager or Issuer is relatively unique in their set-up.. They are all aiming to achieve the same thing: an effective back-office payments function that (1) efficiently allocates settlement values, income, fees, chargebacks etc. across all of their products and customers, (2) accurately reconciles that information across each of their data sources, be that scheme data, processor data, banking data or customer records, (3) identifies any discrepancies to be investigated or managed and (4) presents that information to stakeholders, be that customers, regulators, executive management etc.

These are all repetitive tasks that would benefit from some degree of automation. Given time, any back-office can meet all of these requirements, but the back-office of a card payments business is working under severe time pressure with some relatively material consequences if errors arise, including increased fraud, card scheme fines, regulatory challenges or lost income. Furthermore, problems in any of the above tasks creates problems in every other task required of the back-office, resulting in the problems snowballing for the relevant team.

In our experience, everything stems for the ability of a back-office to automate the manual processes involved in digesting scheme settlement files and card processor files. Driving standardization and an automated reconciliation process across these two areas has material benefits to BIN Sponsors, Issuer Processors and Card Program Managers. It speeds up activity for back-office operations teams, reduces errors and re-work, and ensures that teams can spend their time on higher value activities.

Data security and privacy are paramount concerns for the payments industry. How does your platform ensure the security and integrity of sensitive financial data throughout the reporting and reconciliation process?

Data security and privacy are indeed integral to any payments business. Payments service providers handle vast amounts of sensitive financial information. A data breach can have serious consequences for cardholders and the service providers themselves, leading to financial losses, identity theft, and significant distress. This is especially true of the back-office operations teams that handle sensitive information at both a cardholder and card program level.

Any business that provides solutions in this area has to take data security and privacy extremely seriously. Cambrist’s approach is to safeguard our customer’s data through controlled access and audited security protocols. Our platform is PCI Level 1 certified to ensure the security of our partner’s card issuing domains. All critical infrastructure is duplicated for your safety and designed to ensure real-time, high-volume processing with minimal external dependencies.

What advice would you give to BIN Sponsors, Card Program Managers or Issuer Processors who are considering adopting automation solutions for their reporting and reconciliation processes?

There’s a great saying that the best time to plant an oak tree is “twenty years ago”, and I think that applies equally to any Issuer that is considering adopting automation solutions for their reporting and reconciliation processes. Ensuring that your back-office operations function is set up efficiently and is ready to scale should be a key focus of any fintech that is looking to build out their card business over the next few years.

The saying goes on to say that if you didn’t plant an oak tree “twenty years ago”, then the next best time is “now”. Deploying manual processes and spreadsheet-based solutions to complicated reporting and reconciliation tasks is really just a way avoid some short term costs or investments, but opening up far greater challenges in the longer term.

The challenge for most BIN Sponsors, Card Program Managers and Issuer Processors is finding the time and mind-space to assess where their biggest data challenges are and then to either find an external partner to solve for those challenges or manage an internal development effort with their technology teams. At Cambrist, we always caution against doing “nothing” or procrastinating. There are solutions (Cambrist among them), that can address the data complications that arise as a card payments business scales. This will ultimately simplify your back-office operations, increasing the speed and accuracy of your back-office operations.

There’s no good reason to delay adding automation to your reporting and reconciliations processes.