Latest News From The Clearing House:
New York, June 25, 2019 — A combined team from Fifth Third Bank and AvidXchange was named the Overall Winner of the RTP® Buildathon for its Business-to-Business solution that enhances the digitization, transparency, and automation of B2B payments, leveraging the real-time payments and enhanced messaging capabilities inherent in the RTP network from The Clearing House (TCH).
AvidXchange and Fifth Third Bank were named finalists for a real-time B2B payments solution in a Buildathon sponsored by The Clearing House and the Carolina Fintech Hub, with technology support from Oracle.
“This is the first buildtathon leveraging TCH’s RTP network, a real-time payment system that modernizes core payments capabilities for all federally-insured U.S. depository institutions and their customers,” wrote Patrick Rivenbark, the COO of the Carolina Fintech Hub on its blog. It’s a “buildathon” because for some reason The Clearing House doesn’t like the term hackathon. Bankers can be so touchy.
The contest drew 16 submissions from 13 teams, said Rivenbark
Bank hackathons usually aim at retail banking and try to build consumer-facing apps. Rivenbark said the Hub wanted to make sure the apps developed were aimed at the enterprise. The solutions included bill pay apps and some back end operations.
In addition to AvidXchange in B2B, the finalist for best consumer solution was Frictionless; for enabling the next digitally native business, Plutus, from Kunal Das at South State Bank; and for best back office improvement, Levvel.
The collaboration between Avidxchange and Fifth Third Bank, which won in the B2B category, was named “167% Xcelerated RTP”.
Bridgit Chayt, who is the SVP director of commercial payments and treasury management for Fifth Third Bank, said the bank’s strong partnership with AvidXchange shows how the bank can collaborate with a fintech rather than compete.
“Our strategy is to bring the best of both types of organization. It can be a challenge because of the bank’s legacy environment and a fintech with something brand new, but if you address that right away it becomes liberating.”
The team worked with whiteboards rather than the more familiar PowerPoint, she added.
“Some of our bankers see new enthusiasm for what they do; it teaches us how to better communicate with customers.”
Bankers traditionally show up at meetings with customers or prospects with PowerPoint presentations “assuming you know what they wanted to hear. The incubation way of thinking has led us to start with a whiteboard with clients to better understand their challenges. A product is sometimes only a piece of the solution.”
“Our team took on a B2B solution that looked at the relationship that commercial customers have with their vendors and how RTP can be used to improve experiences on both sides,” said Dan Broadway, enterprise architect at AvidXchange. “One of the things that was interesting was the ability to bring AvidXchange and the bank together so we ended up with a prototype rather than a PowerPoint. That was the result of intense collaboration.”
A real paint point for companies is to use the information that travels with payments in RTP using ISO 20022 standards. Combining billing data and payments will reduce reconciliation and the confusion that arises from not knowing what the payment is for, or why a payment is partial, such as when a shipment was incomplete or damaged. That information is most useful when the company receiving the payment can process both payment and information through its systems at the same time.
AvidXchange specializes in middle market companies, said Denise Leleux, senior vice president of supplier services. It has interfaces to more than 150 accounting systems used in business.
“We talked to our suppliers and they want to be able to push a prompt to customers and maybe offer them a discount if they pay in real-time. Our customers think about speed, trust, data, and easy reconciliation. They think about how they can solve their own problems, such as solutions that allow them to free up their own investment and improve their liquidity.”
Middle market firms are increasing their use of credit cards and ACH for B2B payments, but they still use a lot of paper checks.
“They use paper because they have processes for checks that are already in place,” said LeLeux. They want to change that to e-payments such as credit cards, ACH or Avid PayDirect an enhanced ACH which delivers more information.”
Peter Davey, who leads payment innovation at The Clearing House, said TCH worked with the Carolina Fintech Hub on the Buildathon to to promote the benefits of the new payments network to the companies that will be able to develop new applications that leverage the RTP network’s advanced, 21st century capabilities.
“We wanted to promote how fintechs are working with financial institutions to develop capabilities that leverage RTP to showcase the true opportunities of the new system. The market really needs integrated end-to-end capabilities through digital experiences, as well the option to turn to vendors to help drive that integration.”
