Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Chana Schoenberger (00:09):
Hi, I am Chana Schoenberger. I'm the editor in Chief of American Banker, and I have with me here today Yaminah Sattarian, who is a payments executive at KeyBank. Welcome.
Yaminah Sattarian (00:20):
Thank you. Thank you for having me.
Chana Schoenberger (00:21):
So we're here at Payments Forum, which is our big payments conference. It's down in Florida this year. What is the coolest thing you've seen so far this week?
Yaminah Sattarian (00:29):
I think what really has been exciting me is really spending time with a lot of the different corporates, and there's a numerous amount of pentech here today. So really just hearing how they're engaging, how they're building together, and really understanding some of the things that they think through on a day-to-day basis as they're working with the banks, as they're working with corporates, and really how they're intertwined together.
Chana Schoenberger (00:49):
So is there anything in particular that's interesting or surprising?
Yaminah Sattarian (00:53):
You know what, I think the biggest thing that we're hearing a lot is the companies that are concerned about fraud. We're hearing about the fraud. We're hearing about how the fintechs can help there, how automation solutions are really putting them in a better perspective as to why they don't have their accounts spread out all over the place. So I think really hearing that and how it works to the banks is really what's been driving things here.
Chana Schoenberger (01:16):
We write a lot about fraud. It's amazing to me how much the fraudsters can come up with. They're so innovative. If we could just hire these fraudsters and get them to work for banks, imagine what we could do.
Yaminah Sattarian (01:27):
Oh, I know. The time that they take into it, it's surreal. I mean, I think we put things in place, whether it's through security, through fintechs, through the financial services, and even the government. They're always trying to find ways to stop the fraudsters, but we always have to think ahead. And as companies, I talk to them all the time as they're looking to set up new structures with financial institutions. We talk about what else can you do? What can you do to prevent from having your account number out in the market, whether it's consolidation of their accounts, or there are some old solutions that are in the market that companies don't think about anymore, such as you pick, which is the uniform identified payment codes. And using those codes, it really just masks the account numbers for them so they can make the payments and their vendors and provide those account numbers, but they're not really giving a real account number, so fraudsters really can't get into their accounts.
Chana Schoenberger (02:20):
And how old is that idea?
Yaminah Sattarian (02:21):
Oh, I don't know the exact years, but I will say this. I've been in banking for 23 years now, and it's been around as long as I've been around.
Chana Schoenberger (02:29):
Wow. So not
Yaminah Sattarian (02:30):
New. Not new.
Chana Schoenberger (02:32):
That's great. Yeah. We write a lot about, they were talking about this on stage this morning. We write a lot about check fraud. And check fraud is a fascinating topic because if people would just stop using checks, there would be no check fraud, and yet it's this enduring form of payment. Why is that?
Yaminah Sattarian (02:48):
What people like the ease of just issuing payments and paper, and then also some companies just really can't get out of the paper tracks because of the systems that they use. Old behaviors. I do know, and again, I work with companies that are minimum size of 250 million to multi-billion dollar companies. There's one company that I work with, no exaggeration. They're a $500 million plus company. The president of the company, and it's a family owned non-public company. President of the company legitimately looks at every single check that's issued because he wants to make sure that there's no internal fraud, someone creating a fake supplier within the system, and that's his way of preventing payments. We've talked about 'em. We've talked about it. We've talked about automation, where I tried to describe and explain that you can use an automation solution, and before they submit the payment file out, you can actually go into the system and review every single payment. No different than you physically signing a check. And he said, absolutely not. And his AP team does say he's on occasion. He will come out to talk to the AP team with a physical check in his hand and say, I don't know who this vendor is. Tell me who it is, and why do we have this new payment going out?
Chana Schoenberger (04:02):
You have to admire that, right? I
Yaminah Sattarian (04:04):
Admire it, but not when you're issuing 750 checks two days a week.
Chana Schoenberger (04:08):
Wow. So he just sort of sets up a desk in the AP area and manually reviews everything.
Yaminah Sattarian (04:13):
Every single check.
Chana Schoenberger (04:14):
Wow. Well, okay. So that's one approach to fraud. I bet nothing ever gets through him,
Yaminah Sattarian (04:20):
But it's not a good way, good use of time for someone that owns a company. It does not scale.
Chana Schoenberger (04:25):
Wow. Yeah. Not much strategy there, but that's unusual, right? Most people are modernizing. Most
Yaminah Sattarian (04:32):
People are modernizing. But you would be surprised. I mean, again, my team, we focus on numerous verticals. I have a gaming vertical, a consumer vertical. I have a healthcare and insurance vertical. I would say, when I think about some of the industrial companies, which are older family owned companies that are multimillion dollar companies, but they're still stuck in the paper phase, still issuing paper checks, still utilizing lock boxes where they're getting a lot of payments that are coming in check, and it takes a lot of time and effort for us to get them out of that process.
Chana Schoenberger (05:08):
So how quickly can a company modernize if it sets its mind to it?
Yaminah Sattarian (05:13):
We've seen it depends on the organization, let's put it that way. Depending on the ERP system that they're using, how quickly can they move out of that? Can we get them out of the existing ERP that they're in today? Or can it modernize and really tie into some of these layover automation solutions? But we've seen companies get into, let's just say from an issuance standpoint, from an AP perspective, in about six weeks getting out completely out of the paper phase. We take over the payment, they submit files to the banks or the FinTech, and we just take over the payment process and it's out of their house six weeks fairly quick. And I think from a receivables perspective, it takes longer because now you're asking the individuals that are sending you payment, you're trying to change their behaviors. So that does take time. That goes beyond, I would say, even beyond six months. Again, you're relying on somebody else's behaviors to change.
Chana Schoenberger (06:08):
Right, right. Yeah. I had an equity analyst tell me once years ago that when he saw that a company he covered was doing an ERP migration, he would recommend shorting the stock because it always took twice as long and cost twice as much as the executives thought. And if they told you it wasn't going to take very long, then clearly they were diluted and didn't understand their own business.
Yaminah Sattarian (06:29):
You know what? You're absolutely right. In many organizations when they're switching ERPs especially, they'll come to me and they're like, all right, well, the project's going to be done in three months. And I'm like, I am sorry. That's not going to happen. And quite frankly, your consultant that's working with you hasn't even spoken to your financial institutions or anybody else that really understands the processes of whether it's APIs or whether it's file sharing. They need to understand all of that and really how deep you're into the systems for us to give you a true indication of what it's going to be like and the timeline from a bank's perspective as well. I mean, at minimum, I would say from a bank perspective, I would say at minimum just to do a file share, you're talking about maybe 12 weeks just to make sure, because most of it is custom. I don't know many companies that are using cookie cutters, simple flat files, et cetera, or general APIs. Most companies are using custom formats.
Chana Schoenberger (07:24):
Wow, okay. So it's longer. It's
Yaminah Sattarian (07:26):
Longer. Absolutely.
Chana Schoenberger (07:28):
So when you talk to these companies that you deal with, which are in the low hundreds of millions of dollars in terms of their revenues, what are they asking for now in payments? What do they want?
Yaminah Sattarian (07:40):
What I think that, like I said, some of them are still stuck in their old ways, but others are really trying to find efficiencies. It's hard to find the staff that are going to take the lower level AP and accounting type jobs. They were stuck in the world where they had individuals that are stuffing envelopes, getting these checks in them and getting them out out. They just can't get the staff to do it anymore. And so they're trying to find ways to get around that. And I think that that's why you are starting to see more automation and people moving into it. Again, they can't do the staffing, and also it becomes more efficient for them. It goes back to whether it's internal fraud or external fraud. They want to have less manual processes that they have to rely on. So we are working with them and trying to get 'em out of that.
Chana Schoenberger (08:28):
Yeah, that sounds smart. Are you seeing a lot of AI in this area, or is it just straight up automation?
Yaminah Sattarian (08:34):
What, when we talk about automation, you really want to think about automation is tied into ai, right? I mean, because there is a lot of AI in there. There's systems and solutions that are reading the detailed information. So it's not individual human intervention at all times. So I do think AI is a big thing, and it's going to continue to grow. Again, when you think about banking, it's a little bit slower than the norm, but I think it's because of all the security and the protocols and the fraud that's out there, you really have to be cautious of what you're getting into.
Chana Schoenberger (09:03):
And compliance,
Yaminah Sattarian (09:03):
Absolutely. Compliance risk and compliance always.
Chana Schoenberger (09:08):
Yes. Otherwise, you just have the president of the company looking at every check.
Yaminah Sattarian (09:13):
Right.
Chana Schoenberger (09:14):
So let me back up for a second. How did you get to this point in your payments career? What was your path?
Yaminah Sattarian (09:22):
Yeah, I mean, absolutely. I think I talked about this earlier in the session, but I really did. I started my career in a retail management training program, which I am thankful for because I spent time at the lower level truly understanding the basics of banking from making general deposits, understanding the check process and the things that you have to look at to identify fraud from the front line versus all the way to the top at a corporate level. So I think for me, starting there really helped ground me, and it helped. I zigzagged in a way that I went from the general retail space, then I went into the corporate space and doing corporate treasury. And then from the corporate treasury world, I felt like I needed more, right? And that's when I decided I want to go into international, I want to understand the global markets because if I did that, then I would understand the aspects of payments moving overseas, not only domestically.
(10:14):
So I did, I spent years and I actually did letters of credit and I did global trade. So it helped with the movement of goods. So it put me in a perspective of now I understand what the companies have to go through as they're bringing goods into the US or exporting goods out. So now I've got a tie into really what the company's doing day-to-day, not only from a payment perspective, but actually the goods itself. And then I kind of continued to move on from there and went back into the domestic payments world, into the larger corporate space and continued there. But overall, through my career, it's always been a payment perspective with a little bit of weaving of some additional items. Like I said, getting into the international world and talking about goods and services, it gave me a different perspective. Did a little bit of lending there as well.
(10:57):
A lot of people, I don't talk much about the lending aspect of things, which I still can do. I do some of those and working capital facilities, so helping us companies get lending credit where they can use it towards goods that they're selling overseas. So there's a lot of good governmental programs out there, but not a lot of people talk about it. So it is part of the expertise that I have. It's not something that I do every single day for the organization, but if someone were to need it, they know that I'm the one expert that they could come to help.
Chana Schoenberger (11:28):
And Ohio and the Midwest in general, that's a lot of industrial companies, right? Yes. Yes. So they're exporting machinery?
Yaminah Sattarian (11:36):
Absolutely. Yeah. So there's one company in particular that I worked with for a long time. They did a lot of tunnel boring machines. They were exporting to India and Turkey, and they struggled over the years because they didn't know what to do to protect themselves. You're sending these goods overseas, and most of them didn't want to pay cash in advance. Most of them wanted to pay a percentage of 30% upfront, and we'll pay the remaining when it gets there, but that doesn't really protect them, right? And some of the companies weren't large enough to be able to endure a loss. This machinery is 20, 30 million pieces of machinery. So I think that's at the point when we started really talking about fraud prevention in the way of using letters of credit, old tool, right? Old financial financial services tool that's out there. But when you're talking about overseas and large machinery, it puts you in a position where now you're relying on the bank overseas to ensure that you're getting paid. So you're relying on the credit of that bank, and as long as you're following what's required within that letter of credit, they're going to receive payment. Again, there's credit insurance as well, but I think that's one of the avenues that we've been helping companies with
Chana Schoenberger (12:42):
As well. Yeah, that's almost a medieval technique. That one's been around for
Yaminah Sattarian (12:45):
Hundreds of years.
Chana Schoenberger (12:45):
It really, really is. I think like the MEE did that,
Yaminah Sattarian (12:49):
But it works not new. It still works in the modern day and companies still can use it, and we're seeing that with the larger transactions.
Chana Schoenberger (12:57):
Interesting. Okay. So one of the things that we spoke about on stage yesterday was this convergence between the technologies of consumer and business payments. So the idea, I guess, is that every business has executives who are people, and the people have these payments apps on their phones. And so the experience that they're expecting is much more what you would get from Uber or Starbucks than it is from a bank where you have to manually go down to the branch and have two people sign for everything. How is that sort of changing, or is it changing what you do in terms of expectations?
Yaminah Sattarian (13:32):
I mean, we still get that a lot, right? And I think the problem is corporates still have the concerns of moving into the true real-time payment technologies when it is from a corporate to consumer. We see that, right? I mean, we do that. We have partnerships where we do that, where our corporates are able to do real time payments and get them out to the consumers themselves, but for whatever reason, business to business, they're still hesitant, right? Hesitant to make it easy, convenient to pull those payments or having online portals that are simple. And I think it's more because what I see, at least within the corporate space is the fact that if I was a corporate entity and I had an easy portal for someone to be able to go in there and gather their payment, they don't want their team on the other end. The other team does not want to go in to go to the portal to be able to get their easy payments or input their detail or their data. Again, it's the fact that their data's sitting out there,
Chana Schoenberger (14:26):
So they prefer the friction as a way to slow the transaction.
Yaminah Sattarian (14:29):
Absolutely.
Chana Schoenberger (14:30):
Huh, that's so interesting. Because they all be better off if the money went instantly,
Yaminah Sattarian (14:35):
It would be so much better if it's instantly. But I think the reality is the staffing, having their teams have to go into a solution, input the details to drive those payments.
Chana Schoenberger (14:46):
Wow. Okay. So give me an example of something you've in the last year or so that was a really interesting payments project.
Yaminah Sattarian (14:55):
Let me think. I know right now, and I think it's up and coming, right? We've talked about virtual account management over the years, and I think a lot of times many financial institutions say we have a virtual account structure, but the reality is behind the scenes, there truly was still an account number for those individual accounts. Whereas now with virtual account management, it truly is what I would say, individual, one individual account, and they can have hundreds of other accounts on board that truly are virtual. They are just a tagged ID number. There's only one true account that has the physical bank running the transactions themselves. I think that's the biggest or most important project that we're seeing today because when you're working with hospital systems or even real estate entities, they need hundreds of accounts. We've got companies that have 90 to 150 accounts, and it's because they're like, well, we need to identify the property themselves and we need to know what's going in and out for that specific property. But it's truly just for their record keeping, and it's unnecessary to have all those accounts. And it's one way to prevent fraud, get rid of those accounts, have one main account, and use virtual accounts instead for the purposes of viewing
Chana Schoenberger (16:06):
Things. So when they go to say, do their taxes or do their books, they can actually see what was coming in and out of each entity, but it's all done at the corporate level.
Yaminah Sattarian (16:14):
That's correct.
Chana Schoenberger (16:15):
Oh,
Yaminah Sattarian (16:15):
That's fascinating. Very different than ZBA, right? I mean, ZBA now you're reconciling every single account.
Chana Schoenberger (16:21):
Okay, what is ZBA?
Yaminah Sattarian (16:22):
Sorry. So very different than when you have a zero balance account, because again, you want everything to flow into one main operating account, but all those other accounts still have transactions running through, which means you still have to reconcile all those accounts at the end of the month and the accounting and all of that stuff. You don't have to do that with virtual accounts. It's a whole different world.
Chana Schoenberger (16:40):
So what sort of companies would want that?
Yaminah Sattarian (16:42):
Oh, I'd say a lot for zero balance for virtual. Virtual, absolutely. Like I said, I mean, we're seeing a lot in the healthcare space, the real estate space, most definitely. Especially the larger real estate entities that have hundreds of accounts, hundreds of properties, it makes it a lot easier for them to operate.
Chana Schoenberger (17:00):
Okay, that's very cool. And what's next?
Yaminah Sattarian (17:05):
What's next? I mean, I still think the biggest thing that really most companies and in general, the focus is getting away from way to prevent fraud. And I think that going into virtual accounts, starting the automation process, ensuring that you're clearing all of that, and really internal controls too. I think that a lot of times people focus on the financial institutions, what can they do? But at the same time, what are you doing internally? And I think that when our team really spends time or the individuals that work for me and my team, we don't really just focus on banking solutions. And I think that that's where I appreciate the fact that we really work as consultants. We truly do. We're looking at the entire financial operation. We're spending time with their teams. We've spent days at organizations where we've observed our AP team, their AR team. I mean, we're seeing companies still using spreadsheets manually to document things. And through that advisory process, it's not to say that we have the solution in place for them, but we give them ideas and then we give them recommendations of who they can talk to to help implement these new processes to help them.
Chana Schoenberger (18:10):
I think I read somewhere that Excel is the number one accounting system in the world right now.
Yaminah Sattarian (18:14):
It's surreal. It's surreal that people still use it. I mean, when I walk into an office and I see that, or believe me, you'd be surprised, there's still companies that maintain receipts, copies of the checks that are sitting in files, file cabinets. I've seen
Chana Schoenberger (18:31):
Companies like actual manila folders,
Yaminah Sattarian (18:32):
Actual manila folders. I've seen a company that actually built an addition to their building and your entire warehouse to store them in. And I'm like, why? I'm like, if someone asked you for something, do you have a system where you know to go? He's like, well, we've sent people in there and we said, you got four hours to find it, and if you don't find it within four hours, we're done. I'm like, that is not a good system.
Chana Schoenberger (18:55):
Okay,
Yaminah Sattarian (18:56):
Not a good system.
Chana Schoenberger (18:57):
Yeah. Yeah. So I mean, other than just taking a scanner and scanning all those receipts to the cloud is,
Yaminah Sattarian (19:04):
I don't think it's necessary to maintain that. I think it becomes paranoia. I think from a bank's perspective, the bank maintains a lot of that information. If you're looking for, when you think about your lockbox or you're thinking about checks that are clearing, that's maintained from a bank perspective, we can retain that information for you electronically. It's you have access
Chana Schoenberger (19:21):
Have, right? You do it anyway. We have to
Yaminah Sattarian (19:22):
Do it anyway. So you're going to have access to it when you need it. You don't need to maintain it in storage.
Chana Schoenberger (19:28):
Wow, okay. Are there any other really antiquated practices that you see regularly?
Yaminah Sattarian (19:36):
No. Aside from people signing their own checks, and aside from people storing that paperwork, I think those are the bigger things that really catch my eye and the spreadsheets. I mean, we really need to move away from that.
Chana Schoenberger (19:49):
So on the other side, the more modern, the optimistic side, yes. Do you see companies doing things like APIs?
Yaminah Sattarian (19:55):
Yes. More and more and more companies. That's good. Are asking about APIs in some companies, to be honest with you, as they're upgrading into new ERPs, and we've talked about that, right? It takes a really, really long time to get them up and running. I found that some companies say that as we're implementing the new ERP system, we don't want to think about a new way of doing it. We still want to do the same file pass because they feel like it's already made, it's already created, and it's already tied to the bank, and we just don't want to try something new. We don't want to risk it delaying our change. So I still see a lot of that. So I mean, I still see people wanting to do transmissions, but we're hearing more and more about APIs
Chana Schoenberger (20:38):
And the international trade aspect. How does that work with payments? Are there more automated things you can do with that?
Yaminah Sattarian (20:46):
I think that with international trade, it's still stuck in the old ancient ways, and I think that it's more because of the risk of fraud. I think for years they've talked about electronifying, international trade letters of credit and being able to move that, but it has not, I mean, I think from still to this day, you're still sending the actual bill of ladings and the documents related to it, like actual paper being mailed between the banks.
Chana Schoenberger (21:12):
It was the Mayflower.
Yaminah Sattarian (21:13):
Yeah. I mean, they talked about trying to do it more like universal to try to get those things done electronic. There's no universal system in place now, from the corporate to the bank, now they can actually submit the documents to the bank electronically for us to review and ensure that it meets the requirements they all see. But those real documents are actually still being mailed directly to the foreign bank.
Chana Schoenberger (21:37):
Wow. How is that not a fraud risk if they're in the physical mail? Oh,
Yaminah Sattarian (21:41):
I think it's a fraud risk. I mean, if you ask me, but the ideal of electronic, I think the main concern is if you send it electronically, there's room for people to change the paperwork and they prefer the actual bill of lading that's stamped by the boats that are sending everything overseas. So yeah, we're still stuck in the agent days there.
Chana Schoenberger (22:00):
That's so funny. It's like the conversation. I had this conversation during the conference yesterday with someone. We were talking about self-driving cars and self-driving cars are a brilliant idea, except that sometimes they don't work, but human drivers frequently don't work. So if we could only replace all the humans with self-driving cars, we could completely eliminate all the problems.
Yaminah Sattarian (22:23):
There we go. It would be great. That is funny. I do know someone that uses a self-driving car and they amaze me. They're like, listen, I spend my morning going to work and I read the newspaper. I'm like, I can't do it. I'm not there yet. I'm not there yet. I like to be in
Chana Schoenberger (22:37):
Control. So all we need is self-driving payments.
Yaminah Sattarian (22:39):
There we go. Self-driving payments for everyone.
Chana Schoenberger (22:41):
So that's all the time we have. Thank you so much for coming down with me. Thank you. I appreciate the rest of the conference.
Yaminah Sattarian (22:46):
Thank you very much.