Moderated by Emily Digital Transformation Consultant at Hyperbots
Emily: Hello everyone! Good morning, good evening, or good afternoon, depending on where you are. Today on the call, I’m very pleased to have John with me. John is a CEO at LivData LLC. And today we’ll be talking about emerging new class of payments like VCP or virtual card payments for vendors. But before we dive into it, John, would you like to introduce yourself and give us a little more background?
John: Sure, thank you, Emily, for having me again. So my background is in finance automation, which is a big part of what I do. I go in, do assessments for companies, and figure out how to meet their strategic goals and objectives through people, process, and technology.
Emily: Thank you so much, John, for that introduction. So let’s actually, you know, begin with the basics. Can you explain what the emerging new class of payments such as virtual card payments entail and how it differs from the traditional payment methods?
John: Yeah, so there’s a lot loaded into that question because there’s different reasons to use virtual card payments. It can be budgetary for a business, allowing them to control the expense for a specific purpose that ties to an account. You can set up a virtual card payment for a specific purpose. There are two types of virtual card payments: single-use, where the card can only be used once for a specific approved PO, and multi-use, which can be set up for a specific category like fuel or a merchant-specific category, controlling how and where the card is used.
Emily: Got it. And John, what are the key features and benefits of virtual card payments for vendors, and how does it impact financial operations?
John: Yeah, it can make things more complex because there are more payment methods, which can lead to more manual processes than having all your ACHs regularly scheduled. If you don’t have the right tools and systems for the FinTech part of the payments process, it can be challenging. However, there are benefits such as participating in interchanging rebates, limiting single-use for security, and proper approvals to prevent unauthorized use. These controls enhance cybersecurity and overall financial operations.
Emily: Got it, got it. So moving to adoption and implementation, how widespread is the adoption of VCP among vendors, and what factors influence their willingness to accept such payment methods?
John: Currently, adoption is growing, especially among larger organizations that want the rebates and controls. Some vendors are reluctant due to the complexities and additional labor required. As FinTech solutions improve, making the process easier and more secure, adoption will likely increase. Understanding the cost of processing different payment methods also influences the decision, as some companies might switch back to ACH or checks due to perceived cost savings.
Emily: Got it, got it. So John, can you share any experiences or challenges encountered during the implementation of virtual card payments or VCP within your organization or even among other vendors?
John: The biggest challenges are getting vendors used to single-use cards, as they might prefer electronic methods or ACHs. Ensuring the process is automated and integrated with portals can ease this transition. The key is to make the system as seamless and secure as possible, similar to how ACH schedules work.
Emily: Got it, got it. So then, we go a little deeper into benefits and challenges. What are the primary benefits that VCP offers to organizations in terms of cost savings, efficiency, and security?
John: The cost savings from cash back and tying expenses to budgeted items with proper approvals are significant. It enhances efficiency by ensuring transactions match and are categorized correctly. The biggest benefit is improved security, as single-use cards reduce fraud risks compared to traditional methods like checks or ACHs.
Emily: Got it, got it. Conversely, what challenges or drawbacks might organizations face when transitioning to VCP for vendor payments in particular?
John: Not all vendors accept credit cards, and there’s resistance due to the interchange costs and manual processes involved in taking new cards regularly. The transition can be labor-intensive and requires significant effort to educate and integrate vendors into the new system.
Emily: Got it, got it. How does VCP impact vendor relationships, and have you noticed any changes in vendor behavior or preferences since implementing VCP?
John: Some vendors push back due to interchange costs and manual processing requirements. They may prefer ACH or direct payments for ease. However, as automation and ease of use improve, these relationships can become more streamlined and mutually beneficial.
Emily: Speaking about security and compliance, how do VCP solutions ensure security and compliance with regulatory requirements, particularly in terms of data protection and fraud prevention?
John: VCP solutions offer enhanced fraud protection through single-use cards, reducing the risk of misuse. They also eliminate the need to store sensitive information like bank details, which can be a compliance risk. This makes VCP a more secure option overall.
Emily: Can you discuss the integrations of virtual card payment systems with existing financial systems and workflows and elaborate on how scalable these solutions are to accommodate growth and changes in payment volumes?
John: Integration capabilities are robust, with APIs allowing connections to various ERPs. When set up correctly, VCP systems are very scalable, benefiting large organizations with established portals and workflows. For smaller companies, the initial setup cost can be a barrier, but overall, scalability is high as technology advances.
Emily: From a future outlook standpoint, what do you foresee as the future of emerging payment methods like VCP, and are there any emerging trends or advancements that you believe will shape the landscape?
John: I believe the future will see a shift away from checks towards more secure and efficient methods like VCP. Emerging trends include the use of cryptocurrencies for global payments, which could further revolutionize the payment landscape. Enhanced fraud protection and ease of use will drive adoption.
Emily: Based on your experience and insights, do you have any additional advice or recommendations for finance professionals considering the adoption of emerging payment methods like VCP?
John: Be aware of the implications and understand the true costs of different payment methods. Stay informed about the tools and technologies that make these processes easier. Embrace innovation and don’t get frustrated with initial challenges. The benefits of security, efficiency, and cost savings will be substantial in the long run.
Emily: Thank you so much, John, for sharing your expertise on the topic of emerging payments. The discussion was truly fruitful, and it was great having you here.
John: Thank you.
Emily: All right, thank you, John.
Financial process automation is the use of artificial intelligence (AI) to perform various tasks that would otherwise require human intervention, such as data entry, invoice processing, reconciliation, reporting and more. By automating these tasks, businesses can save time, reduce errors, improve efficiency and enhance customer satisfaction.
However, automation also comes with its own set of challenges and risks, especially when it comes to security. The bots that execute the tasks on behalf of or assuming the role of a human user need to be carefully designed, monitored and controlled. A SaaS-based automation solution, must implement a zero-trust environment, where the bots are also treated just like human users, for the very reason that the bots assume the role of a human user for executing the tasks.
Zero-trust security is a principle that assumes that no entity, whether internal or external, is trustworthy by default. It requires verifying the identity and permissions of every user and device before granting access to any resource or data. It also requires monitoring and auditing all activities and transactions to detect and prevent any malicious or unauthorized behavior.
Zero-trust security is especially important for financial process automation, as it involves sensitive and confidential data that needs to be protected from cyber attacks, data breaches, fraud and compliance violations. By applying zero-trust security, the bots are provided with just enough permissions to perform their tasks, and that they are not compromised or misused by hackers or rogue employees.
Here are a few ways in which zero-trust security principles help secure the bots in financial process automation:
Using strong authentication and authorization mechanisms for the bots. The automation platform must verify the identity and permissions of the bots before allowing them to access any resource or data. The platform must identify a bot executing tasks for a customer organization from other bots executing tasks for different customer organizations. This is very critical in case of Multi-Tenant SaaS based models.
Implement least-privilege principle for your bots. This means that the bots are granted only the minimum level of access and permissions that they need to perform their tasks, and nothing more. This way, the bots are prevented from accessing data that is beyond the permissible boundaries and also limit the potential damage that a compromised or misused bot can cause.
Track and audit various activities of the bots. It is very critical to log and continuously monitor all the actions and transactions that the bots perform, such as what data they access, modify or delete, what systems they interact with, what errors or exceptions they encounter and so on. These logs need to be reviewed regularly using analytics tools to identify anomalies and suspicious patterns that may indicate a security breach or a compliance violation.
Organizations that look to optimize their financial processes through AI-driven SaaS automation solutions should evaluate the solutions paying special attention to the security aspects governing bots, and on how their organization’s data and critical digital assets are secured using security principles such as zero-trust.
In the rapidly advancing landscape of finance, the integration of Artificial Intelligence (AI) has ushered in unprecedented efficiencies and insights. As Chief Financial Officers (CFOs), your role not only involves steering financial strategy but also safeguarding the invaluable asset that is financial data. In the age of AI, where data is both currency and vulnerability, understanding and implementing robust security measures is paramount. This blog serves as an outline to fortifying financial data against the evolving challenges of the AI era.
The marriage of finance and AI has brought about transformative changes, streamlining processes, and enhancing decision-making capabilities. However, the reliance on AI also necessitates a comprehensive approach to data security ensuring privacy of the accounting and financial assets of an enterprise. Here are key strategies for CFOs and their teams to safeguard financial data in the age of AI:
One cannot overemphasize the importance of encryption in securing financial data. Implementing end-to-end encryption ensures that sensitive information remains indecipherable both in transit and at rest. Explore advanced encryption methods, such as homomorphic encryption, to enable secure processing without compromising data confidentiality. This directly maps to the regulatory compliances available to vet and test software and SaaS-based offerings in this space.
Robust access controls are pivotal in preventing unauthorized access to financial data. Utilize Role-Based Access Control (RBAC) to align data access privileges with job roles. This not only minimizes the risk of internal threats but also ensures that employees access only the data essential for their responsibilities.
Embrace AI-driven continuous monitoring to detect anomalies in real-time. Behavioral analytics, powered by AI algorithms, establish normal user patterns and promptly flag any deviations. Early detection is key to mitigating potential security threats before they escalate. Prefer tools that provide dashboards, alerts, and logging mechanisms to allow deep observability of the functionalities.
In an era where AI models often operate as black boxes, prioritize solutions and products that offer explainability and transparency towards product capabilities as well as a clear reason and interpretability of any processed output that may be visible. Understanding how AI algorithms reach decisions fosters trust, and accountability, and aligns with regulatory requirements. Ensure that the financial insights derived from AI are not only accurate but also comprehensible.
Tokenization-based approaches emerge as a powerful strategy when sharing financial data externally. By replacing sensitive information with tokens, even if intercepted, the data remains meaningless without the corresponding tokenization key. These strategies include Masking and Anonymization tools, Redaction policies and only sharing the data post-removal of this information. Additionally, deploy secure APIs for data exchange, ensuring the integrity and confidentiality of financial information.
Invest in comprehensive cybersecurity training programs for your finance team. Educate them on AI-specific cybersecurity risks and instill a culture of awareness. A well-informed team is your first line of defense against evolving cyber threats.
Develop and regularly update an incident response plan tailored to AI-related security incidents. Ensure that your team is equipped with clear procedures for identifying, containing, eradicating, recovering, and learning from security events. Preparedness is your best defense against unforeseen challenges.
As CFOs navigating the dynamic landscape of finance, embracing the power of AI comes with a concurrent responsibility to safeguard the integrity and confidentiality of financial data. By implementing robust encryption, enforcing stringent access controls, leveraging AI for continuous monitoring, and fostering a culture of cybersecurity awareness, you are not only fortifying your organization against evolving threats but also positioning it at the forefront of the AI-driven future.
At Hyprbots, we understand the paramount importance of data security in the financial realm. Our cutting-edge solutions not only harness the power of AI for financial optimization but also prioritize the highest standards of data protection. Together, letÂ’s navigate the future with confidence, ensuring that the transformative potential of AI in finance is realized securely and responsibly.
Securing Finance Data blog Series: This blog is an introductory piece towards blogs around finance data security. We will publish a weekly blog detailing various technical as well as user aspects on this topic.
