Wells Fargo (NYSE: WFC), which for the last half-decade or so seems to only generate negative headlines, announced an interesting new financial technology product this week. True to form, however, the fintech product release came on the heels of yet another negative headline laying out a $250M fine from the Office of the Comptroller of Currency for engaging in “unsafe or unsound practices” tied to its loan-modification program, and violated the terms of a 2018 consent order that was critical of its risk-management systems.
In what seems to be a focused, strategic push to better serve and grow its small-to-medium business (SMB) segment, Wells Fargo is rolling out a new accounts receivable (AR) technology named “Integrated Receivables”. Specifically, the software aims to facilitate easier payments and remittance capture, automate and enhance invoice re-association, and reduce accounts payable (AP) exceptions. Though the technology boasts machine learning AI and “robotic” automation, the technology isn’t, in of itself, groundbreaking. Other companies have been active in the market with similar offering for years now, including Deluxe’s (NYSE: DLX) payment re-association solution, HighRadius’ AI powered receivables and treasury management solution, and Checkalt’s streamlined payments convergence platform.
The Integrated Receivables technology isn’t proprietary to Wells Fargo either. The AR automation software was designed and created by DadeSystems, a Miami, Florida based company. Wells Fargo Strategic Capital invested in DadeSystems back in February 2020.
Given Wells Fargo’s position as one of the country’s largest commercial banks, the introduction of the Integrated Receivables product makes sound strategic sense. It dovetails nicely into wells Fargo’s payments solutions for SMBs: for some who may not know, Wells Fargo is one of the country’s largest sponsoring institutions for SMB retail merchant processing accounts. Thus, this newly expanded SMB suite of services will clearly position Wells Fargo as a legitimate player in the AR space, and a capable competitor to purloin market share from other, independent AR solution providers.
The new Integrated Receivables offering also bolsters the larger banking industry trend of legacy financial institutions having to adapt to the times with more automated, frictionless banking solutions on both the consumer and commercial sides of their business. It wasn’t too long ago (2018) that Wells rolled out automated, algorithmic underwriting for consumer loans – mortgages, car loans – by leveraging recently gone public Blend Labs’ technology. And though there seems to be no clear-cut “right way” for incumbent financial institutions to embrace automation and digitalization – build, buy, or partner – Wells Fargo’s announcement this week does cement the notion that they and their peers know it must be done one way or another.