Transaction banking needs bringing into the 21st century. By starting with core banking platforms, banks can rethink how they operate for good, building closer ties with their clients.
This blog outlines five key trends:
1. Batch is a burden
Consumers expect to check their bank account balances in real time; corporate treasurers want the same for their corporate accounts. Waiting until the end of the day to accurately calculate their cash positions doesn't work in today's fast-paced world.
More than eight of 10 corporate treasurers say that cash visibility is their biggest challenge, while just over half of CFOs highlight cash and liquidity management as a top challenge. However, this doesn't need to be the case, as cloud native core platforms
make real-time corporate banking a reality.
"Banks should not be trying to solve the problem of upgrading their core—they should be fundamentally implementing the bank operating system of the future," Antony Jenkins – 10x CEO and Founder.
2. Real-time analytics are really important
Generating insights from data in real time is essential to provide the level of service corporates need and expect today. Moving from end-of-day batch processes to real-time analysis leads corporates to more informed decisions.
Unfortunately, stacking new tech on legacy systems won't unlock this benefit. Instead, banks need to overhaul their core banking platform so that the data is generated faster at source.
Not only does this create a new world of visibility, but it also allows banks to be more proactive with their clients, offering relevant products and services at the point of need.
"You can now see in real time that customers are taking balances away from you for liquidity management purposes, or because they can get a better FX rate somewhere else, which will enable you to make an intervention quite quickly," adds Antony.
3. Better cash management is crucial
Cash management is central to the treasury function, but traditional banking products are slow and inefficient.
End-of-day reconciliation means corporate treasurers generally have an incomplete view of their cash positions throughout the day, making it harder to forecast accurate cash flow. The problem gets exacerbated for big, global organizations with multiple entities
across different geographies.
"The ability to make real-time decisioning and execute transactions at high speed, and very low cost, is very important, and that's why this access to data becomes so important," says Antony. By using real-time data and analytics, corporate treasurers can
see the status of their accounts instantly, enabling organizations to maximize their cash positions on an intraday basis.
For example, corporate treasurers can transfer funds between accounts faster to cover short-term cash requirements, automatically deposit idle balances into money market funds, or use overdrafts more cost-effectively.
4. New data standards are coming
The arrival of the ISO20022 global payments standard will make payments faster and provide richer data for each transaction, which corporate banks can use to generate deeper client insights. Yet corporate banks risk missing out on the benefits of that richer
data if they try to integrate ISO20022 standards into their legacy systems.
Doing so means the data won't be accessible in real-time. As a result, insights could be out of date by the time a client receives them. By adopting a core banking system, which has ISO20022 built into its payment rails, banks can future-proof their payment
capabilities while benefiting from the new standard's functionality, such as automatic payments reconciliation.
"ISO20022 will, ultimately, simplify the entire landscape as all variations of legacy schema and formats will converge on a single, globally agreed standard," – David Shinkins, Global Head of Cash Management Sales at Barclays Corporate Bank.
5. Virtual accounts make the difference
Transforming corporate banking means entirely rethinking accounts. With a digital-native core platform, banks can offer virtual accounts that allow treasurers to manage multiple segregated accounts in one place. Virtual accounts get created instantly, massively
speeding up the account onboarding process. Treasurers can then partition funds across accounts for different business units or projects while maintaining a single view—all in real time.
"Virtual accounts provide clients with greater visibility and control of their account structures, giving them the ability to open and close accounts themselves in real time," adds David.
Account creation should be fast and entirely self-service, with virtual accounts built into the cloud-native core.