Transaction Banking - The Suite Life:  

Since the financial crisis bank management has given high priority, attention and investment to fee generation businesses and fee generation business that are risk manageable. This has given Transaction Banking (Cash, Trade, FX and Payments) the opportunity to move into the top suite of the banking hotel. There are three views that I would like to consider here the corporate, bank and vendor.

Too often banks are only aware of what the top 10-15% of their clients servicing needs are. While the vendor rarely works to understand what the corporations need, as they are selling to, paid by and their customers are - the banks. This view of building financial software to directly fill the corporate needs, will be software that the banks will buy is rare in the vendor mentality. Vendor's build what the banks will pay them in advance for to minimize the investment and risk involved with producing software. What the market ends up with when using this limited and self-serving approach is financial software that is mainly designed for the banks top 10-15% of clients. The vendor view of the bank as our only customer, must change to understand and acting within reality, that the corporations are everyone's clients and their care is the business. How innovative that would be - build what the corporations actually need based on what benefits their business.

The Transaction Banking Suite

The key view is the corporate view. This is what drives or should drive what the banks and software vendors need to do. Corporations today are far more sophisticated and understanding of their financial needs and positions since the financial crisis and maybe even more trusting of their own approaches then what their bankers tell them. They must have a single access and initiation point for their entire business with a real time view. On-line cloud technology solves the how in this equation, but the what is more of the point. The corporate what is real-time availability of a converged Cash, Trade, FX and Payments on their schedule. The bigger issue is what I will call the multi-bank issue. Corporations must see a consolidated view of all of their information from all of the banks they work with. It is a clear pain point for the corporations to constantly have to accumulate multiple data views from each different bank system in order to view their business portfolio. Innovation is needed to converge these products and present their data in a way that improves the decision making processes for corporate CEO's and CFO's.

The bank view has traditionally focused on their best clients and it is more difficult for banks to address their client balance. There are many good reasons for this, from on-boarding, to compliance (KYC) to the practical consideration of revenue generated. These have been the guide around where the bank invests its efforts and resources. It is difficult for the bank to have clarity on the solutions they need to provide in a broad based approach. Banks have used their offerings to garner and retain clients mainly by locking them into a bank provided platform. This can not continue and the reluctance of banks to give up this thinking is out-dated and potentially self-destructive. Technology based on a cloud computing approach is available today to be the foundation for a Transaction Banking Suite, providing instant access to Cash, Trade, FX and Payments. This gives corporations the access to the different banks that they choose to do business with. This then empowers a corporation to initiate all their transactional needs while giving them the data consolidation from multiple banking partners that they must have at their finger tips.

Innovation is the key for financial software vendors to enable what corporations need and banks want very badly to provide. There are a number of software vendors today that have many of the products needed for such a Transaction Banking Suite. Each may have some gap; like Cash, Trade and payments but no FX as an example. Most are already capable of providing the delivery element which is via the cloud for a consolidated solution comprised of both front-end and back-end Cash, Trade, FX and Payments products. For some the issue is the lack of investment appetite which they justify by saying "business is good selling my individual point-to-point products." Others it is the unwieldiness of their own organizations which are made of product storage towers and those product tower owners are compensated by each products performance usually directly opposite to what a vendors solution selling approach must be. Decisions are made based on the individuals advantage, as humans typically do, and not to the organizations overall benefit or to the go forward strategy.

Transaction Banking Suite - to be realized is made up of vendors selling product converged cloud access solutions. Banks buying these solutions to meet their clients needs today. Saying to the corporations this is the solution we are sure you need. To live the "Suite Life", vendors must invested time with corporations to clearly know what to build and they will then have solutions that banks will buy.