Blog article
See all stories »

Transitions and Transaction Banking

Transitions and Transaction Banking

Transaction Banking is a suite of uniformed products that comprise the key corporate needs for working capital optimization. That suite of products is made up of a designed for corporate solution that integrates Cash, Trade, FX and Payments.  

Transaction banking convergence is a challenge as the industry struggles with legacy applications, limited resources, internal cooperation difficulties and of course, funding. The corporate CFOs are challenged with a never ending quest of optimizing their capital and are focused on positive financial impacts. They are driving banks to provide a transaction banking suite which provide greater benefit. The current approach of separate silos inside the bank no longer works, and vendors have been part of the problem not the remedy.

Can banks and vendors deliver on the promise or do they stay true to their distinctive silo differences? How can banks and vendors provide a seamless financial solution that deliver’s corporate benefits and profits? It will take a cooperative realization to make the shifts in approach that is needed to reap rewards for all. For bankers, their transactional base and experience needs to be combined with a corporates’ CFO working capital thought process for optimizing the overall corporate portfolio. Corporations need to go from being able to just initiate a transaction to an end-to-end real-time view all in a single place.

The work starts with a single access point for the corporate to view, track, initiate and complete the transaction at hand – a secure portal with a working capital dashboard designed to deliver a user-friendly experience that will make a total corporate view easy. This supplies the “show,” and now to the “go”. The following points explain how working capital integration can give corporations needed benefits.

  • Initiate transactions and have them feed real-time information to cash management for position forecasting, FX contracts placement, investment decisions and accounts receivables and accounts payables management. A view that allows a CFO to mitigate risks for the corporation both domestically and internationally.
  • Combine cash, trade, FX and payment information in both standard reports and user built reports. This needs to be real-time in order for the corporation to always have visibility of their current portfolio position for cash flow forecasting.
  • Provide an Omni-channel approach that enables the many forms of communication available today. This will range from a traditional on-line presence to NFC, EDI, Twitter to RFID and mobile for smart phones, tablets and wearable devices.
  • Provide EBPP (Electronic Bill Presentment & Payment) and E-Invoicing capabilities that can be based on either buyer or seller information. Include Purchase Order processing that automates matching of PO to Invoice as well as additional documents.
  • Automate settlement information to carry the PO-Invoice matches within the sellers’ payment and the buyers’ payment confirmation. This will relieve the corporations of the odious work of reconciliation and may be a fee generator.
  • Connect with the banks FX system or interface to an FX provider of real-time rate information visibility. Automate the pushing of FX contract information into the single portal view.
  • Banks need to extend features such as cash concentration, netting, account sweeps and pooling for liquidity management to their customers which enables corporations to better manage their capital.
  • Banks need the ability to offer financing to either buyer or seller in the form of pre-shipment, work in process, transit, warehousing or post-shipment financing along with distributor financing that follows the continuous transaction life cycle.
  • Demand Matching Payments for the most effective route of capital usage by identifying the optimal timing of settlement. The ability to monitor and measure the cash flow against supplier discounts and the earning potential of company funds. Payments should be matched against potential discounts and financing based on term, discount amount, currency or vendor. This can be initiated manually or in an automated method for centralized payment processing. Bill payments can be initiated based on user presented bill details that can cross multiple payment types with the ability to recognize the most efficient type and routing.
  • Enable a single on-boarding capability with actions on the corporate side with automated compliance screening and diligences that is pro-active to relieve the repetitive effort.
  • This solution must be flexible and modular in order to deliver business personalization for the multiple business models of the banks clients – large, medium and small.
  • A cloud or SaaS deployment to speed time to market, lower costs and all clients to be on the same most current version of functionality and stay up on ever changing regulation to prevent maintenance lag.

The call is for vendors to step up to the challenge that the corporations have put to the banks in order to deliver a corporate transaction banking solution. The delivery of a full range of bank products to the small to medium size enterprises (SME) is a difficulty that needs to be overcome. Banks need to find effective ways of servicing the SME companies that their large clients depend on to provide and consume their goods and services as part of the supply chain. For the large corporations the challenge is to have multi-bank access to enable a consolidated single view of every bank that is part of their corporate relationship.

For vendors it is quite simple; build what corporates need and you will have solutions that banks will buy. Whilst that is easy to say, vendors mostly wear blinders telling themselves that banks are their customers and the bankers will tell us what they think corporates want rather than listening to what the corporates actually need. The majorities of vendors do this and end up with products that their banks top costumers want because those are the clients the banks will pay for vendor development rather than a product that meets the broader market. Vendors choose not to INNOVATE and this way avoids the cost and risk of developing market advances. Every vendor wants to say they are leaders as long as there is no cost to being leaders. Very few vendors will say to the market this is how we will advance the industry and this is how you, Mr. Bank will do things because this is what the market needs functionally and technically.

The challenge for banks is to realign their transaction banking business model from siloed to a unified corporate offering that can lower costs. Using real-time automation and through monetizing the informational gold client data that the bank leads to increasing revenue potential.



Comments: (1)

Patricia Hines
Patricia Hines - Celent - Charlotte 24 March, 2014, 13:47Be the first to give this comment the thumbs up 0 likes

Chris - The industry has been talking about this convergence for a long time and I like your insight on why it hasn't yet been widely adopted; a focus on the end customer. Doh! There is also a reluctance on the LoB and IT silos to work together at financial services firms or "Quelle horreur", use the knowledgeable and skilled resources of a third-party firm to put the pieces together.  

Chris Principe

Chris Principe


APB, Inc.

Member since

15 Nov 2008



Blog posts




More from Chris

Blog post

Everything Effects Everything

Blog post

Dream On, Bitcoin

Blog post
Cryptocurrency Insights

CBDCs – But WHY?

This post is from a series of posts in the group:

Transaction Banking

A community for discussing technology trends, views and perspective in global transaction banking

See all

Now hiring