IBS Journal February 2018
31
models. However, Transaction banking platforms can still be useful to give corporate treasurers valuable MIS and decision support.
Adopting Transaction banking capabilities
The commercial potential of Transaction banking has made it imperative for banks to adopt transaction banking systems and integrate them into their IT portfolio. In the last few years, liquidity management, payments and supply chain financing are experiencing rapid technology innovation. Unlike mainstream lending products, Transaction banking services are high-volume, so it is critical to leverage technology and automation to achieve efficiency of operations. Banks that have not yet invested in transaction banking platforms tend to experience the following challenges: • Liquidity management: Lack of capabilities for netting, pooling and sweeping.
• Collections & receivables: Digital channel unavailable for managing receivables.
• Trade finance: No self-service capabilities for customers. •Payments: Menu-based legacy interface for payments. • Supply chain finance: No technology front-end and product predecessor platforms.
• Treasury services: Preference of phones and emails over online portals.
In the last few years, technology vendors have realised the potential for transaction banking and have developed innovative products targeted at this line of business. Supported by these platforms, transaction banking services are rapidly becoming automated and are witnessing the higher adoption of self-service models.
Developing tZransaction banking systems
Technology vendors offer distinct products for each component of the blueprint, which makes it convenient for banks to prioritise the roll-out of Transaction banking capabilities. However, well- established banks with legacy Core Banking platforms experience difficulties in implementing Transaction banking capabilities. Typically such banks already have legacy system capabilities addressing these requirements (such as liquidity management and payments), and hence their challenge is to implement the new platforms and weave them seamlessly into the legacy portfolio. The CIO of a bank typically has the following options for a transaction banking blueprint:
• Option 1: Extend their current e-banking solution Most banks already have robust e-banking capabilities for their retail business. They could extend the same capabilities to
Transaction banking. This will ensure continuity of user experience and optimisation of investments for front-end channels. However, technology vendors who are good at e-banking solutions need not be good at offering the back-end capabilities required for supply chain, trade finance and payments. Hence the capabilities of the technology vendor for current e-banking will need to be carefully evaluated before deciding on this option.
• Option 2: Extend the Core Banking platform In order to have a good back-end platform, one of the available options is to adopt transaction banking modules from the current core banking technology vendor. However, not all core banking vendors provide transaction banking solutions. There may be a need to significantly customise the core banking platform to fill critical gaps. This approach is not advisable for a fast-evolving domain since it will result in significant overheads for managing the customisations and catching up with latest innovations.
• Option 3: Implement a separate end-to-end transaction banking solution Specialised transaction banking solutions are now available, though they may not have equally strong capabilities across the six domains of transaction banking. To select the right platform, banks will need to design a clear strategy for transaction banking and prioritise the modules that they would like to roll out in a phased approach. Also, banks will need to carefully evaluate their ability to integrate the transaction banking systems within their portfolio. An information management architecture will also need to be designed for sharing of customer master data between core systems and the Transaction banking platform.
In conclusion, deployment of transaction banking capabilities will need to be determined by a collaborative approach between business and technology teams of the bank. A good understanding of the vendor’s capabilities and their roadmap for transaction banking are essential for ensuring the successful roll-out of transaction banking systems.
www.ibsintelligence.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
