By Uday Choudhari, Senior Director, Technology – Synechron
The global economy is headed for a radical change, as the evolution of payment services surpasses the old school ecosystem with a newer, instantaneous online model. Encouraged by business requirements and the need for a better customer experience, real-time cash management is a game-changer in the financial services sector. The impact of the prolonged pandemic on the global supply chain has been a catalyst for the rise of more flexible payment options. Real-time cash management has thus become the need of the hour that allows corporations to maintain the necessary liquidity on an adaptive basis.
Real-time liquidity management works best for the new transaction trends that include faster payments, clearing and settlement, increased use of APIs, and open banking. Its impact is clearly outlined by Citibank data, showing an estimated 1.8 million instant payment transactions are being processed daily, and its related schemes now live in 27 countries, including all major markets.
How Real-time cash management is changing the game
Real-time cash management is pivotal for the current PayTech industry expansion. The digitalization of cash management minimizes human error and is an effective way to retain customers, ensure their satisfaction & loyalty, and also amplify the customer base by providing maximum support. The time-consuming infrastructural process of audit and update, the burden of hiring and training employees, and having ongoing obligations and formalities of the employers are a stale-tale now. In contrast, the commercial culture immersed through digital payments and mobile banking adds new levels of speed and efficiency.
Digitalization of cash management has proven to be very cost-effective in this regard; in addition, remote monitoring and 24×7 superior service, makes digital cash management services stand unparalleled to speed up any transaction globally. The new age cash management is empowered with analytics and monitoring capacities to check for discrepancies, fraud, and illegal activities to add more transparency and accuracy. It keeps a check on the behavioral activity, detects any suspicious deviation and can track those anomalies immediately.
Real-time cash management enables CFOs and financial institutions to work together to simplify cash flow operations for businesses and offer access to a wider range of financial services. The intra-day liquidity makes businesses more competitive and gives them greater control over their finances. It supersedes EOD batch processing, especially in cases of international corporations, and keeps them appraised of financial impact in real-time. This not only makes operations easier but improves the overall health of the economy by offering a more agile financial system in a time of economic uncertainty.
There are multiple dominant factors while creating platforms for real-time liquidity or cash management. Though the pandemic acted as a catalyst, the stark growth of real-time cash management was evident due to various factors, such as:
● Growing customer and merchant expectations
● Globalization
● Technology innovation
● Regularization
● Excellent technology support platforms, etc.
Banks and other financial services organizations are now opting for using B2B application programming interfaces (APIs) across business units and enterprises. The financial service-providing companies are helping banks and other financial services institutions to avail new expertise and related support across the payments landscape and solve evolving business challenges through cutting-edge technology.
Global transaction banking can unlock new customer segments by providing downstream banking services to customers of cloud ERP providers and fintech service providers. The Mckinsey report suggests an Asian bank was successful in onboarding new SME customers by partnering with a cloud CRM solution provider to offer back-end banking services for vendor payments and customer refunds.
Smart functionality and high utility have led digital cash management solutions to support increased liquidity and cash management. Thus, it is essential to choose the right service provider that caters to the institutions’ standards and its business needs to support them remain relevant and up to date.
A leading digital transformation consulting firm very recently launched the PayTech Accelerator program. The accelerator solutions of the program are designed for the financial services industry to help businesses compete in the rapidly evolving global payments ecosystem. Its Liquify Treasurers Portal enables multi-banked and multi-national corporate bank clients to better manage inflows/outflows, buffers, and currencies across their operating units, and the Payments Data Platform is supporting real-time cash forecasting capabilities to corporate clients incorporating the best practices in cloud data engineering and data management techniques. The Black Swan Fraud Prevention, on the other hand, is their real-time omnichannel, and Omni-bank monitoring of threats, based on financial and non-finance transactions and events within the bank. It supports with suggestions for the next best actions and enablement of immediate Kill Switches for international standard safety. Such specific portals and tools are being very supportive in creating a flawless real-time cash management process to help multiply business growth.
Different businesses are at different stages in their journey towards real-time liquidity management. While leading banks and digital players have progressed quite far with their upgraded technologies, some institutions continue to operate with their traditional methods, while others are rapidly remodeling their technology to be a part of this change. At the end of the day, payments are at the core of all businesses, and it is only with continuous progress that businesses will stay relevant in the market.