And while finance solution providers might be well aware of this tech-based playing field, there are some key elements that financial institutions need to put forward in their strategy to achieve differentiation in transaction banking.
1. Prioritization
Personalization of services inadvertently extends to a need to prioritize the buyer accounts as per their perceived value for the banks. The only way to make it possible for banks to prioritize their buyers is through accurate data reporting of their current and past buying behavior.
Transaction banking stands on three building blocks of managing working capital – inventory management, accounts receivable and payable, and cash management and also the ease of financing their working capital needs (short term financing). The volume, frequency, and value of which directly impacts how banks prioritize said buyer accounts. And for fintechs, it becomes paramount to provide a crisp reporting structure to enable financial institutions make this decision.
2. Personalization
The idea behind lean practices is at par today with technology – seeing, handling, working with only the necessary has become a need for large organizations. Allowing banks to serve their customers with a more long-term relationship strategy rather than a one-time sales communication is the need of the hour.
For fintech service providers, this becomes the premise of their operating models. The capability of modularity in structure and high tech-innovation along with a robust architecture to steer customization requirements is paramount.
3. Revenue scaling
The running concern with choosing a legacy system to oversee the data of any banking system is the rigidity of the system. The rapid growth in existing banking structures and the frequent introduction of new ones, puts intense pressure on established banks to not just stay relevant but to stay competitive as well. Market competition in terms of functionality, services, technology, and operation has grown immensely in recent times and is only expected to grow bigger.
For banks to evaluate a tech partner, it is important to keep long term planning and expansion at the forefront of their strategy. Also, the tech partner requires to be an integral part of the bank’s business strategy such that solution & technology can be leveraged to meet their critical and growing (prioritized) business needs.
4. Cost reduction by digitization
Cost reduction from an operations perspective can be fundamentally hooked with the role of digitization in the organization. Increasing efficiency and effectiveness along with manpower optimization can lead to shrinking bottom line. And one of the factors which contributes to this case is reduced maintenance cost through single solution.
With the increasing number of digital transactions, the threat of cyberattacks and fraud attempts continues to grow and it becomes critical to combat this. Digitization should consider this fact also. Volume handling is another core factor which should be considered while digitizing.
Digital maturity which banks are leaning towards can be measured by its ability to create sustainable value through digital. Fintechs should be an enabler here.
The all-encompassing need of the hour
Innovation and digital transformation are the keywords influencing the banking industry today and while selecting a tech partner, agility to achieve a new scale of needs is necessary. So, whenever a technology partner is selected to digitize transaction banking for financial institutions, it is imperative to prioritize above-stated initiatives to meet their goals.
FinnAxia™ by Nucleus Software
FinnAxia™ by Nucleus Software presents an all-inclusive global transaction banking platform/suite that enables banks to dismantle conventional product barriers, introduce customized products/services across various channels, and attain unparalleled operational efficiency. This integrated suite, FinnAxia™ , redefines global transaction banking, swiftly catering to the liquidity management requirements of corporate clients. It delivers holistic solutions, encompassing Receivables, Payments, Liquidity Management, and Financial Supply Chain Management, all contributing to elevated customer contentment. This solution empowers financial institutions to establish and uphold a dominant market presence by flexibly, promptly, and effectively executing transaction banking processes.
Lending
Transaction Banking
Financial Inclusion
