The process of collecting and managing cash as it flows from different company activities is key to ensuring the stability of a business. Prior to the wide scale adoption of digital transactions, cash management had been fraught with many complications for banks of all sizes, even for the pillars of the financial industry. Now that many companies and consumers find digital transactions to be the most convenient way of managing their finances, banks with legacy cash management systems find themselves seriously lagging behind.
The difference in level of technical maturity is proving to be a challenge for more traditional banks. More often than not, the outdated systems they currently have are incapable of implementing baseline processes consistently, thereby limiting scalability. At a time when corporate customers are experiencing dynamic growth, such a handicap can lead to a bank’s inability to address the cash management needs of their wide range of clients. Fortunately, it’s not too late to start implementing improvements on a bank’s cash management system. Through the use of corporate banking products from trusted solutions providers, even more traditional banks can revolutionize their cash management strategies by carrying out the following steps:
Using API to Enable Connected and Open Banking
Application Programming Interface or API refers to intermediary software that connects computers or programs and offers services to other software. Specifically, APIs allow applications to access information and interact with other applications or software components. In cash management, APIs play a key role in ensuring the information can move through different systems without issue and as quickly as possible.
Banks that have yet to fully implement digitalization programs within their business are likely using data structures that make use of different data formats. This can be a big issue when it comes to cash management, as the process requires efficient information sharing and quick transaction completion. Such tasks would be difficult to pull off if portions of the data management system require extensive manual processing and customization of non-standardized information formats.
APIs provide a fix for this particular issue by creating a level of standardization within a data structure that uses different technology environments and data formats. The data transferred from one program to another can be customized in such a way that the payload meets the requirements of the majority of users of a particular program. Once the data reaches a particular user, that user can simply pick the information they need and ignore the details they don’t. The payload or data can even carry real-time information from one program to another, thereby reducing the possibility of transmitting stale data and eliminating need for time- and resource-consuming point-to-point connections like scheduled data transfers. The solution brought about by using API will allow banks to access vast connected data and enjoy greater accuracy when forecasting the cash flow.
Focusing on Scalability and Operational Efficiency
The use of APIs is also key to improving the bank’s scalability and flexibility. It’s possible to seamlessly exchange standardized data in real time with APIs, and all parties within the cash management system are capable of accessing standardized information from a common data pool. The speed and efficiency by which the data standardization and exchange are carried out reduces the strain on the bank’s cash management system. Instantaneous data standardization also makes it possible to carry out baseline processes, despite the fact that the bank’s technological ecosystem still makes use of different technology environments. This, then, enables the cash management system to implement repeatable processes continuously and in real time, thereby improving the flexibility and scalability of the system.
Elevating Customer Experiences and Maintenance Services
Another area that banks can focus on when improving their corporate cash management is customer service. Onboarding corporate clients is a lengthy process. It can take months for the bank and the corporate client to share information, determine the most appropriate cash management structure for the engagement, and establish protocols for non-standardized processes. Once the client has been onboarded, they still have to contend with account maintenance throughout the relationship. All these activities take time and any delays in the process equates to lost business opportunities, which subsequently leaves a negative impression on the clients.
Providing self-service capabilities to corporate customers enables banks to facilitate positive customer experiences. Specifically, banks can choose to use cash management systems that provide their corporate clients every opportunity to forecast and manage receivables and collections all on their own. This saves both companies time and money. At the same time, having the freedom to check anytime whether their cash position is accurate will help the corporate client build their trust in the bank.
Late adopters of corporate cash management technology are finding it increasingly more difficult and more expensive to keep up with the tremendous speeds by which most corporate customers demand to carry out their business with their chosen banks. If they want to catch up and make it easier for their company to adopt future innovations, they need to pay close attention to the technological solutions that they have access to at the moment.