CORE BANKING
Article | July 20, 2022
Digital bank accounts, offered by online-savvy institutions, provide security and scalability in transactions. These seamlessly integrate with tools such as accounting software and payment gateways.
Contents
1. Introduction
2. Positive Aspects of Digital Bank Accounts
3. Streamlining Financial Management with Digital Bank Accounts
4. Implementing Digital Bank Accounts in a Financial Management System
5. Best Practices in Using Digital Bank Accounts
6. Final Thoughts
1. Introduction
Digital bank accounts are primarily designed for businesses and are offered by financial institutions with a strong focus on online and digital banking services. These accounts provide improved security features, flexible transaction volumes, as well as low costs, and can be easily integrated with other business tools, such as accounting software and payment gateways.
“By partnering with fintech startups, banks will give their account holders the right measure of security and speed. Account holders can know that their money is safe, and they can enjoy the latest financial technology. This is the way to become a digital bank.”
(Source: Chris Skinner)
2. Positive Aspects of Digital Bank Accounts
Digital business bank accounts provide a range of benefits for businesses, including improvements in financial management processes, time and cost savings, and increased security. Key advantages of these accounts include:
Accessibility: Businesses can access and manage their digital business bank accounts from any location and at any time without physically visiting a bank branch, enabling them to carry out transactions with greater flexibility and efficiency.
Streamlined Financial Management: These allow businesses to manage their finances more efficiently by providing access to the best online banking accounts such as real-time transaction monitoring and account reconciliation.
Cost-effective: Some digital savings accounts offer low transaction fees or even fee-free transactions, making them an attractive option for businesses looking to save on costs. It's mostly beneficial for businesses with high transaction volumes, as they can significantly reduce their expenses.
Enhanced Security: Digital bank accounts come with advanced security features such as two-factor authentication and real-time monitoring of transactions, providing businesses with increased protection against fraud and cyber threats. This feature can help companies to avoid financial losses due to fraudulent activities.
Integration with Other Business Tools: Digital bank accounts can be easily integrated with other business tools, such as accounting software and payment gateways. This feature allows for seamless financial management and automation, improving the efficiency and accuracy of financial operations.
3. Streamlining Financial Management with Digital Bank Accounts
With digital bank accounts, businesses can easily integrate their banking activities with their accounting software, making it easier to manage financial data, reduce errors, and make informed financial decisions. Faster payment processing and real-time financial data also enable businesses to improve their cash flow management.
Digital Accounting Systems: Businesses can easily integrate their bank account transactions with their accounting software, automatically recording financial data, saving time, and reducing errors.
Expedited Payments: Digital bank accounts can facilitate faster payments through features such as real-time transfers, which can be particularly beneficial for businesses that need to pay suppliers or receive payments from customers quickly.
Automated Invoicing and Collections: Many digital bank accounts offer online invoicing and payment processing, allowing businesses to create and send invoices to customers electronically and receive payments directly into their bank accounts.
Financial Visibility: Digital bank accounts often give businesses real-time access to their financial data, including account balances, transaction histories, and spending trends. It can help companies make more informed financial decisions.
Cost-cutting: Digital bank accounts are often less expensive than traditional ones, with lower fees and fewer account requirements. This can be helpful for small and medium-sized businesses that have a limited amount of money to spend on banking services.
4. Implementing Digital Bank Accounts in a Financial Management System
Digital bank accounts facilitate easy transfer of funds between accounts and enable payments to suppliers and vendors, resulting in streamlined cash flow management. They also minimize the risk of fraud and errors since transactions are automatically recorded and monitored by the bank and accounting software, reducing the need for manual data entry and decreasing the chance of errors.
These help manage cash flow by providing real-time information about incoming and outgoing funds, enabling businesses to make informed decisions about payments and investments. These also allow the transfer of funds between accounts, useful during times of low cash reserves or unexpected expenses. Digital bank accounts enable the establishment of automatic payment schedules to ensure timely bill payments, avoid late fees, and maintain a positive cash flow while avoiding business disruptions.
Companies can implement digital bank accounts by choosing a reputable digital bank, integrating it with their accounting software or enterprise resource planning (ERP) system, and establishing internal controls and security measures to protect financial data. Proper implementation and management of digital bank accounts can give businesses a competitive advantage in today's fast-paced and digital business environment.
5. Best Practices in Using Digital Bank Accounts
When it comes to using digital bank accounts for B2B transactions, there are a few additional best practices to consider in order to run businesses more efficiently:
Use a Dedicated Account: While using digital bank accounts for B2B transactions, it's a good idea to use a dedicated digital savings account separate from other business accounts. This can help keep track of transactions and simplify accounting and tax reporting.
Automate Payments: Many digital banks offer automation tools that can help schedule recurring payments and streamline payment processes. It can help reduce errors and save time.
Set Transaction Limits: To reduce the risk of fraud or unauthorized transactions, set transaction limits on the digital bank account, thereby limiting the amount of money that can be transferred without authorization.
Use Invoicing Tools: Some digital banks offer invoicing tools to help create and send invoices to clients or vendors. This can help in managing accounts payable and accounts receivable more efficiently.
Monitor Cash Flow: Regularly monitoring cash flow can identify potential cash flow issues before they become a problem. Many digital banks offer cash flow management tools to help monitor cash flow in real time.
Use Multiple Accounts: Depending on the size of the business and the volume of transactions, using various digital bank accounts can be considered to manage different aspects of the business, thus, segregating funds and simplifying accounting and reporting.
6. Final Thoughts
Digital bank accounts have emerged as a powerful tool for businesses seeking to streamline financial management. Looking ahead, the future of digital bank accounts is bright. As technology advances and the adoption of digital banking services increases, digital bank accounts will become even more efficient and user-friendly. Furthermore, integrating other financial tools and services into digital banking platforms will offer more streamlined financial management solutions.
By selecting a reliable digital bank, ensuring account security, keeping track of transactions, utilizing budgeting resources, and comprehending applicable fees and charges, businesses can reap the advantages of the best online banking for small businesses. The best digital business bank accounts are poised to become even more essential tools for businesses looking to optimize their financial management and achieve greater success.
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CORE BANKING
Article | July 14, 2022
Multichannel payment processing is vital for increasing efficiency & profitability. Merchants can accept payments from all channels with single account, eliminating need for multiple merchant IDs.
Contents
1. Introduction
2. Maximizing Revenue: Cross-Selling and Upselling Strategies
3. Optimizing B2B Operations: Multichannel Banking and Cash Management Solutions
3.1 Digitizing Cash Management in Multichannel Banking: Key Imperatives
4. Leveraging Data Analytics for Multichannel Banking Optimization
5. Striking Balance between Convenience and Security
6. Multichannel Banking Evolution: Trends and Insights
7. Future Scope
1. Introduction
Integrating multichannel banking solutions for a seamless customer experience remains a challenge in today’s digital era as financial institutions and banks are expected to provide services through ATMs, online banking, mobile, and in-branch.
To boost efficiency and profitability, adopting multichannel payment processing is crucial. Technology enables merchants to process payments from all channels using a single account, thus, eliminating the need for multiple merchant IDs. Consolidating online sales into one location streamlines business processes, reduces card network fees, and leads to significant cost savings.
2. Maximizing Revenue: Cross-selling and Upselling Strategies
Banks and financial institutions can effectively promote their multiple products and services to customers based on their needs, behavior, or demographics. Cross-selling and upselling techniques can encourage customers to hold multiple products, which can lead to business growth, new client acquisition, and increased customer lifetime value. Cross-selling involves offering related products or services to existing customers, such as promoting credit cards and internet banking to savings or current account holders. On the other hand, upselling involves increasing the amount invested in an existing or additional product. Both techniques can significantly boost sales, and revenue, and help achieve business objectives.
3. Optimizing B2B Operations: Multichannel Banking and Cash Management Solutions
The evolving demands of corporate clients, rising competition from fintech companies, and the emergence of cutting-edge technologies are providing banks with a distinct prospect to revamp their cash management services and capabilities.
3.1 Digitizing Cash Management in Multichannel Banking: Key Imperatives
Unlocking the Benefits of Collaboration
Fintechs are becoming highly sought-after collaborators due to their product innovation, which enables banks to offer new and compelling services, solutions, and products that aid in attracting and retaining cash management clients.
Tech & Alliances for Dynamic Cash Ecosystem
Using innovative technologies and services, a cash management approach focuses on delivering cash efficiency and effectiveness to clients. New alliances and data-driven insights create a thriving ecosystem.
Omnichannel Architecture
In an omnichannel world, architecture plays a crucial role in delivering a seamless customer experience. While the traditional multichannel approach offers diverse touchpoints, it can also lead to a sub-optimal customer experience.
Harnessing Real-time and Predictive Analytics
In the realm of cash management, banks are increasingly relying on predictive analytics to mitigate risks, underwrite loans, and detect fraud. However, the potential advantages of real-time analytics for both cash management customers and the banks that cater to them are even more extensive.
Integrate Cloud Services
Compared to conventional decentralized cash management systems, cloud-based systems offer a greater degree of process and control uniformity in all scenarios, bolstering their resilience against potential capacity limitations stemming from factors such as remote work setups, cyber threats, and sudden surges in transaction volume.
4. Leveraging Data Analytics for Multichannel Banking Optimization
Data-driven organizations are 23 times more likely to acquire customers, 6 times more likely to retain those customers, and 19 times more likely to be profitable
(Source: McKinsey Global)
Using data analytics, banks can gain insights into customer behavior, preferences, and patterns across channels. This helps identify customer needs, optimize channel usage, and personalize the banking experience.
Predictive analytics can proactively offer relevant solutions to customers through their preferred channels, improving satisfaction. Banks can also optimize channel offerings by identifying the most effective channels for different customer segments, such as mobile banking for younger customers and branches for older customers.
5. Striking Balance between Convenience and Security
Multichannel banking has revolutionized the way customers interact with their banks. With the advent of digital banking, customers can now carry out a wide range of transactions using multiple channels such as mobile apps, online banking, ATMs, and branches. While this has made banking more convenient, it has also created new security challenges for banks.
Here are some key considerations that banks should keep in mind when implementing a multichannel banking strategy:
Multi-factor Authentication: Multi-factor authentication is a crucial security measure that can help prevent unauthorized access to customer accounts. Banks can implement multi-factor authentication by requiring customers to provide two or more authentication factors such as a password, fingerprint, or facial recognition.
Fraud Detection and Prevention: Banks should have robust fraud detection and prevention systems in place to identify and prevent fraudulent transactions. These systems should be designed to detect suspicious activities such as large withdrawals, multiple failed login attempts, and transactions from unusual locations.
Encryption: Encryption is a critical security measure that can protect sensitive data such as customer account information and transaction details. Banks should ensure that all customer data transmitted through their multichannel banking platforms is encrypted to prevent interception by hackers.
Training and Education: Banks should provide regular training and education to customers on how to use their multichannel banking platforms securely. This can include educating customers on how to create strong passwords, recognizing and reporting phishing scams, and using public Wi-Fi safely.
Customer Support: Banks should have robust customer support systems in place to help customers with any issues related to their multichannel banking platforms. This can include providing support through multiple channels such as phone, email, and live chat.
6. Multichannel Banking Evolution: Trends and Insights
As financial institutions continue to adjust to the ever-changing needs and preferences of their customers, it is imperative to remain informed about the latest trends and insights in multichannel banking.
These critical trends and insights have played a pivotal role in shaping its evolution:
Rise of Mobile Banking: The use of mobile banking apps has surged in recent years, with many customers preferring to use their smartphones for banking transactions. As a result, banks are investing in the development of robust mobile banking apps to cater to this demand.
Integration of AI and Automation: Banks are increasingly using artificial intelligence (AI) and automation to streamline their operations and improve the customer experience. Chatbots and virtual assistants, for example, can provide customers with quick and personalized responses to their queries.
Greater Emphasis on Data Analytics: Banks are using data analytics to gain insights into customer behavior and preferences. By analyzing customer data, banks can develop targeted marketing campaigns and offer personalized recommendations to customers.
Expansion of Digital Payment Options: The growth of digital payment options such as mobile wallets and peer-to-peer (P2P) payment apps is driving the evolution of multichannel banking. Banks are partnering with fintech companies to offer these services and stay competitive in the market.
Adoption of Blockchain Technology: Banks are exploring the use of blockchain technology to improve security, transparency, and efficiency in their operations. For example, blockchain can be used to facilitate cross-border payments and reduce the need for intermediaries.
7. Future Scope
With advancements in technology, financial institutions can continue to offer new and innovative channels to improve the customer experience. The use of artificial intelligence and chatbots is expected to increase, allowing customers to interact with their bank through voice and text commands.
The integration of internet of things (IoT) devices with banking channels is another area of potential growth. For instance, customers could use their smartwatches to make payments or check account balances. Additionally, blockchain technology has the potential to revolutionize the way banks handle transactions, reducing the risk of fraud and improving the speed and efficiency of transactions.
As financial institutions continue to adapt to the changing needs and preferences of their customers, multichannel banking will play a crucial role in delivering a seamless and personalized customer experience.
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SECURITY AND COMPLIANCE
Article | August 4, 2022
Digital banking altered the way businesses manage their finances, rendering the once cumbersome processes of physical branch visits and lengthy lines for account opening and money transfers obsolete.
Contents
1. Evolution of Banking: From Brick-and-mortar to Digital
2. Multichannel Banking and Self-service Solutions
3. Demystifying Retail, Business and Corporate Banking
4. Mobile Banking: Payment Processing Overhaul
4.1 Overview of Fintech Companies in Banking Industry
5. Technology Trends in Digital Banking
6. Digital Transformation in Banking
6.1 Authentic User Experience
6.2 Blockchain Technology
6.3 Personalized Technology Services
7. Digital Banking Platforms Reaching out to SMBs
8. Future Aspects of Digital Banking Solutions
1. Evolution of Banking: From Brick-and-mortar to Digital
Digital banking has transformed the traditional banking landscape and brought about a paradigm shift in the way individuals and businesses manage their finances. The cumbersome and time-consuming nature of financial transactions that involved physical visits to bank branches and long queues for basic tasks like account opening and money transfers is now a thing of the past.
Between 2017 and 2021, 9% of all branch locations closed down, a loss of around 7,500 branches, according to the non-profit National Community Reinvestment Coalition (NCRC).
(Source: Bankrate)
With the digitization of banking, there has been a shift toward a cashless economy, with net and mobile banking gaining popularity over physical cash. With digital banking solutions like UPI, internet banking, and mobile banking, customers can access global transaction banking services directly from their own platforms, enabling seamless transactions anytime, anywhere.
2. Multichannel Banking and Self-Service Solutions
The shift from traditional brick-and-mortar banking to digital banking has become ubiquitous, making self-service approaches in digital banking solutions vital for customers. These options allow customers to access banking solutions using software resources without human intervention, enabling them to conduct transactions such as checking account balances, making online transfers and withdrawals, paying bills, loan installments, exchanging currencies, and overall managing wealth with ease.
Such solutions can be accessed through FAQs, chatbots, customer support portals, and other similar resources. The scope of self-service technology also encompasses internet banking and online shopping. Although the first and most successful self-service solution introduced by banks worldwide was the automated teller machine (ATM), the concept has now been extended to include a variety of digital banking platforms and applications.
3. Demystifying Retail, Business and Corporate Banking
Digital banking services and products consist of three main sub-categories: Retail banking, Business banking, and Corporate banking.
Retail banking, also referred to as consumer banking or personal banking, is a form of banking that offers financial services specifically to individual customers instead of businesses. It enables customers to effectively manage their finances, access credit facilities, and securely deposit their funds.
Business banking refers to a company's financial transactions with a specialized institution that offers tailored financial services such as business loans, credit, savings accounts, and checking accounts, exclusively designed for corporate entities rather than individuals. This type of banking is conducted by a dedicated business banking division within a bank, which solely caters to the financial needs of commercial organizations.
Corporate banking entails the provision of financial services to sizable corporations and multinational enterprises, which includes an array of offerings such as cash management, trade finance, corporate lending, and treasury services. With the advent of digital corporate banking, businesses can now effectively manage their financial transactions, process payments, and gain access to various financial tools and resources via digital platforms, ensuring improved efficiency and convenience.
4.Mobile Banking: Payment Processing Overhaul
Mobile banking allows remote access to a wide range of banking services. Mobile app simplifies our lives by letting bank and other financial institution users check account balances, pay bills, transfer money, manage investments, and apply for loans with just a few clicks.
Mobile banking alerts promote smart financial management, provide customization options, and enable easy monitoring for suspicious activity. A Chase Bank study revealed that 87% of consumers use their bank's mobile app monthly.
Some features of a digital banking platform:
Transfer money to friends and family within minutes via the ‘Manage Payee’ option on mobile banking apps.
Clear utility bills via banks linked with UPI-enabled apps on your phone instead of standing in long queues outside gas stations with cash.
Open Demat accounts online via the KYC process and manage all investments, deposits, and stocks in one place.
Open bank accounts by uploading documents online; skip visiting banks and filling out forms.
Get online assistance from banks 24/7 through chatbots and support systems.
Mobile banking enables smooth functioning and boosts transparency in accessing financial data.
Check account balances anytime without the need for passbook slips.
Mobile banking apps provide customers with innumerable loan options, with banks deducting loan amounts from accounts on a fixed date via the ‘AutoPay’ option.
4.1 Overview of Fintech Companies in Banking Industry
Here are some leading digital banking platforms catering to the needs of financial institutions:
Alkami Technology: It is a major developer of cloud-based digital banking solutions for financial institutions in the United States. Its solutions enable users to clients their businesses with confidence, react to changing circumstances swiftly, and build vibrant digital communities. The company provides a range of services, including retail banking and business banking, digital account opening, loan origination, and multi-payment fraud protection solutions to assist clients in their transformation. It is dedicated to empowering its clients and supporting them in achieving their goals.
Numerated: It is a fast-growing fintech that streamlines the origination process for business banking products. Over 400,000 businesses and 30,000 financial institution associates have processed $50 billion in lending using Numerated. The platform is used by financial institutions with a combined $1 trillion in assets, including Bremer Bank, Dollar Bank, Eastern Bank, MidFirst Bank, People's United Bank, Seacoast Bank, and others. The company has been recognized for its work as one of 2020's Top 250 FinTechs by CB Insights and 2021's Best Overall Business Lending Company by FinTech Breakthrough.
Zoot Enterprises: It is a global leader in providing advanced origination, acquisition, and decision management solutions to financial institutions. Its cloud-based platforms offer flexibility for specific business needs, including loan origination, fraud detection, and data acquisition. Zoot enables clients to access hundreds of cutting-edge data sources in real time, delivering decisions in milliseconds. Its origination solution streamlines loan processing, providing powerful tools and robust integrations that reduce data entry, accelerate loan processing times, and avoid costly errors.
Geezeo: The company delivers enriched digital banking experiences, processing, and augmenting transactions for over 500 financial institutions. Its insights enhance the overall customer experience, seamlessly integrating within online and mobile banking environments while allowing financial institutions to maintain ownership of their personal financial management (PFM) brand. It focuses on technology solutions that engage audiences with enriched data and offers expertise in digital banking, marketing, and technology.
TurnKey Lender: It is a global leader in Unified Lending Management (ULM). Its intelligent software products automate the entire lending process, including traditional and alternative lending, SME financing, grant management, money lending, leasing, trade finance, in-house financing, and more. With customers in over 50 countries, TurnKey Lender is gaining traction as a pioneer in AI software development for lenders in regions like the United States, APAC, and the EU. The company’s solutions are used by all types of lenders, including large/mid-size banks, digital lenders, multi-finance companies, trade finance operators, traditional and non-traditional lenders, and telecoms.
5. Technology Trends in Digital Banking
Banking technology is rapidly evolving. Advanced technologies like AI and ML will enable banks to analyze large data sets in real time and offer personalized solutions to customers.
The market size of the global digital banking platform was valued at USD 20.8 billion in 2021 and is expected to expand at a CAGR of 20.5% from 2022 to 2030.
(Source: Grand View Research)
The increasing digital savviness of the global population is prompting the adoption of technological advancements. However, some individuals are still in an adaptive mode due to a lack of time and knowledge. AI and ML technologies enable banks to analyze large amounts of data, make informed decisions through predictive analysis, and improve lending patterns by analyzing consumer spending patterns.
6.Digital Transformation in Banking
Financial institutions must leverage big data to automate business processes and reduce costs in light of falling interest rates and banking fees coupled with rising consumer demands. Adopting artificial intelligence, cloud technology, and automation in modernizing their applications could enable banks to develop omnichannel products, services, and capabilities, ultimately improving the user experience.
Now, let's examine digital transformation in the banking industry:
6.1 Authentic User Experience (UX)
Banks must share genuine customer experiences to retain loyalty. To achieve this, they must embrace the latest trends, technologies, and well-designed UX.
6.2Blockchain Technology
To improve customer satisfaction, banks must reduce the intermediaries between them and their customers. This can be accomplished through increased transparency using blockchain technology, enabling untrusted parties to agree on a shared database and eliminating the need for transaction intermediaries.
6.3 Personalized Technical Services
Key points about the benefits of personalized services such as automation, AI, and cloud computing in the banking industry:
Automation minimizes human intervention and reduces errors, resulting in faster and more efficient service.
AI helps banks predict outcomes based on past data, such as identifying fraud and making customer recommendations.
Cloud computing enables banks to adopt new business models and create secure applications that meet regulatory requirements.
About 27% of Americans use an online-only bank. Of those at online-only banks, 88% reported they are satisfied with the bank’s services. Meanwhile, only 66% of consumers using traditional banks report being satisfied with them.
(Source: Bankrate)
7. Digital Banking Platforms Reaching Out to SMBs
Digital banking platforms have revolutionized business operations by providing enhanced convenience and adaptability. Fintech firms have customized their platforms to meet the unique needs of small and medium-sized businesses (SMBs), offering mobile apps that facilitate financial management, transaction processing, and access to a range of financial tools and services at all times and from any location.
The following is a list of notable digital banking applications that have garnered significant popularity over time:
Betterment: It is an online financial advisor that offers personalized, fiduciary advice for retirement planning, building wealth, and achieving financial goals. By utilizing advanced algorithms and technology, it offers automated investment services that are tailored to each client's unique investment objectives and risk tolerance. The platform offers a diverse range of investment options, low fees, tax-efficient investing, and access to financial advisors. Betterment's mission is to make investing accessible and affordable to everyone, with a user-friendly online platform that is easy to use and offers high-quality investment advice.
Mercury: It is a startup-focused banking platform that provides a comprehensive range of financial services tailored to companies of any size or stage. The platform offers free checking and savings accounts, debit and credit cards, domestic and international wire transfers, treasury and venture debt, and other essential financial products, all with an intuitive user experience. In addition to its suite of banking services, Mercury also provides vibrant community programs that offer founders the resources, advice, and connections needed to build successful companies.
Bluevine: It is a financial technology company that specializes in providing working capital financing solutions tailored to small and medium-sized businesses (SMBs) in the United States. With a suite of financing products, including invoice factoring, lines of credit, and term loans, Bluevine enables SMBs to secure the necessary funding to drive growth and expansion. The company's platform is designed to facilitate a seamless lending experience, with streamlined applications and fast approvals that can be completed in as little as 10 minutes.
Novo: New York-based fintech firm, Novo offers digital banking services to small businesses in the United States. Its suite of products includes mobile check deposit, online bill pay, and debit card issuance for employees. The company has also integrated with popular small business software tools such as QuickBooks and Xero, providing businesses with greater financial management capabilities.
Relay: Relay is an online banking and money management platform dedicated to giving America's small businesses the tools they need to grow and gain visibility into their finances. The company recognizes that traditional banking services often underserve small businesses. As a result, it has built a platform that gives entrepreneurs the power to control their cash flow by giving them a clear picture of their income and expenses.
8. Future Aspects of Digital Banking Solutions
As technology continues to advance, the traditional banking system is expected to undergo significant changes in the coming decades, with neobanks rapidly gaining popularity among tech-savvy customers for their personalized services. These digital fintech companies, often referred to as 'challenger banks', operate without physical branches and offer a range of attractive services, blurring the line between traditional banking and financial systems. As a result, retail banks may adopt an omnichannel approach and leverage the robust infrastructure of fintech enterprises to enhance the customer experience.
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Article | February 11, 2020
The pace of change within the global payment’s technology space is still at full speed with no sign of slowing down. While traditional incumbents have until recently taken comfort in their size and decades of dominance, new digital-only challenger banks are ramping up and making a huge impact on the global financial landscape.
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