This article appears in Express Computer and is penned by a senior director at a firm that provides technology consulting & outsourcing. The gist of the piece is really in the title, which is the steady movement towards faster execution of transactions across systems and solutions that enhance financial operations. We have been detailing these same trends for members, most recently in research around the automation of treasury management systems (TMS). While there are different aspects or key traditional functions within a TMS, including what could be considered separate cash and liquidity management solutions, in the aggregate they are all interconnected for an optimal experience. The author essentially synthesizes it into real-time cash management.
‘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.’
In order to execute real-time cash management (in the end this is real-time treasury, a growing industry catch phrase), an organization needs some level of real-time payments, either domestic or cross-border, but eventually both. This is in process but will require another few years to become a reality. The author provides an overview of how this cash management trend comes together across various challenges. The use of APIs is also highlighted which is something that we specifically reference in our research as another key to integrating best in class capabilities. He then goes on to highlight one of his firm’s new solutions in the space.
‘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…
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.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group