The Role of Digitalization in Global Transaction Banking (GTB)
Introduction
Digitalization has become a fundamental component of recent and ongoing development in banking, particularly in global transaction banking (GTB), in the context of the evolving financial services environment. The onboarding, service delivery, and client relationship management processes are all positively affected by the digitalization of banking.
This blog explores the new opportunities and advantages that digitalization has to offer, as well as the ways in which it is transforming various aspects of GTB. The voyage of digitalization has advanced significantly.
- Initially, clients expressed a desire to be able to monitor their balances online.
- Next, they expressed interest in the prospect of making payments online.
- Subsequently, the interest grew to the extent that clients desired to integrate with their ERP systems. Further, corporate clients were keen on incorporating features such as rule-based maker-checker.
This demonstrates the responsibility and agility of digital financial services. The scope has increased drastically with capabilities expanding exponentially, and today, nearly all banking needs can be met digitally.
Digital Channels: The Backbone of Modern GTB
The emergence of digital channels, like internet banking, mobile applications, and Host-to-Host (H2H) connectivity, has transformed the way corporate customers interact with banks. An iPad can be used by a CFO to monitor the company’s financial position by country. A director may authorize a transaction of significant value from his mobile device en route to the airport after his secretary has verified all details and moved the transaction to his dashboard.
Banks enable multinational corporations to directly connect their ERP systems to the bank’s systems through Application Programming Interfaces (APIs) or file transfer capabilities. The maker-checker process has already taken place in certain instances as the information is processed through the ERP system, and the bank system’s rules confirm that the information generated is validated.
In today’s environment, digital channels offer the necessary flexibility, efficiency, and security to facilitate the execution of services that companies mandate, regardless of whether they are processing payments, managing liquidity, or involved in trade finance.
Enhancing Customer Experience
Digital transformation is key to improving the customer experience in GTB. A single digital platform with dashboards that offer drill-down capabilities enables corporate customers to access their portfolios and perform various operations seamlessly. This is especially beneficial for groups of companies (GCIF) and multi-entity (country) organizations that require a unified view of their financial activities across different currencies and jurisdictions.
Group Customer
In traditional banking, the relationship between the client and the account is typically established for a specific company or customer. Different accounts are typically associated with a customer in the majority of core banking systems. However, the digital capability of Global Transaction Banking (GTB) is extending the relationship with the customer to the group level.
Banks are capable of consolidating and accommodating their customers under a single group customer (GCIF). For instance, the Volkswagen Group may have distinct customers who are represented by Audi, Porsche, and Ducati. The group as a whole is VW. This assists the bank team and relationship management in gaining a comprehensive understanding of the group’s relationship.
Support for Mergers and Acquisitions
Corporate restructurings, including mergers and acquisitions, can be easily accomplished within digital platforms by careful portfolio transfer management. Imagine if your organization had two groups—GCIF—as two businesses, for example, Toyota and Volkswagen. Using the party migration screen, the bank back office can quickly move one Customer Information File (CIF) from one GCIF from one group to another, when a firm (or group company) from one group is moved to another for reasons related to business. This will translate into less resources being utilized for the operations and a flawless experience for the end consumers of the bank.
Access based on entitlement
An integral aspect of digitalization is that access is based on the specific entitlements assigned to each user. Those entitlements can be modified based on the specific corporate entity, user roles, and what the user is entitled to do. Thus, some users may merely have inquiry rights, while others may have the ability to undertake payment transactions. Some users may actually be entitled to access only Virtual Account transactions, while others may be entitled to undertake Trade Finance transactions. The entitlements can be enforced in accordance with rules that set limits for each transaction. Digital systems ensure that the right users have access to the right information and functionality according to their roles in the enterprise.
Unique UI/UX Experience
The manner in which corporate clients interact with and manage their accounts is significantly enhanced by a user-friendly interface. A user-friendly UI toolkit for extending the user interface will help a financial institution to customize and enhance the UI/UX as per their liking. The user expectation of the experience is constantly evolving, necessitating that banks frequently update their user interfaces to ensure that they are in accordance with the user’s expectations. The organization will benefit from a comprehensive toolkit that facilitates this process, while also guaranteeing that any modifications adhere to the fundamental standards of the product’s framework and protocols. And we have seen banks themselves making changes to the UI along with their technology partners.
Extensibility
Another critical criterion for a digital platform is the ability to customize and scale as per growth. It is imperative to select a platform that is modular in design and is flexible, as no product can satisfy all requirements out of the box. This enables the effortless integration and the incorporation of features that financial institutions may require. The extensibility is important in UI/UX, due to ever-changing demand of customers. It is essential to have a robust integration layer that allows the system to communicate with a variety of applications that are utilized by financial institutions. The bank can also contribute to the development of additional features by utilizing the platform’s no-code/low-code tools, which are also facilitated by good extensibility. It is imperative that the UI is responsive, and the platform’s tools should support this capability, as the demand for screen sizes increases.
Multi Entity Support
As businesses continue to grow and expand into newer geographies, it is important to anticipate the convenience of being able to access all of their accounts across several areas by using a single login ID. It is therefore essential for a contemporary digital platform to possess the flexibility to offer a single login for users who are operating in several countries.
This will guarantee a seamless and uniform experience for all users. In addition to this, the platform needs to be adaptable enough to accommodate the specific features and requirements of each country, while also being able to meet the local rules and payment network standards. As part of this, it is necessary to adjust to various security regulations, such as two-factor authentication (2FA), which might vary from one country to another. In addition, the digital platform ought to be able to establish connections with varied core banking systems, as not all countries might have the same version or kind of core banking software. One possible explanation for this is that legacy systems are still in use, or it could be that local business units have selected different systems to better meet their requirements.
The ability of a digital platform to interact with a variety of banking systems and to adapt to changing requirements enables it to guarantee smooth operations, improved security, and provide a uniform user experience for corporate clients, regardless of the location in which they do their business.
Payment Tracker/Trade Tracker
One of the major reasons for banks to adopt a digital platform is to increase operational efficiency and reduce client dependency on banks.
Customers frequently need an end-to-end picture of the status of their transactions. Payment and trade trackers are two examples of useful features that give users up-to-date information on the status of their transactions in real time. They are able to see, for example, whether the transaction is awaiting approval from a person in their organization, and how many more authorization levels are required before it reaches the bank’s processing queue, or whether the bank needs any further details, due to the additional due diligence required. The transaction can be returned for more documents/validation or data if the bank requests them, facilitating easy communication.
In the current climate, where multiple regions require heightened security and compliance inspections, this is especially crucial. In addition to reducing the need for manual intervention, having a robust two-way communication process gives the consumer a more efficient and fulfilling experience by giving them a sense of information and control throughout the process.
Users should be able to see the acknowledgment status of the networks as well as SWIFT communications related to their transactions. With the help of this feature, customers may keep an eye on whether their money has been handled properly by their bank and has reached the receiving bank, providing a clearer picture of the transaction’s path.
Users can feel more assured that their money has been transferred correctly and on schedule when they have access to this level of information. It contributes to a more seamless and informed banking experience, by reducing uncertainty, decreasing the need for updates from the bank, and increasing transparency. This functionality is critical for businesses managing large or international transactions, when confirming the recipient bank’s receipt of the funds.
Conclusion
The utilization of digital platforms is crucial for financial institutions to enhance the client experience, efficiency, and transparency. Digital platforms that provide payment and trade trackers, single sign-on for multiple countries, with the ability to connect with various central banking systems provide corporate clients with a more efficient and seamless experience. This helps banks to meet the evolving demands of businesses in various regions by accommodating a variety of security requirements, regulations, and customer needs.
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Other Blogs
One of the major reasons for banks to adopt a digital platform is to increase operational efficiency and reduce client dependency on banks.
Customers frequently need an end-to-end picture of the status of their transactions. Payment and trade trackers are two examples of useful features that give users up-to-date information on the status of their transactions in real time. They are able to see, for example, whether the transaction is awaiting approval from a person in their organization, and how many more authorization levels are required before it reaches the bank’s processing queue, or whether the bank needs any further details, due to the additional due diligence required. The transaction can be returned for more documents/validation or data if the bank requests them, facilitating easy communication.
In the current climate, where multiple regions require heightened security and compliance inspections, this is especially crucial. In addition to reducing the need for manual intervention, having a robust two-way communication process gives the consumer a more efficient and fulfilling experience by giving them a sense of information and control throughout the process.
Users should be able to see the acknowledgment status of the networks as well as SWIFT communications related to their transactions. With the help of this feature, customers may keep an eye on whether their money has been handled properly by their bank and has reached the receiving bank, providing a clearer picture of the transaction’s path.
Users can feel more assured that their money has been transferred correctly and on schedule when they have access to this level of information. It contributes to a more seamless and informed banking experience, by reducing uncertainty, decreasing the need for updates from the bank, and increasing transparency. This functionality is critical for businesses managing large or international transactions, when confirming the recipient bank’s receipt of the funds.