Modernizing transaction banking

Service externalization and the right technology portfolio

Transaction banking has for years been a reliable, stable source of revenues. But regulatory expectations, disruptive technologies, changing customer expectations, and the rise of new competitors are potential signs that the industry may need to modernize with a greater sense of urgency.

A more modern, agile, and profitable transaction banking business likely won’t come about by simply automating existing processes. Instead, banks should seize a new opportunity to rethink how work is done and empower clients to gain more control of service delivery. This new model, which we call service externalization, enables customers to fill many of their needs exactly how and when they want to.

Service externalization has four components, which together can form a potentially powerful portfolio of innovations:

  • A digital front end designed for maximum user-friendliness and efficacy
  • A core infrastructure built for agility and resilience
  • Cognitive technologies for intelligent automation and scalability
  • APIs (application programming interfaces) to expand banks’ strong connections with the ecosystem

These four components often work best when implemented together, not in silos or increments. A digital front end needs cognitive technologies to meet customers’ needs; it should connect with APIs to customers, counterparties, and vendors for speed and responsiveness; and it typically needs a robust backend to support these technologies and the performance that customers demand.

This modernized transaction banking infrastructure may not only increase customer satisfaction but also create a new competitive advantage. And since customers will likely own many processes that banks currently do internally, banks’ costs and risks may fall. This paradigm could also work with counterparties and vendors.

This paper will look at the challenges in the transaction banking space, explore the approach that can empower banks to overcome these challenges, and offer examples of success.

Modernizing transaction banking
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