Cash management: unlocking efficiency and innovation

There is no doubt that the science of cash management remains nuanced. While cash management teams in banks may be able to show cost saved or avoided, the discipline seemingly lacks the glamour of wealth generation, as without sales and profits, there would be no cash to manage.

Yet, with rising interest rates, the value of streamlined cash management services is soaring. The period when the UK base rate remained below CPI started from approximately November 2008 onwards. Historically, base rates tend to hover a few points above the rate of inflation, and now the time of cheap money is clearly at an end.

The economy continues to stutter, though. Growth has not yet fully recovered and geopolitical pressure plus a cost-of-living crisis may combine to depress consumer spending for the immediate future.

But can enhanced cash management help to ease the pressure on corporations? And can banks assist their clients with value-added services that both improve financial health and enhance banking relationships? Let’s explore.

Banks possess a vast store of transaction data from individual accounts and in aggregate, from multiple clients. Artificial intelligence (AI) and machine learning (ML) can explore this storehouse in entirely new ways, discovering patterns and predicting outcomes as never before. While the AI and ML lighthouse projects, such as credit scoring and loan approvals, attract publicity, cash management, too, can take advantage of these transformative technologies.

Creating a new cash management service based on AI and ML capabilities depends on the ability to exploit existing data. Banks that rely on legacy platforms may struggle to design and implement new services if data is trapped in siloed, relatively inaccessible systems.

In these cases, a short-term approach is to add a dedicated modern cash management solution as an overlay to core systems, drawing data from the legacy platform. The strategic approach would be to move the bank to one of the many integrated banking solutions which offer native support for AI and ML as part of the design philosophy.

Overlay solutions have the advantage of being rapid to implement. Using the latest technologies and sometimes living in the cloud, overlay solutions enable banks to quickly create highly scalable solutions. For little or even zero capital outlay, the solutions provide aggregation, analytics, tooling, and calculation models that allow banks to deploy AI and ML capabilities with minimal impact and maximum effect.

Additionally, new overlay elements can be added incrementally to extend capabilities, from loans to treasury to trade finance and more. Supported by the right platform, banks can produce insights and AI-driven recommendations for internal users and corporate customers.

Modern banking software offers fast adoption that delivers functionality without the disruption and delay of large IT projects — the perfect fit for organisations that want to try new approaches very quickly, unencumbered by the sprawl of legacy systems. As technology and solutions continue to evolve, cash management now possesses a greater depth of capabilities.

Banks in over 100 countries rely on Finacle’s industry-leading solution suite to fast-forward their digital cash management strategies.

Learn more.