A SOLUTION TO GLOBAL CORPORATE LIMITS THAT REDUCES RISK AND COST, WHILE IMPROVING CUSTOMER SERVICE
Corporate limits are often held in multiple processing systems or in separate payments systems that are not fully centralized in real-time. As payments are unnecessarily refused or referred, customer service level drops. The client is unhappy. Excessive limits are set to compensate for this. This leads to a rise in credit risk. The CRO is unhappy. Manual processes are required, leading to extra cost and delay. The COO is unhappy. Everyone is unhappy.
Modification of payment rules is often complex. Banks also face difficulties in managing complex exposure levels of customer and corporate entities. Multiple applications need to be accessed to make decisions on referred items. Banks need to eliminate manual calculations of balances or limits. A high volume of referrals demands that pay/no-pay decisions be automated, with policies and rules embedded into the system: while individual payments systems themselves have some sort of limit management, a bank-wide and client-wide view is essential – most banks use multiple systems, for example different systems for high volume/low value versus low volume/high value. However, smarter funds control has seen banks save operational costs: in one case STP rates reached 93% within the first few months. The COO can be happier.
What is needed is a rule-driven, real-time funds control system that enables risk visualization. Fewer limit breaches lowers the associated risks. A unified view of limits across relationships and products allows monitoring and approval of counter-party exposures, collaterals and limits at an enterprise-wide level across all business lines and at different levels of consolidation. Comprehensive monitoring and control over credit actions bank-wide, providing a complete audit trail of all decisioning processes, is also a must-have. Moreover, a funds control system must comply with industry mandates such as the pay/no-pay/refer decision in the UK’s Faster Payment Scheme that requires decisions within a few seconds and places varying limits on individual transactions. The CRO can be happier.
Corporations would be able to utilize their limits to the full, across complex structures and geographies and in real time. Payment release decisions can be made immediately (whether yea or nay) providing a much more responsive service. Automated retry ability to handle improved balance or increased limits eliminates the need for resubmission. As balances are held in near real-time in the system, should a customer face the need for a sudden, urgent payment, a temporary increase can be agreed upon either free of cost or at a fee. This gives the customers greater ability to use their sanctioned limits to the fullest. Customer satisfaction is enhanced with reduced rejections and fewer delayed or missed payments. The client can be happier. Everyone can be happier.
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