Commercial Banking: The Fintech Point of View

Fintechs are an integral part of the Commercial Banking value chain.

Business customers want and need to manage their cash flows, including making payments, receiving payments, getting information, investing funds and borrowing funds.

Banks provide Treasury Management and Lending products to meet the customer mandate.

Fintechs deliver end-to-end solutions to banks through a Core Banking ecosystem.

The banking ecosystem is not a product; it is a set of solutions which deliver end-to-end commercial banking capabilities. The solutions could be a combination of fintech and bank-proprietary technology. The ecosystem is agnostic to the solution mix, with components integrated via an application program interface (API) gateway. This enables interoperability between legacy and new technology and supports a phased modernization of the underlying technology platforms.

The ecosystem must include Commercial Banking capabilities that deliver value-added, cost beneficial solutions to banks. These include:

• Deposits: Operating, Investment, Escrow and Sweep accounts
• Account Services: Account Reconciliation, Positive Pay, Stop Pay
• Channels: Online, Mobile, File Transfer
• Payments: Low Value, High Value, Real Time, Integrated Payables
• Collections: Lockbox, Deposit Capture, Integrated Receivables
• Information Reporting: Same Day, Next Day, Multi-Bank
• Back Office: API Gateway, Item Processing, Payment Hub, Lending, Account Analysis, Onboarding, Servicing, Foreign Exchange, Trade Finance

It is not enough for the banking ecosystem to include these capabilities in the same fashion as in the past – it must deliver them better, faster and easier to use than ever before. Technology has evolved exponentially on the consumer products side (consider today's smart phones, TVs, and cars); businesses today want that same level of technology innovation leveraged in their banking solutions too. Banks are finally embracing this customer mandate, and are enlisting fintechs to help deliver leading edge solutions such as:

• API-enabled platforms
• Artificial Intelligence (AI)
• Blockchain
• Business functionality with consumer-like experience
• Cryptocurrency
• Data analytics
• Digitized loan origination and underwriting
• Digitized onboarding and servicing
• Distributed Ledger Technology (DLT)
• e-Signatures
• Fraud prevention
• Intelligent Anti-Money Laundering, Compliance and Regulatory, and Know Your Customer monitoring and reporting
• Machine Learning (ML)
• Multi-tenancy / Multi-currency
• Open Banking
• Payment hub
• Predictive loan loss
• Privacy and information security
• Profitability and pricing
• Real-time Core Banking systems
• Real-time payments, processing, reporting and suspicious transactions monitoring
• Robotic Process Automation (RPA)
• Salesforce automation
• Treasury Management System (TMS)
• Virtual customer accounts
• Virtual customer relationship management
• Virtual customer service

The ultimate customers for fintechs are the actual businesses themselves. Commercial Banking solutions are comprised of the bank's advisory skills and knowledge along with the fintech's technology innovation which drive Treasury Management and Lending products. This means that while businesses may have an account at a bank, they are indirectly partnering with the fintech too. It is vital that businesses, banks and fintechs continue to work together to develop the leading-edge financial solutions needed for today's fast paced and complex commercial marketplace.