MUMBAI, APRIL 15:
Banks earn some money in their lending operations, but success lies in earning more through fee income. This, they try to do by offering a variety of value-added services on what they call the non-funded book. These relate to trade finance (letters of credit, performance guarantees), forex (buying or selling foreign currency for payments or collections overseas), treasury (facilitate deployment of periodic surpluses in various instruments) or helping with managing cash (cheque collections from distributors or payments to suppliers).
Typically, these services involve a lot of paper work, a number of meetings or phone calls between the banker and client and often involve laborious effort since the related information resides and operates in different silos with on both the bank and the client. In a way, corporate transaction banking has functioned without much change for the past decade — making you wonder if the digital revolution (seen in retail banking) has completely bypassed this segment of the business. That seems set to change now.
Digital transaction
IDFC Bank, one of the two new banks to mount the banking stage last year, has come up with a digital transaction banking offering christened Business Experience Platform (BXP). As its unique selling proposition, it offers the user corporate the facility of performing trade, treasury, forex and cash operations on one platform. The first impression that strikes a lay viewer is that many organisations will now be able to do with lesser staff in their accounts/finance establishments – or redeploy them in other productive jobs. The platform offers a dashboard view to a CFO or treasurer of the cash flows, upcoming payments, default trends, usage of limits, interest rates, and liquidity positions, among other things. This is further aided by analytics that provide a variety of reports and alerts that can be customised by the operating user. The whole thing is done through the bank’s web portal in a seamless and secure environment.
IDFC’s integrated platform allows a company CFO to hedge his forex requirements at the press of a button (that is linked to a prefixed mark up for the bank’s margins). The facility to see all this on a single screen dashboard (including the position across all divisions of a corporate) is a first of its kind in the banking industry, according to Abhijit Kamalapurkar, Head – Transaction banking, Commercial & Wholesale banking, IDFC Bank, who has spearheaded this project. The platform has some other features that tackle common problems faced by finance managers — collections and reconciliations between invoices raised and payments received. Control and convenience is what the new system has strived to offer users who are apparently excited about this platform. Over a hundred corporates, including leading conglomerates, have signed up for this service. For IDFC Bank, whose non-funded book was at about Rs 2,300 crore at the end of December 2015, that can only mean further growth.
(This article was published on April 15, 2016)
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