Helping Financial Institutions Manage Operational Risk

STERLING COMMERCE WHITE PAPER
Sterling Multi-Enterprise
Finance Gateway
Helping financial services
organizations meet the
needs of their corporate
business customersSterling Multi-Enterprise Finance Gateway 2
IntroductionThere has been much written about the need for financial services firms to improve customer service so as to improve customer loyalty, lower customer attrition and create an environment where the cross-selling of additional services can occur. Many of these discussions are oriented toward retail banking, which includes many of the basic high-volume elements of corporate banking. But what of those needs exclusive to corporate banks? What do financial service firms need to do to satisfy corporate customers in particular? Although there are many actions that financial firms must do well to satisfy corporate clients, there is growing awareness that improved 1customer-to-bank communications is an area of increasing corporate customer demand. To satisfy these customers, financial firms require more effective communications. The Sterling Multi-Enterprise Finance Gateway helps financial service organizations serve their corporate customers more effectively and efficiently, to help lower costs and increase revenue potential.
BackgroundBanks are under pressure to improve financial performance, even as financial services organizations across-the-board feel the impact of a changing payments and cash management business. Transaction management business margins are being squeezed, traditional business borders are disappearing with SEPA (Single Euro Payments Area), and float is becoming a thing of the past due to the electronification of payments.
As margins are squeezed from the commoditization of the transaction management and payments businesses, bankers look to reduce service delivery costs and improve efficiencies to create new revenue opportunities. However, such costs are not easily reduced. Banks and other financial services firms are faced with aging and complex legacy systems infrastructures, competition is increasing from both the globalization of the market and from new technology entrants such as 2PayPal, and customers have become more demanding.
The key to success in corporate banking, as in any business, is to acquire and maintain profitable customer relationships. With this in mind, banks must respond to customer needs and goals for effective and efficient communication, in order to build customer satisfaction and loyalty.
What do customers want?Corporate customers do not want hundreds of different connections to integrate to the bank, but would rather have bank technology hide the complexity of geography, protocol, or network connectivity. They want a single business gateway to connect to the bank to receive and send secure automated messages, data and financial information. In short, customers want one quick, secure connection, not separate connections for payments, deposits and loans, and other business divisions.
Along with such ease of connectivity integration, corporate customers also want to take advantage of today's more "paperless" environment to receive more information associated with their transactions.
One example can be seen in customer demand for payment details, such as associated invoices or payment orders. Companies need banks to supply information other than the standard payment dates and vendor names, to apply payments to an "order-to-cash" business process.
Fred Smith, Federal Express (now FedEx) CEO, was quoted in 1978 as saying, "The information about the shipment is as important as the shipment itself." The Tower Group's Colin Kerr paraphrased Smith in a 2006 article, to point out that "The information about the payment is as important as the payment itself, in the financial value chain." 3
1 TowerGroup, Susan Feinberg, B2Bank Integration, October 20062 F inancial Insights, Maggie Scarborough, Dynamic IT and Integrated Financial Services: At the Doorway to the Financial Value Chain, May 20063 FedEx, About FedEx:FedEx Overview, http://www.fedex.com/us/about/today/?link=2, May2007©2007. Sterling Commerce, Inc.3 Sterling Multi-Enterprise Finance Gateway
From leading market research firm Killen Associates: "A typical billion-dollar company spends approximately $27 million annually for unnecessary working capital and inefficient processing functions beca... [download for more]