Wires are the mainstay when it comes to high-value payments, accounting for global movement of trillions of dollars each day. One of the most coveted revenue streams for banks, it is often supported by dated, reliable infrastructure but laden with cumbersome, manual and longwinded processes. Outmoded systems and tedious processes are the greatest foes of banks that want to stay relevant to meet the high expectation levels of consumer and corporate customers. The technology trap has set an inefficient trajectory for wire operations in many banks. Modernizing wire operations with digitization to make it more resilient and flexible to suit the present-day needs is the top of the agenda for many banks.
“There is so much manual effort processing wires and we just hate the way we operate our wires. We’re still running on archaic processes to suit the legacy system that supports our wire room. Anything would be an improvement from where we stand now.”
CTO at a $15bn bank
The case for modernizing wires
Undoubtedly, wires are a sophisticated medium for securely exchanging trillions daily globally. Apart from legacy technology shortcomings that are stifling the offering of a good experience to customers, there are other factors that are impelling banks to create a business case for modernizing wires:
- Wires are important to manage treasuries
It is important that banks provide wires as value-added services to enable the strategic management of liquidity and risk in treasuries. With increasing transparency and control, corporate treasurers can use wires effectively for their cash management.
- The precedence set for payments by the pandemic is here to stay
The pandemic accentuated the limitations of the fragmented, manual payment processes and systems. Certainly, the scale and demand for digital payments is here to stay and wires are no exception. Banks have realized that it is time to address the elephant in the room with modern cloud based wire platforms that can enable collaboration between banks and their customers.
What are some of the top initiatives that banks are embarking on for wire modernization?
- Moving towards cloud-native wire payments infrastructure
- Automating workflows to streamline the supporting processes
- Enhancing centralized reporting for wire operations to extract messages and transactions
- Moving towards multi-channel support for wires: Branches/APIs/digital banking/file upload
- Migrating to ISO20022 formatted messages for wires
Benefits of modernizing wires
The payback of digitizing the wire operations are immediate and immense. Banks are taking this one step further, by bringing wires underpayment hubs that support wires alongside other rails to enjoy more efficiency.
- Capacity expansion due to the scalable and elastic architecture of cloud platforms. This will eliminate the need to increase staff to handle the sudden surge in wire volumes.
- Event-driven business rules trigger workflows that support automated decisions. For example – customers can set drawdown agreements and wire payments will be automatically sent based on the event trigger rules.
- Automation of returns/cancellations/request for reversals/callbacks
- Reduced errors in processing
- More transparency of the wire payments and visibility for bankers and customers
- Ability to tailor workflows and system logic
- Elimination of redundant processes in the workflow
- Dual controls and security through encryption
- Improved STP rates across different channels because of auto-repair that can fix formatting errors
All these modernization efforts will transpire into a great end-user experience for wires with richer notifications and multi-channel support. Banks are catering to business customers by providing additional features like the ability to manage limits and controls, access to detailed reporting through digital banking, thereby providing a great user experience.
With the explosive growth in digitization in the surrounding ecosystem, banks’ limited technology and processing capabilities are no longer an excuse in a connected world with blurring boundaries.
Schedule a call to start your wire modernization today!