Freedom of choice to build your dream bank

Freedom of choice to build your dream bank

Fintechs are unleashing a myriad of solutions every day, leaving financial institutions (FIs) to play catch-up to stay in the race. FIs are dealing primarily with two challenges while competing with fintechs:

1. FIs’ legacy technology was not developed to deal with the scale of innovation now dominating the fintech world. That said, it is not easy to replace legacy systems as FIs need to be able to support their legacy products.
2. FIs are being driven to their wits’ end with their partnership strategy as there are too many fintech solutions to build, buy or partner.

What do FIs need to do to compete with fintechs?

1. FIs need to be able to launch new products and services faster, and offer a great user experience to their customers.
2. FIs must make it easier for customers to do business with them, whether it is opening a new account or getting a loan approval. Simplicity begins with the elimination of paperwork propped by a complete digital ecosystem.
3. Payments need to be easier to initiate, cost less and delivered faster. Business payments must enjoy the added security of a dual approval process.
4. FIs must offer multi-asset, real-time accounts that can be created on the fly.
5. FIs must either provide, or find a partner who provides, accounts payable/accounts receivable (AP/AR) and global treasury management solutions to better manage cash-flow and expedite loans when required.

Not just checking or savings account

FIs have traditionally offered checking and savings account to their customers while paying a certain fee to their core provide for each account they manage. However, there are other purposes for which FIs can instantly create accounts, including:

• Businesses that want to better track their budget, income and expenses in different micro-accounts with a real-time ledger;
• Customers who want to manage their savings goals better into multiple cash pots;
• The need to operate businesses globally with accounts spread across countries;
• The market rush to invest in crypto currencies; and
• The need to track any asset such as reward points; banks are required to support creating those accounts on the fly and managing them effortlessly.

Extending the customer experience through sub-accounts

By nature, customers prefer to make things manageable through organization and compartmentalization, whether it is supermarket trolleys, sock drawers or wallets, to name a few. To capitalize on this tendency, FIs have started to offer similar “jam-jar-style” digital experiences to help customers manage their money.

As the management of assets grows more complex, empowering customers to divide and organize funds into designated sub-accounts, all within a single banking relationship, has become imperative for FIs to compete, and win.

Manage by meaningful custom names

Giving names to the individual sub-accounts adds a touch of personalization while making it easy for customers to carry out transactions in real-time, between, to and from their compartmentalized accounts.

Possible sub-accounts for consumers can include:

• Christmas expenses
• Bills to pay
• Vacation fund
• Mortgage
• Emergency fund
• Education

The named sub-accounts help contextualize savings by allowing customers to set savings goals and motivate them to save more towards achieving these objectives.

Possible sub-accounts for businesses can include:

• Software-as-a-Service (SaaS) service income
• Professional service Income
• R&D development

• • • Payment product
    • Banking-as-a-Service (BaaS) product
    • Blockchain research
    • Artificial intelligence (AI) research

• Software maintenance
• Hosting expenses

• • • Development hosting
    • Production hosting

• Advertisement expenses
• Marketing events

Limits can be set for each one of these business sub-accounts to better allocate and control business budgets. Sub-accounts can also be linked to a debit card, assigned to and controlled by a single user or a group of users.

Instant movement of money between sub-accounts

With sub-accounts, customers can benefit from moving money freely between their digital “piggy banks” with no additional cost or transaction limits. Instant movement of one-off and regular recurring payments from the main account to the sub-accounts adds a layer of convenience, allowing customers to meticulously organize finances.

Send and receive payments via any payment network

Sub-accounts can be used to send and receive payments from individual bucket accounts, such as paying university fees using funds in the “Education” sub-account or setting up a monthly bill payment.

Manage business expenses

Whether it is tracking, setting or amending spending limits for team members, digital sub-accounts make it easier to manage business expenses by using the itemized features of sub-accounts.

Cost of opening and maintaining accounts in the traditional core

FIs pay a fee per account to the core provider. With hundreds of sub-accounts per relationship, the cost of maintaining sub-accounts in the traditional core is commercially not viable for FIs.

Many FIs are on the hunt for cost efficient options to be able to offer sub-accounts.

FIs are in a bind to innovate, and digital core capabilities give them a level playing field, irrespective of their size

Finzly’s digital core capability has been fortified to offer deposit services using Infinity Account. Infinity Account can track any asset, including foreign currency, crypto, reward points, or anything that has a value, and is powered by a multi-asset real-time general ledger.

Infinity Account is an effective and flexible way to meet the savings goals of customers or budgets for businesses by managing sub-accounts on the digital core in real-time. Infinity Account gives FIs the freedom and flexibility to create numerous digital sub-accounts to track any asset at a fraction of the cost of such services offered by their current core provider. Customers enjoy the benefits of better management of their spending and enhanced financial planning.

Not only can new debit cards be issued for Infinity Accounts, but customers also enjoy access to preloaded payment rails, such as ACH, FedWire, RTP, FedNow, and Swift.

BankOS becomes even more powerful

Infinity Account, part of Finzly’s BankOS platform, gives FIs freedom to open any number of digital accounts, while providing the capabilities of a digital core. The cloud-hosted digital core platform BankOS is the cradle of innovation for FIs. It comes with pre-built banking solutions, embeds third-party fintech solutions, offers open application programming interfaces (APIs) and software development kits (SDK), and can run standalone or parallel to the existing core, equipping FIs with powerful banking capabilities to launch new fintech solutions.

With Infinity Accounts, new financial solutions that require multiple accounts, such as Brex for budgeting or Greenlight for personal finance management (PFM), can be launched in a matter of months. With each Infinity Account linked to a debit card and connected to all payment rails, customers can tap 360-degree control over rewards, savings and fees, and redeem greater visibility into their finances.

Needless to say, legacy systems have not been built for real-time payments that require 365/24/7 banking capabilities. The modern features of the BankOS platform, with real-time general ledger capabilities, brings more flexibility and real-time processing capabilities to the core. Finzly’s payment hub provides an end-to-end payment solution, with direct connection to all payment networks including real-time rails, with smart payment routing, settlement and clearing. Amidst the influx of the new-generation banks, traditional FIs can use digital cores not just as a survival kit, but as a silver bullet to help them compete and win.

Finzly’s mission is to enable banks to be able to offer a one-stop financial platform for businesses and customers – a solution that can bring all the fintech capabilities onto one central platform. This way, customers don’t have to look beyond their FIs for products and services. Finzly achieves this by building native solutions, offering third-party fintech solutions embedded within the Finzly platform and allowing FIs to build their unique solutions using Finzly’s API.