price loans and hedge against region-specific risks, but it is being phased out of use in the U.S. More FIs are looking to the secured overnight financing rate (SOFR), produced by the New York Fed, as a replacement. The transition to SOFR is expected to provide FIs with an increasingly accurate and secure pricing benchmark, but exactly how this shift will affect the overall banking environment will become clearer in the months ahead.
• Review procedures on remote working and cyber risk to reduce operational risk. • Make strategic improvements that will optimize operational efficiency with a keen focus on improving cash visibility and risk, improve liquidity management, considering regulatory, cultural and technological factors. Consider how this will support the organization’s strategic objectives. • Select the best solution: Identify the opportunities available, how the solution can be designed to take advantage of digital technologies without placing large demands on resources, what the expectations are, consider the costs of adoption or non-adoption, and what the value added will be to the organization. TREND 5 Embedded Banking The trend of technology and fintech companies integrating financial services into their platforms, creating a seamless "super app" experience for users. This trend reflects the blurring of lines between the tech and finance industries, with financial services becoming more integrated into other areas of business. One example of embedded banking is the inte- gration of buy now, pay later options into checkout screens for e-commerce websites. These con- sumer-focused buy now, pay later programs, which are essentially arbitrage between when different parties want to get paid for goods and services, are similar to traditional supply-chain finance tech - niques, so this trend could increasingly be adopted as a B2B short-term finance option. In the business banking world, this trend can be used to bridge liquidity gaps, allowing businesses to take advantage of earning assets while they wait to pay suppliers or receive payment from customers. However, it's important for businesses to carefully consider the terms and fees associated with these types of financing options, as they may not be as favorable as traditional supply chain finance options.
In the business banking world, embedded banking such as buy now, pay later options can be used to bridge liquidity gaps , allowing businesses to take advantage of earning assets while they wait to pay suppliers or receive payment from customers.
Back-end automation — especially in accounts receivable and accounts payable — can free up existing staff to do high-level work that is both more fulfilling and more likely to increase revenue.
The transition from the London Interbank Offered Rate (Libor) to the secured overnight financing rate (SOFR) is expected to provide FIs with an increasingly accurate and secure pricing benchmark .
business continuity planning, companies that suf- fered significant turnover might not have had any people left in-house who knew how to perform all their necessary business banking functions. Lacking the institutional knowledge and rigorous documen- tation of work processes, those businesses were left scrambling. That painful experience has helped spur increased interest in automating business banking procedures and processes—especially in accounts receivable and accounts payable—to make life simpler for companies running with reduced staff. On the FI side of the equation, this kind of back-end automation, deployed properly, can free up existing staff to do high-level work that is both more fulfilling and more likely to increase revenue. TREND 4 Treasury Optimization Since the pandemic, treasury optimization has become increasingly important for FIs. This includes enhancing liquidity management, digitization of treasury for future proofing, and optimizing operational processes. Here are some immediate steps organizations can take to optimize the treasury function, accord- ing to the Association for Financial Professionals’ recently published guide: • Use insights on cash to identify unnecessary costs and ensure processes are being adopted correctly within your company/organization.
This trend has the biggest implications for small businesses and the FIs that cater to them. There are vendors with digital banking integrations that can help small business owners become more sophisti- cated banking customers or members. For example, they could get an alert that tells them their cash flow in two weeks is going to drop and recommends reaching out to their bank or credit union for bridge financing or an extension on their line of credit. At the same time, these services can give FIs the granular data they need to judge the credit worthi- ness of these small businesses and possibly provide financing where they would not have been able to with confidence in the past. Conversely, such ser - vices can also alert small businesses when it’s time for them to think about investing and provide options the FI can offer to meet those needs as well. This is just one of the ways that FIs can begin to differenti- ate their business banking operations to service the widely varying needs of large and small businesses. Overall, embedded banking is a key trend to watch in the coming year, as it has the potential to significantly impact the way businesses handle their financial operations. It’s especially important for FIs to monitor because embedded banking options can draw more traditional consumer and business banking revenue to pure play e-tailer and fintech companies. But the good news is that FIs can leverage online banking vendors to stay ahead of the curve on the breadth and depth of digital financial services offerings. One additional ongoing trend to keep an eye on this year is the move away from the London Interbank Offered Rate (Libor). Libor is an index that was used by global financial institutions to
Whatever trends emerge in the coming months and years, Alkami is well-positioned to help FIs take advantage of them as they shape the future of digital banking. Alkami’s expertise in B2B payments makes it a valuable partner for FIs and businesses looking to navigate the rapidly changing landscape of digital payments, reduce float time, and streamline their operations. Alkami can also help with enhancing liquidity management for treasury departments, future proofing via its digital banking solution, as well as automating and improving cash flow and cash positioning wherever possible in operational processes. ▪ About Alkami Technology Alkami Technology, Inc. is a leading cloud-based digital banking solutions provider for financial institutions in the United States that enables clients to grow confidently, adapt quickly and build thriving digital communities. Alkami helps clients transform through retail and business banking, digital account opening and digital loan origination, payment security, and data analytics and marketing solutions. To learn more, visit www.alkami.com.
Treasury optimization, including enhancing liquidity management, digitization of treasury for future proofing and optimizing operational processes has become increasingly important for financial institutions.
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THE FINANCIAL BRAND INSIGHTS SPRING 2023
THE FINANCIAL BRAND INSIGHTS SPRING 2023
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