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What's driving the digital cash management evolution?

Cash management is a critical component of effective financial management for businesses. It involves ensuring there is enough cash on hand to meet financial obligations and maximise liquidity. We can also consider that while there are many challenges that contributed to the collapse of SVB and Signature Bank and the problems at Credit Suisse. One factor rises above them all … without real-time insight into cash, collateral and liquidity, companies are not able to make decisions at velocity.

“...Firms realised that having accurate cash flow visibility is more important now than ever. Efficient cash flow forecasting is critical to effective liquidity management, allowing clients to better understand their future working capital and liquidity needs, to budget effectively, and to support efficient reporting.” – Drew Douglas - ‘HSBC US Global Liquidity and Cash Management Adds Cash Flow Forecasting to HSBCnet 2020’.

Effective cash management includes managing cash balances, monitoring cash flow, forecasting cash needs, and optimising cash resources to achieve financial objectives. This enables informed decision-making about cash flow management, which can reduce costs and increase revenue. In fact, cash management can be the difference between the success and failure of a business. It is especially important for banks and their clients, as it allows them to make informed investment and financing decisions.

In today's complex business environment, efficient cash flow forecasting is critical to achieve effective liquidity management. This allows clients to better understand their future working capital and liquidity needs, budget appropriately, and support accurate reporting. By optimising cash positions, managing cash inflows and outflows, and minimising the cost of funds, businesses can improve their working capital efficiency and reduce financial risks. Businesses that prioritise effective cash management will be better equipped to weather financial challenges and achieve their long-term financial goals.

The advent of digital corporate banks has significantly transformed the traditional approach to managing cash flow in businesses. The plethora of tools provided by these digital banking solutions enable corporate clients to optimise cash management, reduce risk, and make informed financial decisions. These digital cash management tools, such as online banking portals, mobile banking apps, remote deposit capture, ACH payments, and virtual account management, offer corporate client’s convenience and accessibility to their finances like never before.

Major banking giants, including JPMorgan Chase, Bank of America, HSBC, Citi, and Deutsche Bank, have established their own digital banking platforms that offer an extensive range of cash management tools:

  • JPMorgan Chase offers fraud prevention measures, account management tools, and payments and transfers.

  • Bank of America's CashPro platform offers payments and receivables, liquidity management, and fraud prevention measures.

  • HSBC's digital corporate banking platform (HSBCnet) allows corporate clients to manage their cash flows and transactions online. The platform offers real-time access to account information, as well as tools for making payments, managing liquidity, and reducing risk.

  • Citi's digital banking platform for corporate clients (CitiDirect BE) offers a range of cash management tools, including payments and receivables, liquidity management, and foreign exchange services. The platform also provides real-time access to account information and analytics.

  • Deutsche Bank's digital corporate banking platform (dbDirect) offers a range of cash management tools, including payments and receivables, liquidity management, and foreign exchange services. The platform also provides real-time access to account information and analytics The digital banking solutions not only allow corporate clients to access their account information and transaction history but also enable them to perform banking transactions online, such as transferring funds between accounts, paying bills, and initiating wire transfers. This technology allows businesses to streamline their financial operations and reduce the risk of errors and fraud. Overall, the digital corporate banking platforms offer clients sophisticated analytics and real-time access to account information, empowering businesses to make informed financial decisions. With the continued development of digital banking solutions, we can expect even more innovative cash management tools to emerge in the future.

What challenges do corporate banks face when developing real-time solutions for cash management?

As technology continues to advance, digital corporate banking platforms face new hurdles in real-time cash management. These challenges include cybersecurity threats, compliance issues, system downtime, integration challenges, and a lack of personalisation. To address these barriers to digital services, banks are increasingly partnering with fintechs like Starfish Digital.

With the rise in digital services and the increase in online transactions, cyber-attacks have become more prevalent, and banks must ensure that their systems and data are secure. Starfish Digital's solutions are designed with security in mind, with features like encryption and multi-factor authentication to protect sensitive financial data.

System downtime can also be a major issue for digital corporate banks, as it can cause delays in transactions and lead to customer dissatisfaction. Banks need to ensure that their systems are robust and that they have backup plans in place to minimise the impact of system downtime. Starfish Digital's solutions provide automated workflows for cash management, which reduces the risk of errors and enables banks to manage their cash more efficiently.

Integration challenges are another problem that digital corporate banks may face when it comes to integrating their systems with other financial institutions, as well as with their clients' own systems. Starfish Digital's Universal Adaptor integrates with other banking systems, such as payment processing and treasury management systems, providing companies with a more comprehensive view of their cash management activities and enabling them to manage their cash more effectively and reduce the risk of errors.

The lack of personalisation can be a risk as digital corporate banks become more automated, potentially losing the personal touch that is important in building strong relationships with clients. Starfish Digital's solutions enable banks to provide personalised service to their clients, even in a digital environment, by providing real-time data and analytics.

In summary, the management of cash is an indispensable facet of efficient financial administration for corporations, and proficient forecasting of cash flow is indispensable to achieve effective liquidity management. The emergence of digital corporate banking enables businesses to optimise cash management, mitigate risk, and make well-informed financial judgments. Nevertheless, digital corporate banking systems confront fresh obstacles in cash management, comprising of cyber threats, compliance complexities, system outages, integration hurdles, and an absence of personalisation. Ground-breaking solutions, like those proposed by Starfish Digital, can assist digital corporate banks in managing their cash more competently and securely.


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