It is not shocking that deep-rooted banks consist of many different departments and branches. However, they are obliged to work as an organic structure collectively. So, one can interpret that being able to be responsive to each other is what they have to achieve. If not, the workflows will get knotted up and be a burden for many employees. In the end, an efficient and manageable atmosphere will eventually disappear.
Because of that, banking institutions are striving to reach a certain level of internal communication and collaboration within their departments. This is specially important for the FI (Financial Institutions, a division within the wholesale banking) department because they tend to interact with various departments during their workflow to approve complex credit facilities.
In addition, enhancing the performance of this department directly converts into the overall efficiency of the banks. These are the reasons why FinTechs, who target this vital point to lighten up its heavy workload, emerged. They utilize smart solutions which benefit from technological advancements like improved data storage or faster communication networks.
This way, they aim to enhance internal communication and transparency, which in turn enables FIs to manage complex and multiple operations better. In line with that, this report by Frost & Sullivan underlines that when a bank implements a digital collaboration and communication solution, the ROI (Return on Investment) is met within 18 month.
How to Enable FI Departments Further
Digitalization has many promises for the banking industry and that’s why FinTechs are evaluated as valuable partners along the process. Naturally, benefitting from FinTech software for maintaining effectiveness for FIs is not a surprise. There are many components that nourish efficiency and management for FIs.
For instance, manual processes and multi-system operations result in heavy workloads that equate to inefficiencies. Through real-time limit check and online RAROC calculation, automated policy rule controls or booking system exposure importations, software can disburden employees exponentially.
Real-Time and Storable Chat
Real-time chat is a valuable asset for any project management. When it comes to FI credit line management, it gains even further importance. Since cross-department communication is crucial for approving credit facilities, communicating with approvers disburdens workflows of FIs enormously and engages employees altogether. This ultimately saves time, but also makes the process more transparent.
In addition to that, unstructured and unplanned communication is also inevitably hindering the decision process of FIs. Being able to form a digital collaboration and communication between departments quickens the flow of information. Thus, as the operational cornerstone of banks, the FI department obtains further manageability via a well-developed digital communication network. Similarly, McKinsey’s report emphasizes that banks can further their productivity up to 10 per cent with digital collaboration.
Storage of the communication data is similarly crucial for FIs since data can be lost if not stored. So, continuous reachability of data also enables the department to improve its efficiency and manageability.
Since to err is human, financial institutions are naturally prone to wrong-doings. From this point on, there are two possible scenarios to follow. The banks can either reduce the number of mistakes, or find measures to take immediate action. According to this perspective, if there is an approach that combines both of the scenarios, it is much more preferable for financial services. Enter FinTechs and digital software.
Digital software allows banks to build a developed monitoring system that enables employees to note any on-going operation down with ease. Thus, they are able to detect whether a credit limit is exceeded and take swift action. This improves efficiency and management.
At the same time, a more integrated internal collaboration is granted through transparency. As an example, Deloitte claims that enhanced monitoring systems attained by digital tools allow employees to take remedial action quickly and efficiently.
An Example: LC Operations and FI
To give an example, during a letter of credit (LC) transaction, an FI department needs to conduct a communication between several departments, including trade operations. Relationship management launches a limit reservation request to trade operations, reviews the request and submits it for approval. FI handles the approval and limit reservation process of such transactions and concludes them. This is a multi-departmental process that can be time-consuming and inefficient if not handled accordingly.
Fortunately, FinTechs are offering fast, resourceful, and effective solutions to enable FIs in this manner. Digitalization is in a strong correlation with attaining a more interconnected department structure. To elaborate further, on a digitized infrastructure, the FI department can monitor requests regardless of the device used. Therefore, taking action became easier and efficiency was eventually increased. Moreover, if the communication between departments is transferred onto a digital platform, inefficiencies bother the workflows less often. The chat-data is stored and connection among departments is attained easily.
The benefits of internal collaboration & communication are hereby demonstrated. The importance of internal communication and collaboration can’t be overlooked since they result in efficiency and better management for FIs. There are various methods of attaining this, such as real time and storable chat or developed monitoring. They all contribute to internal communication and collaboration from different perspectives. Digital tools and software are renowned for possessing all kinds of solutions, and even providing more to the FI department.
Real-time and storable chat boosts communication and integration among the departments in addition to improving the reachability of the data. Developed monitoring, on the other hand, introduces transparency that contributes immensely to interconnectedness. FinTechs provide many more solutions to increase efficiency and manageability of the department. Thus, preferring a digital tool to introduce those valuable assets to the workflow of financial institutions and stepping up to smart finance is the wisest choice.
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