What are Corporate Credit Cards? – Different Types of Cards
February 12, 2025
Commercial banking has traditionally been slow to adopt the latest technology. However, over the past few years, commercial banks have undergone so much transformation that they have now started using different technologies to complete different steps of the same process. In order to foster automation and better adoption of technology, it is important to view […]
There is no philosophy in the management domain which has not been criticized. The strategic financial management philosophy is no exception. Although it has been proven that there are numerous benefits to implementing this framework of decision making, there are some associated costs as well. This is because of the various disadvantages that accompany the […]
Turnover ratios (also known as efficiency ratios) are a very important class of ratios. These ratios are not only used by financial personnel but also by the people in charge of operations. However, we are going to consider these ratios from the point of view of outside investors. This is because judgments have to be […]
The bankruptcy process takes a long period of time to resolve. During this time frame, the company takes the protection of the legal system. The legal system makes provisions for discharging the previous claims on the assets of the company in a fair and equitable manner. However, the bankruptcy process is quite complex. It has […]
The past couple of decades has seen tectonic shifts in the way pension plans are being funded. Investors all over the world have been encouraged to shift from defined benefit pension plans to defined contribution pension plans. In the past, defined contribution plans were not considered to be pension plans at all. Instead, defined contribution […]
The liquidity management paradigm in the commercial banking industry has undergone a drastic change. At one time, liquidity management was driven by constraints such as cut-off times and end-of-day processing. However, with the passage of time, the industry has witnessed continuous technological advancement. The industry now has the infrastructure as well as the regulatory mechanism in place to enable the real-time processing of transactions. As a result, the past few years have witnessed the migration towards the concept of real-time liquidity.
Real-time liquidity is very important for clients and provides several benefits. However, there are many challenges that commercial banks and companies have to face while implementing this real-time liquidity. In this article, we will have a closer look at the concept of real-time liquidity as well as how it is implemented.
Traditionally, there has always been a time lag between when payments were made and when they were actually realized by the beneficiary. This is because the sending and the receiving bank needed time to settle their books and then transfer the funds to the beneficiary. The clearing and settlement were manual processes till the late 1990s and early 2000s. However, the past couple of decades has witnessed advancement in information technology. As a result, most of the transactions can now be automatically cleared and settled with a high degree of accuracy.
The end result is that commercial banks all across the world are now able to enable their clients to make instant payments. The money gets instantly transferred to the beneficiary in case of domestic payments. However, in the case of international payments, there is still a small-time lag. This too is being eliminated with the implementation of the SWIFT global payments initiative.
Corporations across the world expect their banks to provide them with real-time liquidity. This is because of the fact that real-time liquidity provides several advantages to corporations. Some of the important benefits which accrue to corporations have been mentioned below:
Even though real-time liquidity theoretically seems like a good idea, there are many challenges that need to be overcome in order to make it a success. Some of the most prominent challenges have been mentioned below:
The bottom line is that real-time liquidity has become a very important aspect of commercial banking. It is quite important for corporate clients. However, the idea is still in its nascent stage and is likely to face many challenges in the future.
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