What are Corporate Credit Cards? – Different Types of Cards
February 12, 2025
Most investors do not invest directly in the company i.e. they are not promoters of the company. Rather they invest in the company through the stock market. This means that they buy shares at a certain value and make a profit only when the price of the shares go up or they get regular dividends […]
The Difference between Retail, Corporate, and Investment Banking Most of us when dealing with banks usually walk into the branch and get our work done we usually do not bother whether it is retail banking branch or a corporate banking branch. The difference between retail and corporate banking is that retail banking serves individuals and […]
The main criticism of the Barnewall model was that it only classified investors into two types. This created an oversimplification. Practitioners of behavioral finance wanted the classification to be more accurate and inclusive. This is the reason why they started creating another psychographic model. This model is called the Bielard, Biel, and Kaiser model, i.e., […]
It is a known fact that the world is in great need of infrastructure projects and, therefore, infrastructure finance. Developing countries need to build their infrastructure for the first time. This needs to be done in order to attract more investments. However, even developed countries need to build more infrastructure projects. This is because the […]
In the previous article, we learned about financial freedom or financial independence. However, in the traditional financial planning world, financial freedom was only considered to be a goal that is to be reached towards the end of one’s career. The general opinion was that financial freedom has to be reached when a person has attained […]
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.
Your email address will not be published. Required fields are marked *