A Guide to Centralizing Bank Connectivity for Global Corporations

Quick and efficient financial operations and financial business intelligence are imperative for remaining competitive, especially when market dynamics, including the introduction and adoption of new technologies, are constantly shifting. To be good at what you do, you need to seamlessly transact with your partners and clients worldwide and easily access real-time cash flow and liquidity information. We’d go as far as to say that your success can hinge on efficient treasury operations that deliver fast, efficient, and seamless bank connectivity.

The current connectivity paradigm

Global companies operating across multiple geographies know this better than anyone. To successfully serve different markets worldwide, they need an established network of banking partners that enables them to send and receive payments around the world in a safe, transparent, and cost-efficient manner. However, having multiple banking relationships in today’s markets requires treasury departments to interface with a variety of bank communication channels through different connection types. And while it sounds simple enough, the facts show otherwise. Today, there are over 1400 financial messaging formats in use offering multiple connection possibilities and combinations.

Not only does this increase the IT burden on an ERP/treasury system, but unfortunately, it also translates into more work for treasurers. That means manual or script-based logging into separate bank portals to upload and retrieve payment data and reconcile transactions whenever information is embedded in different formats. And even with automated banking and format translation software, companies must often host bank integrations on-premises, which creates additional costly IT maintenance challenges. In both cases, transaction security is put at risk, straight-through-processing rates suffer, and account reconciliation and reporting become riddled with errors.

What can you do about it?

It’s no surprise that complicated, scattered, and cumbersome bank connectivity are a treasury department’s nightmare. However, Bank Connectivity as a Service (BCaaS) is an ideal solution that promises to streamline, centralize, and automate bank connectivity. A key feature of BCaaS is that it is bank and rail agnostic, affording companies the luxury of easily selecting which connection channel best serves their banking needs.

Take for example, Axletree’s AxleConnect. As a BCaaS solution, it allows companies to streamline their bank connectivity, onboarding, and relationship management. It manages all existing bank connections and new relationships through a central system, enabling companies to communicate with their banking partners securely and reliably.

Why opt for an external Bank Connectivity as a Service (BCaaS) provider?

Bank connectivity is essential to financial and operational success for corporations of all sizes. Therefore, the development and maintenance of bank connections must be seamless. The right connection channel must be paired with the right flexible financial messaging formats and secured through the right information security method.

To ensure the efficiency and security of their transactions, companies need to objectively assess whether their treasury departments and their supporting IT resources have the technical knowledge and budget to handle bank connectivity in-house.

If the answer is no, then it’s more prudent to outsource bank connectivity management to a BCaaS provider as it can unlock a host of benefits for a company’s treasury and financial management, including:

Cost efficiency: BCaaS solutions are mostly offered as either subscription or pay-as-you-go models. The company is charged depending on the number of existing connections and for each additional connection established. Therefore, there’s no need to undertake heavy in-house capital expenditures to install and upgrade ERP functionality and capacity, nor are there any additional maintenance costs associated with managing bank connectivity in-house.
Seamless plug-and-play connectivity: BCaaS solutions like Axletree’s AxleConnect come with pre-defined, rail-agnostic connections that allow for seamless connection to any of the world’s market infrastructures. The BCaaS provider maintains the back-end technology and security, enabling the client to focus on their primary operations.
Technical Expertise at a lower cost: With BCaaS solutions, companies can benefit from a specialized team’s technical expertise and bandwidth at a competitive price point compared to in-house maintenance. As an example, Axletree’s bank connectivity team are experts in effectively and seamlessly integrating back-end systems with the world’s leading market infrastructures, and are always on call to address our clients’ security considerations, technical queries, and connectivity requirements.
High connection uptime: Opting for a BCaaS provider shifts the onus of ensuring that all bank connections remain active from the company’s internal team to the external service provider. Axletree’s AxleConnect has a record uptime in excess of 99.99%, ensuring the continued, delay-free flow of transactions between our clients and their banking partners.

Getting ready to centralize bank connectivity

Before bringing a BCaaS provider on board, companies must evaluate their banking strategy and existing systems, and identify the following:

Transaction volumes and types: The types of connections and communication channels established through the BCaaS solution will depend on the average transaction volume and transaction types the company plans to transmit.
The number of existing and anticipated banking connections: Companies should take stock of how many banks they are connected to, the type of payment traffic format each bank uses, the number of additional bank connections they want to establish in the near future, and how many business entities are connected and transacting with each of their banking partners.
IT landscape: Having a clear picture of the existing systems and processes (manual and automated) is key. Companies need to know what treasury systems they are using, the strengths and weaknesses of their ERP system, how they reconcile accounts, and how all their processes flow between entities. In addition, they should also know about their existing security and encryption practices, and any gaps that need to be rectified.

Selecting your BCaaS Provider

The following are some questions organizations should consider while evaluating and selecting their ideal BCaaS provider:

Does the provider offer a wide variety of connectivity options, and do they fit my company’s banking connectivity needs?
Does the provider offer format translation and integration solutions, and do they support an extensive format library?
Can the provider promise end-to-end connection security?
What is the solution uptime, and what are the monitoring services like?
What additional value-added services does the provider offer?

Axletree is proud to provide peace of mind to our global clientele by offering the ability to transmit any transaction, from any system, to any network, anywhere in the world. Learn more about AxleConnect to discover how you can leverage Axletree’s marketplace suite to centralize bank connectivity, boost financial messaging capacity, and ensure seamless, end-to-end visibility and control over your financial transactions. Reach out to our team to get a free consultation with one of our connectivity experts!

January 7, 2025