banking

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Surviving (and thriving) in the Age of Real-Time Payments 

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Ten years ago, a payment between two banks could take 1–3 business days. Today, in many countries, money moves in 10 seconds or less, 24 hours a day, 365 days a year. Systems like UPI in India, Pix in Brazil, FedNow in the USA, and SEPA Instant in Europe have made real-time payments the new normal. 

Why Real-Time Payments Change Everything for Liquidity 

  • No more “float” In the old batch world, banks knew exactly when money would leave and arrive. They could use the 1–2-day float to earn interest or invest short-term. That float is now gone. 
  • 24/7/365 outflows Customers can now move money on Friday night, Saturday morning, or Christmas Day. Your liquidity has to be ready at 3 a.m. on a public holiday. 
  • Instant visibility = instant reactions When a large corporate pulls ₹500 crore at 11:55 p.m., you see it immediately — and so do your regulators and rating agencies. 
  • Higher intraday swings Studies show that intraday payment volumes can be 5–10 times higher than end-of-day net positions in real-time regimes. 

The New Rules of Liquidity Management 

Here are the practical steps successful banks and fintechs are taking today: 

1. Move from “End-of-Day” to “Real-Time” Treasury 

Old way: Look at balances once a day at 6 p.m. 

New way: Monitor positions continuously (every 5–15 minutes or even second-by-second). 

Tools that help: 

  • Real-time dashboards 
  • Treasury management systems (TMS) connected directly to the Real-Time Payments rails 
  • API-based position keeping 

2. Build Bigger and Smarter Buffers 

You need more high-quality liquid assets (HQLA) than before because: 

  • Outflows are unpredictable in timing 
  • Central bank standing facilities may be closed on weekends/holidays 

Many banks have increased their intraday liquidity buffers by 50–100% after moving to real-time. 

3. Pre-fund Nostro Accounts Strategically 

In cross-border real-time (e.g., SWIFT GPI, Ripple, or upcoming systems), you often need to pre-fund accounts in multiple currencies and time zones. Smart banks: 

  • Use AI to predict daily and hourly funding needs per currency 
  • Keep “just-enough” instead of “as-much-as-possible” 

4. Use Intraday Liquidity Tools from the Central Bank 

Many central banks now offer: 

  • Intraday credit (sometimes collateralized, sometimes uncollateralized) 
  • Open repo facilities 24/7 Make sure your operations and collateral teams are ready to use them instantly. 

5. Automate Liquidity Transfers 

Top performers use: 

  • Standing instructions and rules engines that move money automatically when balances cross thresholds 
  • “Liquidity bridges” between payment systems (e.g., RTGS, Fast payments, CBDC when it comes) 

6. Stress Test for the New Reality 

Old stress scenarios (“What if 5 big corporates leave at day-end?”) are not enough. New questions: 

  • What if 30% of salary credits hit at 00:01 on the 1st of the month? 
  • What if a viral social Real-Time Payments campaign moves ₹1000 crore in 30 minutes? 

7. Turn Liquidity into a Product 

Some forward-thinking banks are now offering “Instant Liquidity as a Service” to corporate clients and fintech partners — charging a small fee for guaranteed 24/7 availability. 

The Winners and the Strugglers 

Winners are: 

  • Banks that invested early in real-time treasury platforms 
  • Neobanks that were “born” in real-time and never had legacy batch thinking 
  • Fintechs that partner with banks for funding while offering better customer experience 

Strugglers are: 

  • Banks still running end-of-day Excel sheets 
  • Institutions that treat real-time payments as “just another payment rail” instead of a fundamental business model change 

Final Thought 

Real-time payments are not a technological upgrade. They are a complete rewrite of how money, risk, and customer expectations work. 

The banks and fintech’s that treat liquidity management as a 24/7, data-driven, automated capability will win the next decade. 

Those that keep managing collateral and limits with end-of-day spreadsheets, emails, and manual approvals will slowly (or suddenly) run out of cash—or breach their regulatory limits—at the worst possible moment. 

This is exactly why leading institutions are now moving to a single platform that: 

  • Tracks collateral pledges, haircuts, and eligibility in real time 
  • Monitors intraday limits across payment systems, currencies, and counterparties (including central bank intraday credit) 
  • Automatically blocks or warns before a payment would breach LCR, NSFR, or internal risk limits 
  • Optimizes collateral usage across intraday liquidity facilities, repo markets, and clearing systems 24/7 
  • Gives treasury, risk, and operations one live truth instead of 15 different reports 

 
Building or upgrading a real-time enterprise collateral & limit management system? We at SmitApps Technologies help banks and fast-growing fintech’s do exactly that—live, automated, and regulator-ready.  
 
Drop us email at [email protected]   if you’d like to see it in action. 

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The Financial Risks of Sticking with Outdated Banking Technology 

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In an era where technology continually reshapes how we live and work, the banking industry is no exception. Yet, many banks still rely on outdated systems, hoping to avoid the complexity and cost of change. While it might feel easier to stick with what’s familiar, the financial risks of holding onto old banking technology are growing—and they’re hard to ignore. 

  
One critical example of innovative technology reshaping the sector is the Enterprise Collateral and Limit Management System (ECLMS)—a modern solution designed to streamline and secure collateral management and credit limits across institutions. 
 

Why Outdated Technology Costs More Than You Think 

At first glance, using legacy systems might seem like a cost-saving move because it avoids the upfront expense of an upgrade. But the reality is different. According to Deloitte, banks can end up spending as much as 70% of their IT budgets just to maintain their older systems. That means less money is left for improving services or adopting new technology that customers expect today.  
 
The hidden cost? Inefficiencies, slower processes, and mistakes that can hurt both the bank and its customers. 

Security Risks: A Growing Threat to Banks 

Security isn’t just a buzzword; it’s a lifeline. Old software and aging infrastructure often have gaps in protection that hackers love to exploit. IBM Security’s 2023 report showed that banks using outdated technology are facing data breaches costing roughly $6.5 million per incident—almost double the cost for those with modern security setups. And it’s not just money at stake. A data breach can absolutely wreck a bank’s reputation and shake customer confidence, making recovery tough and expensive. 

Trouble Meeting Regulations 

The financial world is heavily regulated for good reasons. Banks have to follow strict rules about how they handle data, prevent fraud, and report suspicious activity. But older systems aren’t always designed to keep up with changing laws, like the European Union’s GDPR. Banks that can’t update their systems quickly risk big fines and legal headaches. The EU has already handed out fines totaling over €1 billion related in part to outdated compliance systems. 

Losing Customers to More Agile Competitors 

Today’s bank customers are more digitally savvy than ever. They want fast, easy access to their money and personalized services on their phones. According to McKinsey, more than half (56%) of banking customers globally prefer digital-only banks—which tend to have the newest technology. Banks stuck on old platforms run the risk of watching their customers go elsewhere for a better experience. 

But It’s Not Always Easy to Change 

Of course, shifting away from legacy technology isn’t simple. Smaller banks may not have the resources or expertise to make big tech investments quickly. Migration projects can be complex and sometimes disruptive. Still, many technology experts agree that the long-term cost of doing nothing usually outweighs the short-term challenges of upgrading. 

The Bottom Line 

The truth is, outdated banking technology isn’t just an inconvenience; it’s a financial liability. Between high maintenance costs, growing cybersecurity threats, regulatory risks, and the expectations of today’s customers, clinging to old systems could put a bank’s survival at risk. For banks looking to stay competitive and secure, embracing modern technology like ECLMS isn’t just smart—it’s essential. ECLMS offers a comprehensive, agile platform for managing collateral and credit limits efficiently, ensuring compliance, reducing risk, and enhancing customer trust in a digital-first world. 

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Open Banking and Risks. Were you aware of this? 

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BFSI players can leverage Open Banking and APIs to their advantage while safeguarding customer data, maintaining compliance, and driving innovation in the financial sector. While Open Banking and APIs offer great potential for innovation and convenience in the BFSI industry, they also come with inherent risks that need to be carefully managed. Here are some key ones: 

Data Security and Privacy: 

  • Increased attack surface: Open APIs create more entry points for hackers to access sensitive financial data. 
  • Data breaches: Third-party providers (TPPs) accessing data could be compromised, leading to leaks and unauthorized access. 
  • Accidental data exposure: Human errors or misconfigurations in API implementation can lead to accidental data exposure. 

Regulatory Compliance: 

  • Complex compliance landscape: Banks need to comply with various regulations regarding data sharing, user consent, and security, which can be challenging with Open Banking. 
  • KYC/AML risks: Verifying the identity and Anti-Money Laundering (AML) checks for TPPs add complexity and potential for fraud. 

Business Model Disruption: 

  • Commoditization of services: Open APIs can make core banking services accessible to new players, potentially eroding traditional banks’ competitive edge. 
  • Loss of customer relationships: If customers migrate to TPPs for specific services, banks may lose valuable customer data and engagement. 

Other Risks: 

  • Third-party risk management: Assessing and monitoring the security and reliability of TPPs requires robust due diligence processes. 
  • Operational complexity: Implementing and managing Open Banking infrastructure requires significant investment and ongoing maintenance. 
  • Lack of trust and transparency: Some customers may be hesitant to share their data due to privacy concerns and lack of transparency in data usage. 

However, the risks can be mitigated with these strategies: 

  • Robust security measures: Employ strong encryption, authentication protocols, and regular security audits. 
  • Strict data governance: Implement clear data access controls, consent management, and data usage policies. 
  • Thorough TPP vetting: Conduct rigorous due diligence and ongoing monitoring of TPPs’ security and compliance practices. 
  • Customer education and transparency: Clearly communicate data sharing practices, privacy policies, and customer control mechanisms. 
  • Investment in technology and compliance: Allocate resources to build secure and compliant Open Banking infrastructure. 

While the open banking landscape might seem like a thrilling tightrope walk, remember, you don’t have to navigate it alone. With the comprehensive risk management solutions, you can transform the thrill into a smooth, controlled ascent, reaching new heights of innovation and customer satisfaction. 

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Distributed Ledger Technology: A Helping Hand! 

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Distributed ledger technology (DLT), often synonymous with blockchain, is transforming the BSFI industry with its unique ability to create a secure, transparent, and shared record of transactions. Here’s how it’s making a difference: 

Enhanced Efficiency and Speed: 

  • Streamlined processes: DLT automates manual tasks and eliminates intermediaries, reducing time and costs for processes like trade finance, payments, and regulatory reporting. 
  • Faster settlements: Transactions occur in real-time or near real-time, unlike traditional settlement systems that can take days. This improves cash flow and liquidity management. 

Improved Transparency and Trust: 

  • Immutable records: Every transaction is recorded chronologically and immutably, creating a single source of truth that all participants can access. This reduces errors, disputes, and the need for reconciliation. 
  • Enhanced traceability: The entire history of an asset or transaction is visible, fostering greater accountability and auditability. This benefits areas like KYC/AML compliance and fraud prevention. 

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Innovation and New Business Models: 

  • Tokenization: Assets like securities, loans, and even identities can be tokenized on DLT, enabling fractional ownership, automated smart contracts, and new financial products. 
  • Decentralized finance (DeFi): DLT empowers peer-to-peer financial services without intermediaries, potentially making finance more accessible and inclusive. 

However, challenges remain: 

  • Scalability and performance: Public blockchains can struggle with scalability for high-volume transactions. Private DLTs offer better performance but sacrifice decentralization. 
  • Regulation and interoperability: Regulatory frameworks are still evolving, and different DLT platforms lack universal interoperability, hindering wider adoption. 

We, like many other software development companies are increasingly embracing embedded finance for several reasons like payments, microloans, or insurance within non-financial platforms creates new revenue opportunities through commissions, fees, or data monetization.  

Ultimately, distributed ledger technology and embedded finance represent exciting opportunities for the BSFI industry and software development companies like FERMION. By addressing the challenges and leveraging the potential effectively, these technologies can contribute to building a more efficient, transparent, and innovative financial landscape.