What is the Payments Services Hub (PSH)?
iGTB’s Payments Services Hub (PSH) is a centralised real-time payments and transaction management solution for banks worldwide from small to large to Tier 1 global.
Why is such a Hub important for banks?
The future of payments will centre on not just the ability to process payments from a variety of different customers, instruments, channels and payments standards but also give the ability to understand each and every interaction whether it is initiated by a human, application or device and whether it is provided in traditional message, file or by means of digital API.
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To drive this understanding, banks must start with deploying a horizontal layer across all payment channels and interfaces to orchestrate the handling of instructions and execution of payments in a holistic and centralised manner. Payments Services Hub provides this functionality, handling any form of payment, whether it is traditional wire, ACH, real-time payments or even blockchain-related digital payments such as Ripple.
Payments Services Hub furthermore will enable corporate payments to be “business aware”, allowing banks to understand the intent or context of each and every interaction. Firstly, this improves the execution of the payment – taking contextual factors such as need for safety, speed, legality and insurance, counterparty trust, revocability and/or traceability into account to make intelligent route calculations. But it will also improve the interaction, by interpreting information to provide the optimal advice to corporates across their operations, including how to manage their money, credit facilities, or payment executions.
We term this contextual banking. Banks adopting such an approach can integrate much deeper into their corporate clients’ value chain, adding value and ensuring that they are not side-lined from the payments process. And last but not least, such an approach drastically improves the potential for cross-selling and up-selling.
What makes iGTB’s approach unique?
iGTB’s Payments Services Hub aligns with this view of banking by centralising a bank’s payment workflows – giving banks a better understanding of clients’ transactions and their context. Payments Services Hub then provides routing and transformation services based on business rules.
Yet the ability to orchestrate payments across channels and execute traditional payments are “hygiene factors” – important, delivering proven operational and economic benefits, yet more-or-less the industry standard.
iGTB differentiates itself by going a step further and enabling payments to be orchestrated horizontally across the bank, with the aim of enabling banks to become an integral part of their corporates’ supply chains – delivering tangible economic, operational, business and strategic benefits to both parties.
Looking ahead, banks must ready themselves for the Digital Age, support Real-Time payments and assess what that means from a corporate/consumer behaviour, regulatory compliance and banking IT infrastructure perspective. They must also support the convergence of retail/corporate payments across the spectrum of C2C, C2B, B2C, B2B.
iGTB’s approach aims to:
Change the operating model: Moving corporate and transaction banking to be centred around the corporate/consumer and not around the traditional product or account;
Change the application/IT: Moving corporate and transaction banking to be centred on the channel and interaction and not around core banking systems or transactions;
Change the strategy: Moving corporate and transaction banking to be centred on understanding the intent and context of each and every interaction, enabling optimization and maximization of the associated execution;
Drive partnership: This is about positioning banks to become valued partners for the corporates by understanding their business and delivering tangible business benefits, diffusing the risk of disintermediation.
What additional functionality does Payments Services Hub offer?
iGTB’s Payments Services Hub is a centralised real-time payments and transaction management solution.
In terms of functionality, iGTB’s Payments Services Hub also provides easy integration with downstream systems such as core banking systems and payment gateways. It therefore functions as a single, all-purpose centre for pre-processing payments, using a modern technology platform that is cost-effective, scalable and easy to implement.
iGTB’s Payments Services Hub offers banks a number of further advantages. Due to its ability to handle large transaction volumes, it enables banks to capitalise on growth opportunities – processing more payments for more clients, all while catering to the demand for rapid execution. The time-to-market for new products and channels is also improved, and there is enhanced visibility of payment flows.
Of course, it supports domestic and cross-border payments in various formats, including MT101, MT104, ISO Pain 001/Pain 008, ANSI X12, CPA005, NACHA 94, and many others.
What are the key benefits for Banks of using iGTB’s Payments Services Hub?
Many corporate customers use multiple payments formats to initiate both domestic and international payments across multiple isolated systems. iGTB’s Payments Services Hub provides a bank with an integrated, centralised solution to unite these separate channels – supporting existing products and services for payables and receivables. Beyond this, the solution provides a platform to accommodate further innovations – forming a foundation for the development of future payments products and capabilities.
Centralising payments services via iGTB’s Payments Services Hub opens the door to increased operational efficiency for both banks and their clients. New payment methods, channels, products and acquisitions can all be on-boarded quickly and cost-effectively, while banks also benefit from the reduced operational complexity of a centralised system, and increased straight-through processing (STP) rates for all payment types.
iGTB’s Payments Services Hub offers a comprehensive, yet flexible, payments services hub that allows banks to centralise and optimise their existing services, while offering a robust platform for developing new ones.
Can iGTB’s Payments Services Hub help with compliance?
iGTB’s Payments Services Hub creates a single data repository for client and transaction-specific information, along with clear, simple audit trails, making it easy for clients to store and retrieve information for compliance purposes. On top of this, all PSH channels can be integrated into fraud, AML and sanctions screening tools for added efficiency.
iGTB’s Payments Services Hub can also help banks meet Basel III requirements. Under Basel III’s Liquidity Coverage Ratio (LCR), banks are required to hold an amount of high-quality liquid assets (HQLAs) – such as cash, treasury bonds or corporate debt – equal to, or greater than, their net cash outflow over a 30-day stress period, having at least 100% coverage.
iGTB’s Payments Services Hub allows banks to monitor in near-real time their outflow of cash – and enables them to “dynamic throttle” their outgoing payment instructions from any division across the whole bank so that their cash outflow does not break the LCR covenant.
But what happens if the cash outflow does break the covenant? In that case, the bank would have to determine the available headroom, prioritise payments based on products or customers and execute only those payments allowed in the headroom. Those that are outside of the available headroom (and thus would violate the LCR ratio) would have to be put in a suspense queue to be released only when offset by incoming payments or if the bank allocated more HQLAs in order to raise the headroom.
In light of scarcity and the expense of capital within a bank, the ability to optimise required capital and to ensure adherence to the LCR by means of dynamic payment throttling is critical to meeting compliance requirements.