With the rise in automation and interpersonal connectivity, there are now numerous different options available to perform cash settlements. For instance, to pay a dividend or vendor, a banking platform can be used to complete the transaction whereas one can make a funding transfer by sending out an instruction or email to the fund admin directly.

As you can see, options are plenty here, but why are we beginning to see a push towards single settlement platforms for these various forms of payments?

Alternatives

There are broadly two kinds of alternatives to the single settlement platform:

  1. Excessive Use of banking platforms: The implementation of different banking platforms for making transfers out of a bank’s account.Advantages
    1. Provides a sense of security since this is managed by the banks themselves.
    2. Issue resolution is performed by the banks, which can be easily checked if there are any blocks in transfers.

    Disadvantages

    1. Must use multiple platforms of the different banks to make transfers out of different accounts.
    2. Difficult to do an end-of-day reconciliation of all the payments that were made from different bank accounts.
    3. Customizable features are not available.
    4. Lack of central reporting and analytics.
  2. Paper-Based Cash Management: This is a popular method used for making payment instructions to fund admins or any other third party. This is usually done on paper-based Letters of Authorizations (LOAs) or through emails.Advantages
    1. Users have more control since the instructions can be changed or cancelled by making a call to the fund admin.

    Disadvantages

    1. A quite tedious manual process that is highly error-prone.
    2. Lack of reporting, analytics and ease to track the status of different payments.
    3. Lack of standard formats.
So, why is shifting towards a single settlement platform a feasible solution? A multi-admin, multi-bank supporting application is the answer to address most, if not all, of the issues that coincide with the aforementioned alternative options. This is due in part to:
  1. Greater Control & Reduced Risk when working with workflows and security checks within the application, which ultimately standardizes the entire process.
  2. Reduced Processing Costs coincide with having a single system. Also, with SWIFT integration and netting of transactions to be sent out via SWIFT, overall cost is reduced in a highly efficient way.
  3. Customized Features that are tailored for specific requirements and business cases based on individual client requests.
  4. Enhancements spanning reporting, analytics and auditing capabilities.
  5. Communication with banks, brokers and fund admins through a single application.
  6. Integration with upstream systems like trade ticketing systems and downstream systems like the Geneva accounting platform.