Platformization of Banking — Part 3 — Bank of the Future

Chris Shayan
15 min readNov 10, 2023

This post is being written first time back in 2019–2020 with great contributions of Minh Tran, MBA, PSPO II and Woan Huey Ooi. I am sharing this as Part 3 to give few examples of a good platformized banks can do, a bank of the futuer.

The pre-reads:

Digital Banking = Repeat [ Execution + Generate Data + Learn + Experiment]

Business Banking of the Future — Elevating Local Experience

If the platformization is done right then there are some quick wins when it comes to business banking that banks can offer. It does not need to be too complicated like “Corporate Banking” despite it being very good if a bank can offer features like Virtual Bank Account for retailers.

Hassle-Free Payroll — PayrollX & BenefitsX

A zero-cost benefit that helps you attract and retain productive talent.

With the most compliant solution for employee access to their earned income, our service checks every box.

PayrollX platform provides a frictionless, digital experience at every stage of the employee lifecycle — from recruitment through off-boarding. With PayrollX solution, employees can access their pay and tips early and save it as they earn it. You can also send rewards with compliance and process off-cycle payments with ease. PayrollX provides an incredible pay experience with built-in earned pay access that makes employees happy, reduces turnover and increases productivity.

An employee can but not limited:

  • access her PAY before payday to cover bills that are due before his next paycheck for selected employees and risk is on employer
  • start to SAVE for their upcoming weekend getaway, taking steps toward creating greater financial stability in their lives.
  • enjoy exclusive services offered by our bank such as buy now pay later, 1'Click Loans, and more.
  • Buy healthcare insurance and retirement plans
  • 15 minutes mortgage loan
  • Salary Cash Advance for selected employees and risk is on employer

You as employer can but not limited:

  • Motivate your employees and fill shifts by sending an instant REWARD to employees who pick up extra shifts at the last minute, employee referral bonus, employee of the month, gym fee and many more employee retention policies.
  • disburses an employee’s final paycheck instantly using CYCLE, which enables off-cycle payroll processing.
  • Easily handle your tax withholding

If we think of a consumer’s balance sheet in the way we would a business’s, then payroll is the “revenue” side of the equation. To date, this data has only been visible to financial service providers in a peripheral way-income data isn’t available on credit reports and is only directly visible to a consumer’s primary bank. This data is important because it gives visibility into a consumer’s spending potential or “ability to pay,” while most other measures of credit focus on “willingness to pay.” Both Jeff Bezos and your grandmother may have a 760 FICO (indicating their “willingness to pay”) but have very different incomes (their “ability to pay”). Universal access to payroll data holds promise for lenders, neobanks, employers, and B2B fintech companies in distinct and interesting ways.

With new lending capabilities we can become better at both underwriting and servicing loans. Most immediately, lenders can verify income and employment information much more quickly and easily than existing methods for doing so. Further, when loan repayments are pulled directly out of a consumer’s paycheck, called payroll-attached lending, it de-risks a loan significantly. It is akin to a loan that is securitized with a consumer’s income stream, or by factoring a consumer’s paycheck, rather than a true unsecured loan where the lender depends on the customer’s willingness to repay. This sort of “voluntary garnishment” can reduce losses for lenders and allow them to underwrite to a broader set of consumers. In addition, payroll-attached lending has the potential to reduce fraud, improve credit quality, and decrease charge-offs. This is particularly important for startups in the unsecured lending space (such as credit cards and personal loans), since consumers are less likely to repay a loan from a lesser known startup than they are from an established legacy lender. The order of repayment is known as the “payment waterfall,” and pulling directly from payroll puts the lender in question at the top.

With new consumer fintech capabilities we can increase LTV by switching a consumer’s direct deposit. When neobanks and other deposit-taking institutions connect to payroll, it gives consumers the ability to re-route their direct deposit to a new account, called direct deposit switching. There are many benefits to receiving a consumer’s direct deposit. Namely, the account receiving the direct deposit is likely to be the consumer’s primary account, where the account is automatically funded with payroll rather than relying on the consumer to transfer funds. This dramatically increases the fintech company’s share of spend and LTV, as most neobanks today monetize through Durbin-exempt debit interchange (Reduce the amount retailers paid banks for customers who used debit cards, and they’d pass the savings on.).

We can also get more seamless and secure access to payroll and HR systems so that all employee data can be pulled into one place. This saves significant time for the software company that would typically need to build one-off integrations, as customers may be on different payroll and HR system providers. As a result, payroll access provides these applications with a rich set of additional data. For example, an FP&A application can pull detailed headcount expenses from payroll data; headcount expenses can be used to underwrite insurance or commercial lending for the business.

Finally, employers are better equipped to provide financial benefits to their employees. It is a strange anachronism that workers receive health benefits through their employers, but not financial benefits, even though the employer is their primary source of income. As this trend gathers steam, employers are increasingly offering holistic, employee-aligned benefits like earned wage access and savings accounts, all powered by payroll APIs. Companies like Brightside, which provides financial health as an employee benefit, are at the forefront of this approach.

Company Expense Cards — ExpenseX

Company Expense Cards are our company Master or VISA Cards for your business bank account. Our Company Expense Cards help you spend more time doing what you love. No more time-consuming admin like processing expenses and petty cash; and with no expenses claimed to do, your team can stay more focused on work. A simple way for your finance and accounting teams to track expenses.

  • As a finance team, I can control employee spending with customisable budgets for various expense categories and view itemised transactions for each user, in real-time. If any employee is missing receipts, don’t worry, ExpenseX will chase them up on your behalf! No need to manually upload expense reports to your accounts either — we will neatly organise all expense data and receipts into accounting software.
  • As a team/division leader, I can review, approve or reject expenses for members of your Team. New expense submissions will be available for review instantly. Has an employee submitted the wrong receipt, or selected the wrong category? Simply pop a note on the expense, and we will notify them for you!
  • As an employee, I can make purchases with my own debit card — no need to fork out of my own pocket! We receive most of your expense details automatically, you simply add a photo of your receipt and assign it to a category, then submit for review. Easy!

ExpenseX combines credit cards, payments, expenses and cash into one integrated experience to give you maximum control and visibility over spend.

Omnichannel Expense Management

  • Virtual Cards. Generate virtual cards for online payments. Trust employees to make payments under strict spending rules and budgets controlled by the finance team.
  • Physical Cards. Issue best in class Visa Commercial physical cards to traveling employees. Control every payment with built-in spend rules and automatically collect outstanding receipts in real-time.
  • Team Cards. Issue team cards for employees spending from a shared budget. Each employee receives a unique card number tied to a shared team budget. The perfect solution to manage subscriptions, marketing budgets, or project-based spending.
  • Spend Rules. Implement your company spending policy directly on cards. Configure spend rules based on locations, budgets, merchants, spend categories and days or times when cards can be used.
  • Approvals. Empower employees to request funds through an approval process. Implement multi-level approval for different request thresholds.
  • Receipts Collection. Automate expense reports with real-time transactions and collection of receipts. Stop chasing outstanding receipts to close the month.

ExpenseX Use Cases

Business Travel Spending

Book work trips, track employee expenses on the road and automate expense reports.

  • Book work trips quickly. Pay for flights, trains and accommodation online with unique cards. Request approval from management and book securely on any website.
  • Employees use our cards to pay for everything they need on the road. These cards are used just like normal credit cards, but within the spending limits set by the finance team.
  • If employees do have to pay out of pocket, they simply snap a photo of their receipt and ExpenseX manages reimbursement. That means no more time-consuming expense reports at the end of the month.

Administrative Expenses

A smarter way to manage office and administrative expenses. ExpenseX gives you complete control over your company’s operational spending.

  • Single-use cards. Anyone in your team can pay online with secure single-use cards and finance has a real-time view of office spending with every expense logged against the right person and team.
  • Automated receipt fetching. Chasing after receipts and invoices is certainly not what office managers are hired for. ExpenseX automates this process by letting each employee upload their own receipts on the spot with our very handy mobile app.
  • Each invoice is uploaded to ExpenseX as a PDF or JPG file and saved for as long as you need it. No more lost paper invoices, and no need to go hunting through your email inbox to find electronic copies.

Subscription Management

Smooth subscription management for busy managers and finance teams. Manage recurring SaaS payments easily thanks to our cards and smart tracking software.

  • Approve requests in seconds. Teams can request new tools in a few clicks. Once approved, finance still has the flexibility to pause the virtual card anytime.
  • Track payments centrally. All cardholders are visible from one dashboard. Say goodbye to paying unused softwares and keep only the essentials.
  • Manage budgets & suppliers. Get automatic notifications if there’s an increase on your subscription fee, and top up or cancel your card accordingly.
  • Export to accounting tools. Accounting data is pre-filled and accurate, and ExpenseX integrates with your chosen accounting tools.

Digital Advertising

Control paid marketing budgets and track spending across all channels in a single dashboard.

  • Simple & secure payments. Using the same corporate card for all advertising spend is risky and makes campaigns hard to manage. ExpenseX cards create unique payment details for each purchase, and aren’t linked to your bank account.
  • Precise transaction tracking. Tracking advertising payments on Google, Facebook, and other major networks is difficult. But every ExpenseX payment is managed from your dashboard. You’ll know exactly what you’re spending in real time, no matter where you spend.

Control paid marketing budgets and track spending across all channels in a single dashboard.

  • Immediate access to company funds. ExpenseX’s smart expense cards give office managers the money they need. Small payments can be pre-approved, and managers can give instant sign-off for larger transactions. You’ll never be caught out-of-pocket again.
  • Safe and secure — unlike petty cash. ExpenseX lets you track even the smallest payments instantly, save receipts electronically, and stay on top of office spending. It’s both safer and easier than the petty cash box, and doesn’t put a burden on admin teams.
  • Your office managers work closely with finance. And they need to share office expense payments easily. ExpenseX lets finance see what everyone’s spending in real time. That keeps the office running smoothly and finance in control.
  • Shoppee, Tiki, Lazada and others account for countless online payments on the company card. Instead, ExpenseX lets you create one-off payments directly from your web browser without sharing card details. It’s quick and easy, and every payment is tracked.

Team Perks

Manage team perks and other office expenses easily. ExpenseX makes it simple to pay for incidental office costs without the need for petty cash.

  • Immediate access to company funds. ExpenseX’s smart expense cards give office managers the money they need. Small payments can be pre-approved, and managers can give instant sign-off for larger transactions. You’ll never be caught out-of-pocket again.
  • Safe and secure — unlike petty cash. ExpenseX lets you track even the smallest payments instantly, save receipts electronically, and stay on top of office spending. It’s both safer and easier than the petty cash box, and doesn’t put a burden on admin teams.
  • Your office managers work closely with finance. And they need to share office expense payments easily. ExpenseX lets finance see what everyone’s spending in real time. That keeps the office running smoothly and finance in control.
  • Shoppee, Tiki, Lazada and others account for countless online payments on the company card. Instead, ExpenseX lets you create one-off payments directly from your web browser without sharing card details. It’s quick and easy, and every payment is tracked.

Invoice Processing

Streamline your accounts payable with simple invoice processing. Process, approve and pay invoices from all your teams quickly and efficiently.

  • Centralise invoice management. ExpenseX lets everyone upload outstanding invoices to one platform, for finance to handle when appropriate. No emails, no missing documents, and no worries.
  • Pay all invoices at once. Once invoices have been added and approved in ExpenseX, simply 1’Click pays all bills on our online banking portal. This keeps you on time and error-free.
  • No need to look over hundreds of receipts at the end of every month. ExpenseX’s OCR technology (and manual review for exceptional cases) reads them for you to make sure every one of them is valid.

Payment on Delivery (POD) as part of PayX

This is just like Cash On Delivery, instead of cash, the consumer confirms the payment upon delivery.

As a Consumer

With Payment on Delivery, you don’t have to pay for your purchase until after you receive your item. Only certain purchases offer Payment on Delivery as a payment method. There is no fee using Payment on Delivery.

When you use Payment on Delivery, we pay the seller right away, so there’s no delay in sending you the item. We withdraw the payment from your bank account and hold it in a simple escrow account which is visible for you on the ABC app.

You just need a debit or credit card to enjoy “Payment on Delivery” service.

As a Seller (Business Banking customer)

Increase customer trust and stimulate sales with Payment on Delivery.

  • Similar to Cash On Delivery but a lot less complicated and a lot more safer
  • Reach a New Audience. First time shoppers are more likely to purchase through your website if you offer Payment on Delivery. Increase trust and consumer satisfaction.
  • Direct Delivery. Guaranteed payments ensure that you can ship your products immediately. Ensuring punctual delivery for your consumers.
  • Protected Payments. We guarantee your payment, ensuring that you receive what’s due — whether your consumer pays or not. The risk is completely ours.
  • Net Promoter Score. We collect customer satisfaction reports on your behalf from consumers.
  • Promote repeat purchases. Facilitate repeat purchases through an easy to use, low threshold method of paying. Allowing you the chance to prove that your shop is one to trust and come back to.
  • Raise your order value. Payment on Delivery enhances your consumers purchasing power. Data shows an increase in A.O.V. after offering Payment on Delivery.
  • Boost your conversion. Payment on Delivery provides your consumers with an easily accessible way of paying. Promote one-click checkouts.

POD Happy Case — High Level Journey

This is the high-level journey and happy case of a consumer ordering something from a merchant. The journey follows these basic steps:

  1. Consumer makes the checkout on merchant platform (online or offline for simplicity we are assuming an online platform as of now in this journey)
  2. Bank moves the money from consumer account (debit or credit card) into Consumer POD account which is visible to Consumer and this transaction is visible to Merchant (we will show the services that bank offers to merchants in “Bank Services for Merchant” section) then banks send the finance confirmation to merchant
  3. Merchant confirms the order and informs 3PL.
  4. 3PL will deliver the goods to consumer
  5. Consumer using Bank app confirms the receival of goods
  6. Bank moves the money from the Consumer POD Account to the Merchant AR account.
  7. Finally the Sales Ordered is now considered completed and closed.

Out of the Box Services

These are some of the services which are available for merchant:

  • Revenue Report
  • Billed Revenue
  • Goods in transit Revenue
  • Declined Recieval Revenue
  • Recognized Revenue
  • Cash Flow Report
  • Cash in POD accounts
  • Cash in AR
  • AR Aging Report
  • Delivery Lead time vs Industry Average
  • NPS

Value Added Services

These are lists of services that we offer that are part of value added services.

NPS Collection

Upon payment confirmation on delivery, as a bank we can collect NPS data and provide analytics.

Exact Delivery Time

We can share the exact date and time (YYYY/MM/DD HH:MM:SS) of the moment the consumer has confirmed the payment after delivery which can help you to calculate delivery lead time.

Payment Link

A payment link is a way to request payment from customers who are paying for goods or services outside of a traditional online store purchase. It’s essentially a “Pay Now” or “Pay Invoice” button sent to customers via email. Once those customers click the payment button they’re taken to a payment page showing the amount due. They can securely fill in billing and shipping information, and the process is complete. Here a vendor offering Payment Link.

Recurring Payments

There are some B2Bs (like utilities, ISPs, eCommerce enablers, telcos, etc) that are offering subscriptions services and there is a need for recurring payments. There are many vendors right now offering help on recurring payments like Stripe, Paymill and a Vietnamese player too.

  • Identify is this a VBA or not; we can have
  • We use our bank account numbers and we can add some specific prefix or suffix that can help us to identify this is a VBA; OR
  • We build an interceptor, we can have a simple internal system that we record all VBA accounts there as a key-value then on each transfer request we can verify if target account is a VBA or not
  • Execute the transaction and record the VBA which is mapped to specific customer and our B2B customer

Virtual Bank Account (VBA) & Receivable Reconciliation

Perhaps I am not familiar with why it is so hard to offer VBA independently from all other complicated corporate banking. A simple VBA can save so much hassles for retailers. The most basic implementation of it could be like these steps:

  • Basic account balance and consolidated all bank accounts report
  • Available B2B Loans from our bank to them and apply for a loan
  • Spending Analytics (Cash Out)
  • Alerts, threshold and Scheduled Alerts on minimum cash on hand or transfers
  • Contact account manager
  • Account Level (VIP, Premium, Gold, etc)
  • Deposit Checks by scanning
  • Manage Debit Cards
  • Manage Credit Cards

CEO/CFO App

We can build a simple app that helps CEO/CFO on these features:

  • Basic account balance and consolidated all bank accounts report
  • Available B2B Loans from our bank to them and apply for a loan
  • Spending Analytics (Cash Out)
  • Alerts, threshold and Scheduled Alerts on minimum cash on hand or transfers
  • Contact account manager
  • Account Level (VIP, Premium, Gold, etc)
  • Deposit Checks by scanning
  • Manage Debit Cards
  • Manage Credit Cards

Vendor Portal

We can allow our B2B customers to add their vendors into our B2B systems, then the vendors will have an account to login to our vendor portal, they can choose to become our customers and enjoy the benefits or simply can just monitor transactions, bills, payments and next ARs.

Customer Portal

We can allow our B2B customers to add their own customer (we call it client for now) into our B2B systems, then the clients will have an account to login to our customer portal, they can choose to become our customers and enjoy the benefits or simply can just monitor transactions, bills, payments and next APs, or even valuate how reliable this company is before they can sign a contract with our B2B customer.

Originally published at https://www.linkedin.com.

--

--

Chris Shayan

Scaling Up, Growth and Digital Transformation guy.