State Bank of India (SBI), the country’s largest lender, has launched 34 transaction banking hubs across the top-21 district centres of India.
In case, you are also wondering what transaction banking means, and what these hubs will facilitate, here’s decoding them for you.
The term ‘transaction banking refers to a range of products, processes, and systems that enable core banking functions to provide comprehensive solutions for transactions, payments, and collections.
“The newly launched hubs (transaction banking hubs) will be staffed by product specialists who will also assist business customers with their other financial service needs by leveraging the ‘Power of One’ within the SBI Group by enabling seamless connectivity with other business verticals and subsidiary companies,” SBI said in a release.
SBI said these transaction hubs will also consolidate current account-related offerings.
Earlier, SBI had said in report that a transaction banking unit (TBU) refers to a specialised department within a bank that utilises technology to offer comprehensive solutions for handling bulk transactions for clients. The term clients can include corporate clients, government departments, financial institutions, and small and medium-sized enterprises (SMEs). The main goal of the TBU is to efficiently manage funds on behalf of clients while providing value-added services, such as customised management information systems (MIS) and dedicated client support.
Benefits Of Transaction Banking
Transaction banking can be highly beneficial for small businesses due to several reasons. To start with, it simplifies day-to-day transactions by offering a range of financial services, such as deposits and withdrawal, and wire transfers.
TBUs have a technology-driven platform that help clients handle large transactions for collection and payments. It enables effective management of funds and capital utilisation. Some notable services provided include the collection of bulk cash and cheques across India, electronic fund collection through various methods like national automated clearing house (NACH), direct debit, e-mandate, real-time collection capabilities through SBI branches, customised payment solutions for faster processing, integration with client’s ERP systems, and tailored management information systems.
The platform also offers liquidity management to efficiently manage funds across multiple accounts, execute dividend warrant payments, and provide dedicated client support for smooth collection and payment processes.
Further, transactional banking increases efficiency by streamlining financial transactions, thus allowing businesses to allocate resources to other areas. It also improves cash flow management by providing real-time access to financial information.