Are you ready to implement Temenos Transact and design your future financial products? Have you considered an effective product path strategy to satisfy your ever-growing customer needs? Every business leader seeks right answers for such questions when you put your critical investments in line for aiding your banking operations. Product functionality coverage isn’t just enough to help you achieve your desired business goals, there is always a world outside of that which includes robust performance and easy maintenance of the product.

The essence of product design is to satisfy customer needs at every cost and maximize the returns from the product. In many cases, incorrect product design or improper integration lead to undesirable consequences.  It is pointless to implement a market leading solution to your Bank without adequate planning for its optimal design and use cases. With my long association with Temenos Transact and experience in multiple implementation projects, I have penned down 7 tips to build your Transact products in a constructive way.

The 7 Tips to design your Temenos Transact Products

• Group products based on common functionality

  As we know, the primary key benefit of Transact is Reusability. For the best utilization of it, the first step of product design should be identifying all common behaviour of your financial products. Accounts, deposits and lending being high level product line definitions in Transact, a financial product will fall into one of these high level classifications. Therefore, we can easily find the list of common behaviour of deposit products or account products. If we take account, the common behaviour can be savings, current or notice type of accounts. As another example for deposits, it can be common interest payment method like Interest pay-out or compound interest with deposit amount. If we have a clear definition that a set of products are applicable only for the group of customers belonging to a sector like salaried professionals, then that itself can be considered as a common behaviour. There are many other attributes to do this kind of grouping.

  • Products which share same asset and liability column
  • Products which have same tax benefits
  • Products which needs additional charges
  • Products which have same behaviour in maturity
  • Products which will allow partial withdrawal
  • Products which will change contracts into another product after some predefined time
  • Exclusive products for rollover

  Transact has property classes like interest, term and settlement and we will take an instance of it and build a product group. When we construct a product group, we need to group products based on the above listed common behaviours. It will give a strong basement to build further products.

• Decide your products as standalone or parent-child

  After you brought the product group in place, the next step would be constructing products. How to decide the optimal approach for a product? Should we create standalone products or use parent-child concept? It is always dependant on each bank’s business and the right approach will minimize the maintenance of product in future.

  

  To decide it, you need to list down all common functionalities at a side and different behaviour of the product at the other side. Do you sense that the common functionality is more and the differentiator is less, it clearly indicates you to follow parent-child concept bringing all common behaviour to parent? For Example, if a 5 year deposit is going to have fixed interest rate and a 1 year deposit goes to earn variable interest, we can create two child products just with different Interest definition whereas all the other components like payment schedule, settlement, maturity instructions, messaging, etc can be brought into the parent. Parent child concept is the best fit structure for products having more common features. On the other case there are few common functionalities but major is the difference, standalone products will be the right approach.

• Design Interest and Payment schedule components first

  Interest component is a key attribute for products and sometimes it will change our product structure itself. It is very essential to detail the interest component prior to product definition. Kindly consider all features of interest component of your product like whether it offers simple interest/compound Interest, follows fixed interest or variable interest, periodic automatic Interest or Interest based on terms. It is necessary to consider all these factors and ensure our parent-child approach should not affect the independent management of interest/payment schedule components. This consideration will help out in the future maintenance of products or the respective products.

• Decide the pricing model of products

  Transact has enabled us to have enterprise pricing feature (ie), even if we need different interest rates based on customer relationship, residence and channel, it is possible now to define all those variations within a single product.

  

  What is the best utilization of this feature? Reduction in the stack of products. If you confirm that Interest alone goes to be different for different currencies/region/channel, you do not need to increase the count of products. Just bring all your business financial products into one single Transact product. Product variation will help us to define the variation and define different pricing for it under a single product. It is a great relaxation that we no need mess up our system with N number of products and redefine the same thing. This feature has a huge benefit while doing data migration from legacy system to Transact. Imagine that we are going to migrate 1000 of legacy contracts into one single product in Transact, what will be the result in the effort for data mapping? A very clear reduction at the effort and hence in implementation cost.

• Design products as per your reporting needs.

  Why Core banking solutions enable all possible static definitions to be defined for contracts. Of course, it is to serve for financial reporting. All Income and expenses needs to be categorized properly in order to enable proper classifications in the reporting. Therefore, it becomes very essential to consider this point while designing a product itself.

  

  All contracts of a Transact product are going to have same asset and liability category/ Profit& Loss category and so Banks should take a pause and confirm a product definition; it should not include any contract that needs to be columned differently in reporting. If we need different column for a set of contracts, they surely need a separate product.

• Consider eligibility checklist for products.

  Do you check the eligibility of a customer to avail your financial products? If so, you can list out those eligibility conditions into two categories, one set as “Static checks” which will be verified only when a customer requests to avail a product for example credit score; another set as “dynamic check points” like customer age must be greater than 18 years. For dynamic check points, it is necessary to define eligibility component when u construct a product in Transact. It is our choice to check manually or through system for one-time eligibility checks. A product will have single eligibility component and hence we need to define an exclusive product if it has dynamic eligibility checkpoints.

• Decide how to track changes of product attributes

  With the enhanced functionality of Transact, It is now the bank who will decide whether interest rate or charge attributes of a product can be negotiated or not at contract level.

  
  Therfore, we need to list out all components of contracts and define whether it should be derived only from products and should not be changed at contract level. If so, they need to be defined as Tracking. If you need some attributes of a component like interest rate can be input only once at contract level and after that, it should not get changed, kindly make the component as custom tracking. The other group of attributes will fall under “Non-Tracking” category.

Wrapping Up

I am happy that I brought major product creation techniques through these 7 tips for the benefit of banks. Working with multiple implementation projects for different banks on Transact, I have discovered proper product definition will reduce the effort of implementation or data migration and so will reduce the operational cost as well as the maintenance cost in an immense way.

It is always advisable to plan and prepare well in advance, before you construct your next Transact product. As banks are looking at every possible way to drive operational efficiency, improve customer experience and shrink costs, a well-defined Temenos product structure is always the right move.

You can also catch some of the breath-taking features of Temenos Transact from my previous article in case you have missed.

How have payment methods evolved and how do transactions take place in our banking platform?

Buying things and paying for them is a regular part of our everyday life and we do it numerous times in a day. The biggest point to ponder here is how we have emerged in the world of payments. We are literally moving away from the days of pocket carrying leather wallets to digital wallets.

In the earlier days, trade use to happen in exchange of material goods, then slowly we emerged to payments in the form of ancient coins and it moved further in the form of leather money. Post which, paper based bank notes were issued by respective country authorities generally backed by Gold bricks. There are few other modes of payments made based on bill of exchange, debtor paying for creditor and cheque issuance. Eventually when the internet and technology evolved, all the current banking payments took the shape of digital payments.

The Growth Potentials

The technological advancements offer a vast potential for new payment services, from the acceptance of existing banking payment channel capabilities to the latest requirements of these new payment channels.  Thus, we get introduced to new fundamentals and concepts for payment process right from payment initiation or receipt to execution. Majority of users in all countries have regular access to internet services and the expansion of digital network is even more advanced.

Payment services are strongly governed by banking regulations and country specific rules, which keeps progressing on a regular basis. Interestingly, nowadays payment services are not purely the interest domain of banks anymore, payment fintech innovators such as Paypal, Chase, Apple Pay etc offer multiple payment products and services. For seamless payment processing, every such payment innovator also has to connect to the existing banking infrastructure and payment systems.

Statista has estimated that the total transaction value in the digital payments segment is projected to reach $ 10,520,219 million by 2025, growing at an annual growth rate of 12%. As payments processing volumes are growing with increasing diversity of customer demands, the areas such as digital payments modes, real-time payments, fraud monitoring and many aspects of processing are put under severe pressure within a bank’s functional system.

The emphasis is now, more than ever, on cost efficiency, better risk management, and building a resource-light digital platform for servicing customers, this has, in turn, accelerated the need to scale up technology within the banks.

Adoption of Temenos Payments HUB (TPH) in today’s digital payment world:

The true real time digital core banking system with a payments hub designed by Temenos offers an excellent breadth of new-age functionalities and ample levels of flexibilities.  Through smart configurations, TPH can easily meet the ever rising payment demands. Banks can now offer their customers a seamless payment experience which offers straight through processing (STP) and provides  a 360° view of all transactions in real-time and have a workflow for priority based payments processing. Thus, the Temenos payments hub more commonly known as TPH rules the digital payments world by facilitating easy arrangement at customer level for any payment volume or value.

Hassle-free instant payments

TPH is a one single real-time 24/7 platform which supports instant payment processing. The need for Instant/immediate payments has already taken its immense stride in the evolution of the payments market. It emphasizes the digitization of the supply chain in which real-time payments enable corporates to concentrate on their business priorities rather on the invoice payment and its subsequent processing. Additionally, the data of such transactions can be viewed in a real time with adequate financial insights on the fly. TPH has unrivalled STP (straight-through-processing) based on native functionalities with exception handling.

The robust architecture of TPH allows customers to seek intelligence of any payment transactions at given point of time. TPH can address global payments, instant payments and all the expectations of ISO20022 and real time settlement clearing.

Legacy Processes

More than digital, payments requirements is greatly differentiated by region and banks need to be more active in this space, and still there are use of cheques in certain regions and it is essential that banks move existing customer base from cheques to digital payments particularly if instant payments process has  to succeed. Regardless, it is essential for bank’s payment system to be easily adaptable to the changing needs of their customers and country regulations. TPH has the capabilities on the broader payment ecosystems and has the additional solution of Financial crime mitigation and repair option enabled.

Built with Open API’s for Open Banking

Open banking has taken the banking industry by a storm with the introduction of Open API’s.  Through Open API’s, banks have been provisioning and granting third-party services. TPH is an API enabled payment solution that offers a seamless integration service with the core banking platform to make sure STP is a success, a truly digital customer experience. It manages routing to all downstream payment processing systems based on rules. For example, all real-time payments can be routed to TPH for execution and route low value (e.g. ACH) payments through an existing legacy system, supporting progressive renovation.

Ensures Payment Compliance

TPH is built with a strong regulatory engine which has a close eye on country level compliance and governance requirements (e.g., PSD2). Supporting reporting requirements institutionalized by regulatory bodies or financial ministry is a matter of click for use cases such as submissions of financial documents and reports related to payment transactions, customer bank account details and other related payment information.

Conclusion

Payments are becoming increasingly important and seamless experience is essential for survival. The rise of digital payments enabled by latest technologies will lay a foundation for superior experience. Corporates will expect manual processes to be replaced with digital methods that are quicker, cheaper and incur less friction. TPH is an ideal solution, which has the capability of standalone deployment or can be embedded with Temenos Transact.

The banks should drive the back-office operations efficiently and the speed of fulfilment is also critical; the digital solution must therefore be front-to-back. Banks should perform friction-free back-office operations, and the back-office staff can work efficiently without any hassle. This ultimately comes down to using a single platform. Temenos payments can process to highly scaled up Tier-one payments volumes. A recent benchmark showed that it can process up to 10 billion payments per year and TPH supports this being highly parameterizable payment product. As one of the leading payment solutions, banks can lead the game of digital payments with TPH.

As technology and customer interaction keeps evolving on a regular basis, it becomes highly imperative for any traditional core banking solution to be at par.  The growth trend in digital transformation reached its peak during pandemic and this trend continues to grow and expand further. Newly improved versatile technologies such as cloud based databases raised eye brow’s with superior application performance and substantial cost savings. Banks need to re-energise their core banking solutions which could aid them with highly personalised customer engagements and be super-efficient.

Temenos is the number one banking software company with more than 3000 customers across 150 countries. With the continuous innovation and enhancements of last 25 years, Temenos has brought the core banking solution aka Temenos-Transact, that tops the charts with comprehensive set of modern features and functionalities as listed below in the figure

The digital properties embedded in Temenos Transact are impeccably crafted for elevating customer experience. Banks can rejoice the benefits of Open Banking, which is clearly demonstrated through built-in APIs on cloud native/cloud agnostic databases. Personalised products can be smartly configured in a jiffy.

Let us dig deeper on Temenos Transact and the value it offers to the banking world.

Breath-taking features of Temenos Transact that you can’t miss!

Reusability

The primary key focus of Transact is to maximise the reusability through a common pool of functional components. It has a reusable repository of components for each business services like Customer, Interest, Payment schedules, etc. These components are robust in nature and hence they can work independently with their own attributes and processes. Once we define a component be it either Savings account or Fixed term deposits, Transact easily allows to reuse the cross products with no boundary on what type of product it is. The reusability feature enables banks to reduce the implementation effort by eliminating “similar-look-alike” features.

Easy and faster launch of products

Temenos Transact has a flexible framework to allow bank users to build more banking products in much easier way. It follows a three-tier approach to create any financial products as given below.

The high level product lines are defined with attributes and processes associated with them and published by Temenos. In the subsequent level, banks can create product groups by picking the list of necessary and sufficient components. Usually, Temenos publishes model product groups as a part of the application package itself and some banks may reuse them as they are.

From a product group, any number of products can be designed either as stand-alone products or as parent-child products where child product can be inherited from the parent. It is possible for the child to have additional features on top of the parent or even to overrule parent features, if required. Once parent product is created and ready, Banks can create their own child products even within a week’s time. This ease of flexibility makes the job of product creation much faster.

Enterprise Pricing

If your banking business requires to have different pricing for different customers, it is possible now with a single Transact product. This is a big relief to banks. Transact allows to have different interest rates, based on customer relationship or the channel customer uses. Do you want to have different pricing for transactions depending on their creation date or to imply region specific pricing? Yes, these questions are very well answered by Transact’s enterprise pricing feature. You can just create one single product with various pricing options through multiple set of Configurations.

An important point to ponder – Transact Configuration is easily possible even If your requirements need to have user defined variations and exclusive interest rates for each variation. This feature reduces the effort to create separate products for each type of pricing and hence will result in low Implementation cost.

Open APIs for Easy Integration

We have so many advanced technology applications and products in the market, so it is essential for any core banking solutions to facilitate easy communication passage and integration with any third party system. The Open APIs available in Temenos Transact offer seamless synergies with other product suites such as Temenos Infinity or Temenos Payment Hub  (TPH). Additionally, these can be easily mounted on external systems for sanctioning communication access though built-in library of Open APIs.

Therefore, Transact is highly capable to bring in an unified solution to any bank with its desirable list of products including Infinity for digital front office or TPH for payment system and technologies like SaaS to run on own cloud or to use any external cloud and ride on the   advantage of different features

Event/Activity Driven Processes

Temenos transact has a list of event driven processes which enables banks to map an event and trigger all the needed processes with a little effort of configuration. You can trigger a business event like partial withdrawal based on the defined financial transaction codes. As we know, TPH is a standalone product to handle all type of inbound and outbound payments. Using a simple mapping, you can connect to Transact in no time.

You can apply any kind of restrictions in business activities such as withdrawals, deposits, prepayments, etc in order to monitor them against the pre-defined rules. Penalties, overrides or even rejection of the transaction can be initiated in case of any deviations.

If we need to assign different screens to users based on a business event like creation of new arrangement or interest rate change, it is a single step of mapping which is put to action. We can define any number of screens as we want and map them against necessary business events. If you need to create delivery messages for any kind of business events – You can just define a field level mapping for it and the interface to the Transact delivery system can initiate the delivery processing.

Easy Maintenance of Transactions

Are you tired of default tracking behaviour of your traditional CBS products on the existing transactions, whenever you need to do a parameter change at product level? Transact has a solution that can define the required tracking rule. You can define the product with tracking option so that any change at the product will be applied to all existing contracts. If you don’t want such tracking, we can choose non-tracking option. We have an advanced custom tracking method too, wherein some attributes alone can be excluded from the tracking.

Such parameter changes in products can be easily controlled by an effective date of the contract which can help us to apply changes or make corrections only for a group of contracts. Also, Transact facilitates to have Backward/forward dated change definitions. Therefore, it is much easier now to maintain the existing contracts according to the business decisions.

Minimal Local Development

What about the ratio of implementation effort Vs local customization effort with the available Traditional Core Banking Solutions? Transact brings a well-packed end-to end solution in order to reduce the local development effort in a massive way with all the below enhanced features.

• It has a single contract view to showcase entire details of a contract including owner details, balances, interest rate, payment schedules, payment bills, settlement instructions and messages.
• It is possible to configure restrictions at field level and business events level
• We can imply charges for business activities just through configurations
• There are multiple stages to attach local routines, as required.
• Field /Component level negotiation rules can be defined
• Periodic attributes are associated with components.
• Well-structured limit functionality
• Enhanced enquiries for better management of banking business.
• Single facility for multiple loans even for retail customers, supporting additional borrowers on top of the primary borrower.
• Amend, reverse or update arrangements with effective date as back dated with recalculation and adjustment, if required
• Settle the disbursement of loan amount to multiple accounts in multi-currency with role-based home pages for users.

Simulation

Another customer friendly feature of Transact is Simulation, it helps user to do a transaction and check “what if” before committing the transaction. Let it be a creation of a new contract or modification of existing contracts, if the customer or back office user prefers to see the “what if” result, they can just simulate the operation and decide to proceed with the transaction or not.

It delights customers knowing what will be the interest, maturity date or instalment amount before proceeding with the transaction and helps them to take the right financial decision. This way banks can engage and retain customers well with 100% transparency.

A Contextual Solution for the New Normal

All banks need new functionalities like default payment holidays, negative interest rates and fee waivers to meet up the customer needs for the new normal situation like Covid-19. With the flexible architecture of Transact, Temenos has enhanced a new component for payment holiday with the complete functionality to defer loan Instalments for a defined period and collect the outstanding balances with different recalculation methods.

Transact allows negative interests too and it has a well-defined fee waiver functionality as well.

Soft Accounting

If your modern banking business seeks to define your own accounting and allocation rules, the rules-based accounting model of Transact helps with a smooth configuration. It is possible now to map a single action against a number of accounting events. For Example, interest and charges adjustments can be booked under different profit and loss head and income and expense out of negative rates can be booked under different profit and loss head.

Conclusion

Temenos Transact is the best modern end-to-end core banking solution, enabling wide range of possibilities through its robust architecture and breath-taking features. With the advent of Open API’s, the future of banking is brought alive for driving the culture of open banking eco-system. Transact promotes banks to offer rich customer experiences bringing any kind of products to market faster. Implementation cost is kept under a check with the virtues of higher degree of available configuration, zero customization and lower operational costs with easy maintenance of products and transactions. You can also visit my webinar recording to get a comprehensive view of Temenos Transact. Additionally, you can also learn some classy tips and best practices on Transact upgrade from my colleague’s article.

The game of retail banking can thrive on the compelling promises of Temenos Transact and the outcomes it delivers for operational efficiency, OPEX reduction, lowering IT burdens and process simplification. At Maveric, we help banks in building and managing their future connected core through our encyclopaedic proficiency by unlocking the best of Temenos Transact to #AccelerateNext.