In my last entry I outlined six key reasons why a bank should offer a cash forecasting solution to corporate customers. In this entry, I will describe what are the main options in offering such a solution and why you should give up any fantasies about internal development or traditional application license business.
In practice, a bank has three alternative ways to offer a cash forecasting solution to its corporate customers:
You can develop a solution internally or outsource the development to a partner. You will own the IPRs to the application and you can develop the application as you wish.
This is, however, inevitably a massive undertaking that requires very deep understanding of corporate cash forecasting. Furthermore, the resources required for development and support are significant. This is guaranteed to be the most expensive and time-consuming way of bringing a cash forecasting solution to the market. Do not even think about this!
…guaranteed to be the most expensive and time-consuming way of bringing a cash forecasting solution to the market.
Alternatively, you can buy a white label software license. This is a somewhat less resource intensive approach and is likely to be both faster and less expensive than custom development.
But, to be successful, even this approach requires your sales people to have a deep understanding of cash forecasting, not to mention product management and customer service personnel.
Be honest with yourself: even if your sales representative is a virtuoso in selling cash management solutions, it is an entirely different kettle of fish to sell tools that improve your clients’ internal processes.
You have to commit to a sizable investment before you really know if the initiative is going to be successful or not.
Furthermore, your costs are going to be very front-loaded. This means you have to commit to a sizable investment before you really know if the initiative is going to be successful or not. Not such a great idea, either…
that includes the solution itself along with auxiliary services such as:
The solution provider should offer the solution as a cloud-based service and have a proven track record of scalability. This way the bank can offer the solution at a price that is affordable to even medium-sized and small companies. The bank can also leverage the partner’s expertise in cash forecasting and concentrate on just deepening the client relationships.
If you offer a solution like this under the bank’s own brand, you still incur administrative overhead from e.g. contract management and sales documentation. Brand management and legal liabilities also need to be considered.
Next week I will describe an even easier way for banks to offer cash forecasting without any commitments at all.