Nowadays, it has become a standard in top banks to use a Banking ERP Software to manage all their core business processes. If you are a layman, you may be wondering what an ERP system is and how it impacts the current banking industry.
Read on to learn more about ERP, its functions in banking, and how it benefits the banking process.
What is an ERP system?
An ERP or Enterprise Resource Planning system is a centralized platform that stores and analyzes essential data while keeping it secured. ERPs manage all financial aspects of an organization while reducing errors.
ERPs can be defined in two ways:
- Strategy—ERP is a managerial approach that organizes core processes inside the company’s internal system.
- Software—ERP is a type of software that helps implement the strategy mentioned above.
To put it simply, ERP is an information system that stores and processes crucial company information. ERPs in banking focuses on critical processes such as financial transactions, client info, cross-department collaboration, etc.
It is important to note that this software cannot handle all business-related tasks as this can lead to high implementation costs while also becoming challenging to maintain. Therefore, you must have a clear idea of what essential aspects of your business you want to integrate into the system.
What are the Functions of an ERP system for Banking?
ERP solutions for banks need to have four vital operational characteristics for them to be effective:
Regardless of the company’s complexity, there should be a single database that includes its core business processes. This helps big banks gather crucial data and then process them by simplifying them for analysis.
Local and web ERPs for banks should smoothly integrate with different applications. This will ensure that every branch has access to the global ERP software so that managers can easily track performance.
ERP solutions allow banks to make quick decisions. In the 2008 financial crisis, banks that responded immediately could avoid immense losses while sluggish banks were wiped out.
Multilingual and Multicurrency
This is extremely important for international banks, and the best ERP system can support several different accounting methods, tax schemes, currencies, and languages.
What are the Benefits of Using ERP for Banking?
Apart from making the core business process more streamlined and efficient, an ERP system for a bank has the following benefits:
ERPs support multi-language and multi-currency use, thus allowing them to engage in international transactions. The multi-currency support helps users get updated currency transaction rates.
It will also support transfers and also manage international accounts of customers. Customers will be satisfied as they can use multiple currencies to make transactions and investments.
ERPs make it easier for banks to save time as transactions can be completed remotely. ERP systems also simplify the scheduling of employee time as well as roles. They also rarely have technical issues.
Customer Relationship Management is Easier
ERPs make customer management very simple. You can safely store their information and communicate with them quickly and efficiently. You can also integrate email and SMS communications with your customers for accessible communication.
ERPs allow you to access all necessary documents in just a few clicks. It also helps in managing documents across departments. You can also automate routine work such as updating data, generating reports, and monitoring. You can also view all KPI information on the KPI Dashboard.
Human Resource Management
An ERP can help you with managing employees and all employee-related requirements. You can manage leave and attendance of employees, recruitment, performance reviews, and employee expenses.
Reduces Operational Costs
ERPs can drastically reduce operational costs as automation can decrease the need for a workforce. Cloud-based ERP systems will also make redundant internal servers, data management, and maintenance teams.
Ease of Compliance with Regulators
Since the banking industry is highly regulated, ERPs can help banks maintain all regulations as per standards set by the regulatory body.
Once the regulations are integrated into the ERP system, you can follow a checklist when dealing with customer information, making documentation and compliance much more straightforward.
An ERP solution for banks has become a crucial aspect due to the immense amount of benefits and overall utility it provides compared to the investment required. The benefits listed above are not all that are present.
Many more benefits are available as most ERPs are customizable, and you can fit them to your bank’s unique needs.
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