The transaction banking and payments space is evolving rapidly with innovations in technology, enabling functionality that was previously difficult for banks to offer to their customers at scale. Competing in the area of digital transactions and payments, particularly in the context of open banking, can be challenging when it comes to technology, regulation, and capabilities for handling large volumes.

At the same time, mitigating risks in processing payments is a critical area where technology can optimise costs and processes. This is especially true in areas such as cross-border payments, multi-payment integration, and payments involving multiple financial institutions.

Stern International Bank is a US “state bank” as defined in Section 3 of the U.S. Federal Deposit Insurance Act (12 U.S.C. §1813(a)(2)) and is organised as an International Financial Entity in Puerto Rico. The bank specialises in providing correspondent banking services
to commercial, retail and investment banks in Western Europe, Latin America, and the Caribbean. Stern also provides trade finance as well as commercial and individual banking services.

Choosing an agile core banking system recognised in the industry and by federal US regulators for its robustness was a cornerstone of Stern Bank’s business development strategy. The Bank opted for ERI’s OLYMPIC Banking System, as it offered a fully configurable and customisable solution that would replace several existing systems simultaneously. The OLYMPIC Banking System responded to the challenges of the banking and financial sectors by streamlining and digitising processes from front to back office.

Solution and implementation overview
As a part of the new solution implementation, Stern Bank was keen to streamline and automate processes and procedures that would help to keep costs under control while enabling responsive customer service. A key strategic objective was to obtain a master online account with the New York Federal Reserve (“FRBNY”) to process USD payments as a direct clearer in the US financial system.

The OLYMPIC Banking System did not require specific developments to cover the core of Stern’s functional requirements as the system comprised predefined products, transaction templates, input screens, enquiries, menus, reports, pre-parameterised system tables, and business processes.

ERI was able to provide a range of services that are key to system implementation, including project planning and development, staff training and support, organisational model definition and maintenance. The system was implemented using an agile methodology and deployed on MS SQL Server for the whole bank as the core banking solution.

The project, handled 100% remotely in 2020, was completed in just 9 months, with Stern working closely with ERI’s consultants throughout the period.

Benefits achieved
The OLYMPIC Banking System covered all business functions from client onboarding to accounting. Since its implementation and deployment, Stern International Bank has seen great development in its transaction banking processes as the new system was able to support the bank’s growth and an increasing number of transactions. Additionally, via APIs, the system had a connection with ancillary compliance solutions to automatically embed regulatory constraints.

Leveraging this system enabled open connectivity and flexibility, which allowed Stern Bank to offer new products and services with a shorter time-to-market. The integration enabled the bank to add new segments to its existing client base, which was not possible using the previous IT system.

With improved transaction process speed, lower operational costs, and reduced risk of error, the bank saw an enhancement in efficiency with the implementation of fully integrated payment processing workflows.

Fee structures are usually based on a fixed price in the US, whereas the OLYMPIC Banking System allowed the bank to configure percentages as well. This flexibility was key when it came to managing multi- currency accounts.

The system offers digitally enabled customer service and a seamless omnichannel experience. Customers were also given the option to choose intermediaries with payment flows and secure mass downloading of payment instructions. Data analysis to respond to specific customer needs was pivotal in increasing customer acquisition and loyalty.

Conclusion
The technology partner chosen by Stern had to provide a core banking solution that was compatible with the Federal Reserve Bank of New York. By deploying the OLYMPIC Banking System, Stern Bank managed the entire payment processing lifecycle and all stakeholders from initiation through execution to full settlement, using the FRBNY as the correspondent account. Providing support for multi-currency, multi-language, multi-entity, and multi-time zone requirements enabled the bank to adapt to each client’s specific business requirements. OLYMPIC Banking System is now Stern’s primary technology platform, covering the full extent of its functional and technical needs across its various departments.