ERP Banking: What You Need To Know

ERP systems include many different components, yet continuously fails to include one critical piece: financial payments. 

Enterprise Resource Systems: What’s Missing?

Enterprise Resource Systems (ERPs) are arguably one of the most critical systems used by a business. Setting various departments up for success, studies have shown that ERP implementation led to business process improvement for 95% of businesses. Connecting many aspects of a company, an ERP system helps manage activities such as supply chain, manufacturing, accounting, services, and other workflows, with the exception of banking and more specifically, financial payments within the ERP. With both banking and ERPs being part of a business’ daily life, the ability to integrate those two has become more pressing than ever before.

 ERP Puzzle 
Strategic priorities for banks are shifting from simply managing loan applications, to being able to forecast what their customers will require next month or next year. Personalized financial experiences are becoming a top priority for corporate clients, as 72% of customers rated personalization as “highly important” in the financial services landscape. With these shifting customer expectations, a one size fits all approach should be considered outdated. 

This is where banking within the ERP can support this changing market. Also known as embedded banking, ERP banking is a relatively new approach that is revolutionizing digital banking for corporate treasurers and finance teams. With ERP banking, banks are now able to respond to modern corporate consumer needs while attracting their own benefits in the process, including higher customer retention and satisfaction.

ERPs, Defined. 

It is likely that you have heard the term ‘ERP’ being thrown around, but what exactly do ERPs do for a business? To break it down, an ERP software acts as a centralized platform and software that integrates all company information together, resulting in more efficient workflows. ERP systems are the most popular approach to gather, store, and interpret data while also enabling the automation of business processes, insight generation, and better productivity due to ease of data access. With the customizability of technology today, businesses of all sizes can leverage ERPs to meet their specific needs, whether it be predicting, planning, budgeting, reporting, or even all four. 

Cloud Vs. On-Premise - What’s the Difference?

When it comes down to selecting an ERP system, two options exist:

  1. Cloud-based ERP
  2. On-Premise ERP 

Cloud ERP vs On-Premise ERP

Cloud-based ERP: Today, cloud-based ERPs are the market-leader, though some businesses still do choose a more traditional on-premise ERP system. The key difference between the two infrastructures lies in how they are deployed. While cloud ERPs are accessed through the web and hosted on the vendor’s server, on-premise ERPs are installed locally, directly to a company’s servers. 

Cloud ERPs enable companies to access and analyze massive amounts of data with complete ease of access. The need for a digital-first world has skyrocketed due to the COVID-19 pandemic, and cloud ERP technology has emerged at the forefront of digital business. According to a Google-KPMG report, digitally transformed small to medium-sized businesses have boosted profits at almost double the speed of their counterparts. For SMBs, cloud-based ERPs can provide lower upfront costs, increase system stability, and are easily accessible. 

On-Premise ERP: On the other hand, on-premise ERPs provide companies with the advantage of customization. Organizations are able to have more control over data security, and for companies with more money to spend, it can be the best option for customizing system operations

Regardless of which ERP option you choose, the fact persists that ERPs fail to provide accessibility to key banking functions. To this day, accountants and treasury professionals are still required to conduct their banking activities through an often outdated banking portal. This isn’t even the end of it because their ERP and banking exist individually, they must manually input both payment information to and from each system, making it a very labor-heavy process where their time could have been otherwise spent working on other and more efficient tasks. 

What’s In Store for ERP Banking? 

Over the past decade, the use of ERPs has not only transformed the core of how SMBs run their business by helping to automate workflows and back office functions, but has also expanded to include more functions such as e-commerce, marketing, and more. This further leads us back to the concept of bringing the banking experience into the ERP, as ERPs continue to miss out on the opportunity to involve financial payments. 

Combining the ease of conducting banking activities within a system in which businesses already operate is an ideal situation, and ERP integration provides this ultimate solution. FISPAN’s integrated solutions touch on the many needs for finance departments to have faster payment reconciliation, invoice payments, and multiple modes of payment type options. This is made possible through the use of API-based integration, which ensures that the exchange of data is secure, confidential, quick, and reliable. Connecting to ERPs ultimately helps transform the banking experience for commercial clients, and ERP connectivity should be at the forefront of every bank’s focus. Read our Corporate Banking ERP Strategy playbook to learn about the various ways to make the connection.

FISPAN partnered with J.P. Morgan Chase to bring in next-generation technology to solve the most difficult treasury problems faced by accounts and finance professionals in small and medium-sized businesses. Watch our free on-demand webinar to learn how FISPAN and J.P Morgan Chase were able to successfully bring banking into the ERP to the benefit of finance departments, financial institutions and other payment providers.


ERP Banking Benefits Corporate Users

The benefits that ERP banking integration brings to corporate users are numerous: empowering finance leaders to have better control, more visibility, and increased data for decision-making capabilities. With companies that have more limited resources and labor, such as SMBs, the opportunity to integrate banking within their ERP results in high value-add. 88% of companies who implemented embedded finance report higher engagement with their customers. Larger companies are also able to integrate payments across all their channels, a task that was highly labour-intensive prior to this technology.

In ERP banking, payment data is synced both from and into the ERP system with the bank portal, which provides real-time reports, streamlined payment processing, and automatic reconciliation as a result of a single-window system. In fact, these all contribute to 3 overarching benefits:

  1. Smoother collaboration
  2. Increased data security
  3. Reduced operational costs 

ERP Banking Benefits Banks 

The benefits that generated as a result of ERP banking aren’t just limited for the corporate customer, but for banks as well. Providing corporate users with ERP integrations allows for higher retention, transaction flow, satisfaction and better performance overall for clients, which directly impacts the amount of transactions processed through the bank. 

Connecting your solution to ERPs can be made possible through bank and fintech collaboration, which is a secure, quick, and low-cost way to bring the experience forward to customers. Previously inaccessible revenue streams are able to be unlocked with fintech collaboration, as banks do not have the responsibility to maintain and manage the integration platform, and can rather focus their efforts on the customer experience itself. 

The ERP Market Landscape

Globally, the ERP market is projected to reach $117.09 billion by 2030; this growth surge is primarily due to the growing need for more transparent business processes and demand from SMBs. Though the on-premise segment continues to dominate in terms of market share, the cloud ERP segment will experience the highest growth in upcoming years. 

With different vendors that cater to different business needs, FISPAN has evaluated the current market to assess the most popular options and were able to categorize ERP vendors into four categories: 

May 2021 ERP Webinar-4

  1. The Big 4 - Long-term players in the ERP market boasting multiple products that cater to businesses across a wide range of sizes, industries, and geographies. Out of these four (Microsoft, Sage, Oracle, SAP) FISPAN has partnered with three, providing solutions for companies that use Sage Intacct, Microsoft Dynamics, and Oracle Netsuite.   
  2. Cloud Leaders - True cloud players with market-defining visions and strong go-to-market strategies that are best positioned for the future.
  3. Vertical Leaders - Dominant, industry specific ERPs with vertical-specific offerings.
  4. Leading Account Systems - Major players in the SMB space

Shaping Your ERP Integration Strategy

If you’re a bank looking to develop your ERP integration strategy, it’s not too late. We’ve identified the ERP integration best practices that you should consider before moving forward into ERP banking. 
  1. Identify the most common ERPs among your clients
    Each company has its own needs, which require different ERPs. Among your customers, it’s important to first determine the most popular ERPs and to focus on fintech opportunities related to the top 3. Globally, Microsoft Dynamics forms the system with the highest market share, followed by Oracle Cloud and Sage Intacct. Fintech opportunities that capitalize on the most common ERPs seen among your customer base will bring higher value and faster ROI when you first develop your ERP integration strategy.

  2. Review current practices
    Prior to implementation, it’s critical to evaluate your current product offerings to determine which products/services will bring the most value to your customers. With customers demanding more personalized experiences from their financial institutions, perfecting the user experience is critical for long-term growth. As an example, take FISPAN’s partnership with J.P Morgan to form Treasury Ignition. J.P Morgan recognized that their clients were searching for a way to bring J.P Morgan’s payments and receivables capabilities into their own ecosystem. This collaboration allowed J.P Morgan to bring the products their customers were searching for into their ERP while expanding their products and services.

  3. Decide how you want to move forward
    Now, you have the option to build vs. buy. Developing an in-house solution and acquiring an existing fintech to bring about an ERP banking experience might not necessarily be a realistic option, especially with the pressing problem of time, leaving only co-innovation as a possible opportunity. Leveraging the strengths of existing fintechs act as a secure and quick way to gain access to external capabilities. At FISPAN, we offer an end-to-end solution where our teams not only develop, but continuously support, manage and update our systems.

Looking Ahead With ERP Banking 

It is clear that client needs are shifting, and banking customer service has long struggled to innovate at the pace in which clients are asking for. Financial institutions are not structured to service these needs at these heightened paces and levels, and need to start looking beyond their own capabilities. Legacy systems make it highly difficult to build new products, which is why fintech to bank partnership is so critical to achieve success. As customer demand for intuitive banking experiences in the context of their ERP continues to grow, banks need to start leveraging technological solutions to meet these demands, by offering solutions such as ERP banking. 


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