Deep Dive: Next-Gen Transaction Banking—Unlocking Working Capital with AI and Embedded Finance

The New Era of Transaction Banking

Transaction banking is undergoing a profound transformation. As corporate clients demand real-time, integrated, and personalized cash management, and as fintechs set new standards for speed and transparency, commercial banks face a pivotal opportunity—and challenge. The future belongs to those who can unlock working capital efficiently, deliver seamless digital experiences, and embed banking directly into the heart of their clients’ operations. At the center of this evolution: artificial intelligence (AI), generative AI, and embedded finance.

Evolving Corporate Expectations: Real-Time, Integrated, Personalized

Today’s corporates—especially mid-to-large enterprises—manage complex, multi-bank relationships and expect a 360-degree view of their cash and liquidity. The days of waiting weeks for onboarding or days for funds to clear are over. Key trends include:

Multiple Bank Relationships: Corporates often maintain 6–10 banking relationships, with some managing over 20, making unified visibility and control essential.
Demand for Speed: The expected time to cash has dropped from months to under 24 hours.
ERP Integration: 36% of corporates have adopted bank-to-ERP plug-and-play solutions, and 48% have embraced open banking APIs.
Personalized, Proactive Service: 62% seek a single, real-time view of balances; 65% cite onboarding and KYC as pain points; and 44% would switch providers for a better digital experience.

The Rise of Fintechs and the Pressure to Modernize

Fintechs are rapidly capturing market share in payments, cash management, and supply chain finance by leveraging AI, machine learning, and data analytics. Their agility and customer-centricity have raised the bar for speed, transparency, and tailored solutions. In response, traditional banks are accelerating digital transformation, but many are still held back by legacy technology and fragmented data.

Legacy Technology: 51% of banks cite fragmented, siloed systems as a primary barrier to growth; 40% struggle with scalability.
Data Quality: Outdated systems and poor data integration hinder the realization of a connected, intelligent ecosystem.
Client Experience Gaps: 48% of corporates rate their digital servicing as average or poor; cross-selling of working capital products remains below 29% in Western Europe.

AI and Embedded Finance: The Game Changers

AI-Powered Dashboards and ERP Integrations

The next generation of transaction banking is defined by AI-powered, personalized dashboards that aggregate data from multiple banks and ERPs, providing a real-time, unified view of working capital. Generative AI enables:

No-Code, Self-Service Tools: Corporate clients can use Gen AI chat interfaces to build custom dashboards, connect to multiple banks and ERPs, and visualize key metrics—without engineering effort.
Proactive Forecasting: AI models analyze historical and real-time data to predict liquidity needs, flag potential shortfalls, and recommend tailored solutions.
Automated Credit Decisions: Pre-approved, invitation-only finance offers are surfaced directly in the dashboard, with instant underwriting and same-day disbursement.
Conversational AI: Clients interact with their data and banking services through natural language, receiving insights, alerts, and recommendations in real time.

Embedded Banking: ERP as the New Digital Bank

Embedded finance is redefining how corporates access and consume banking services. By integrating banking directly into ERP and treasury systems, banks become invisible enablers of business operations:

Plug-and-Play Integration: Open banking APIs and modular architectures allow banks to embed services into any ERP, reducing integration time from months to days.
Unified Experience: Clients manage payments, liquidity, and working capital from a single interface, with seamless approval workflows and real-time notifications.
Scalable Distribution: Banks can scale their offerings across multiple partners and platforms, creating new revenue streams through AI-as-a-Service and embedded product distribution.

Overcoming Barriers: Modernizing the Legacy Estate

To deliver on the promise of AI and embedded finance, banks must address foundational challenges:

Coreless, Cloud-Native Architecture: Modern, modular platforms break down product and channel silos, enabling rapid integration, scalability, and security.
Unified Data and AI: Decoupling data from legacy systems and layering advanced analytics and AI unlocks actionable insights and hyper-personalization.
Agile, Cross-Functional Teams: Moving from hierarchical, product-centric structures to agile teams aligned to customer journeys accelerates innovation and delivery.

Real-World Impact: What’s Possible

Banks that embrace next-gen transaction banking are already seeing measurable results:

Faster Onboarding: Onboarding times for SMEs and corporates have dropped from weeks to under an hour, with automated KYC and digital workflows.
Personalized Insights: AI-powered dashboards drive significant increases in client engagement and cross-sell, with proactive recommendations and real-time alerts.
Broader Reach: Embedded finance platforms support millions of users and thousands of merchants, expanding banks’ relevance and market share.
Cost and Efficiency Gains: Modern architectures reduce annual run costs by up to 50%, freeing resources for innovation and growth.

The Path Forward: A Value-Driven, AI-First Strategy

To lead in next-gen transaction banking, banks should:

Invest in AI and Data Foundations: Build robust, cloud-based data platforms and AI models to power real-time insights and automation.
Embrace Embedded Finance: Develop modular, API-driven solutions that integrate seamlessly with client ERPs and third-party platforms.
Modernize Core Systems: Transition to coreless, composable architectures that enable agility, scalability, and security.
Adopt Agile Ways of Working: Organize cross-functional teams around customer journeys and outcomes, not products.
Prioritize Responsible AI: Implement ethical, transparent, and secure AI practices to build trust and comply with regulations.

Why Publicis Sapient?

Publicis Sapient partners with leading banks to design and deliver next-generation transaction banking solutions. Our expertise spans strategy, product, experience, engineering, and data—enabling us to help clients:

Define and execute AI-first, embedded finance strategies
Build and scale modern, cloud-native platforms
Unlock new revenue streams through AI-as-a-Service and embedded product distribution
Deliver seamless, personalized experiences that drive client loyalty and growth

Conclusion: The Future Is Now

The convergence of AI, generative AI, and embedded finance is reshaping transaction banking and working capital management. Banks that act boldly—modernizing their technology, harnessing data and AI, and embedding themselves in their clients’ digital ecosystems—will unlock new value, deepen relationships, and secure their place at the center of the corporate financial landscape.

Now is the time to move beyond incremental change. The next generation of transaction banking is here—and it’s intelligent, embedded, and client-centric.

Learn more about how Publicis Sapient is helping commercial banks unlock working capital and lead in next-gen transaction banking at publicissapient.com/fs.