The escrow accounts dilemma: Delivering the service your customers are asking for

Organisations responsible for managing funds on behalf of multiple entities are increasingly demanding enhanced escrow account services from their banks

by | December 16, 2021 | Cashfac

From legal firms to property managers and wealth management companies, organisations working across multiple sectors that manage funds on behalf of others are increasingly looking to their banks for an enhanced escrow accounts service.

Today, they are looking for their requirements to be fully met as they seek out more refined, fully automated, secure, integrated, and self-service options.

For many banks, this has brought lucrative new business opportunities in a growing cash management segment. However, banks are also recognising that their ability to retain and attract customers will be restricted by the limitations of their existing core demand deposit account (DDA) platforms.

“At the moment, customers in general are looking to their banks to provide a much better, fully automated escrow accounts service. However, many banks are struggling with their legacy systems – and they will lose business if they cannot meet their customer needs,” says Tim Martin, head of product management and pre-sales at leading global financial technology provider Cashfac.

“Customers want more than self-service capabilities, and banks now need to automate their process more fully so that customers can see transactions as they are being processed,” he continues, noting that in providing self-service capabilities, banks have shifted a bigger element of the self-service job to their customers.

“Banks have always looked at this from their own systems perspective, and have not provided customers with the seamless, robust service they now expect.”

 Delivering a fully automated, self-service alternative

Cashfac has developed its escrow accounts solution to enable banks to deliver a fully automated, self-service alternative to their customers. Banks using the white-labelled solution to distribute these services benefit from reduced pressure on their existing DDA platforms as well as reduced banking overheads and risk exposures.

The fully scalable solution offers banks greater scope to grow their escrow business by attracting new larger customers with more complex escrow requirements whilst also making the provision of these services to smaller customers more commercially viable.

Banks can quickly set up new customers and once set up, the customer can -open their own escrow accounts. Additionally the Cashfac platform can be integrated to the customer’s own back-office system, enabling end to end account creation and straight through processing of transactions. The escrow accounts are automatically reconciled to the customer’s master bank account, enabling both the banks and their customers to benefit further from easy compliance and control.

Greater automation is also provided in areas that include accounting for and collecting fees, and the payment of debit/credit interest and tax, thereby reducing the need for manual intervention.

“For many banks, there has always been a manual element in managing escrow services with their existing systems. As our solution automates the entire process, it frees up bank personnel to spend more time on other proactive tasks,” say Martin.

“From a security perspective, our solution also complies with bank security standards across the board, including having passed ethical hacking tests at banks globally.”

Designed with customers in mind

While generating compelling advantages for banks, Cashfac’s solution addresses customers’ modern-day, and often complex, escrow services requirements, enabling them to access a full self-service platform where they can automatically allocate transactions and initiate payments.

Martin points out that the solution was developed specifically in line with customers’ needs.

“One of the biggest benefits of our solution over other third-party solutions in the marketplace is that it was designed with the corporate customer in mind. It has been created to deliver the capabilities that they require, and for banks this has always been a challenge.”

He continues: “Added to this, escrow account services are required by multiple industries, and our solution can be configured for specific individual sectors ranging from property management to fund management. Variations of escrow account services are provided via the same platform, with multiple verticals tailored to the specific sector the customers are in.”

He explains that end customers accessing bank-delivered escrow services via Cashfac’s platform also benefit from reduced manual intervention with the automation of everyday tasks such as the remediation of overdrafts and surpluses as well as reconciliations. Compliance with state and federal regulations is also streamlined.

“Our solution also offers customers complete visibility into the entire order-to-cash lifecycle, which is what they now want to achieve. With a bank solution, this visibility is often limited to just the bank account,” says Martin.

Meeting banks’ evolving needs

Cashfac, an early pioneer of Virtual Bank Technology (VBT), has witnessed extensive take-up among banks of all sizes globally for its escrow and equivalent solutions. Most recently, Sterling National Bank adopted the solution to enable its customers to create and manage their own escrow accounts, streamline the receivables process and reduce processing delays and operational inefficiencies.

Cashfac’s escrow account solution is offered in two models: as a platform, which can be configured and tailored to meet a bank’s exact needs and as a pre-defined Software-as-a- Service (SaaS) out of the box solution.

“The technology and hosting offered is exactly the same,” says Martin. “Larger banks may prefer the platform version as it gives them more flexibility and additional integration options.

“Smaller banks can benefit from the SaaS option as it gives them a solution out of the box, with a shorter implementation timeframe, as well as the ability to scale up to the full platform if needed. For both options, Cashfac can deliver innovation without disruption and can enhance the customer experience.”

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