Why Real-Time Reconciliation Is Essential for Successful Bank-Direct Partnerships

Banks have unique privileges to handle customer money. These privileges are the reason regulatory agencies exist — to ensure banks follow through on their directive. And technology providers have a similar duty to help banks act responsibly, by providing technology that enables essential oversight. 

The recent Synapse collapse laid bare the need for transparency in bank-fintech partnerships. Without access to real-time transaction data, Synapse’s bank partners couldn’t verify reconciliations or correct discrepancies in how the fintech managed and transferred funds. As a result of this data gap, customer money remains unaccounted for.

Now more than ever, it’s evident bank-fintech partnerships require the same level of visibility and control afforded to banks. 

From Day One, Treasury Prime has considered banks our customers. As an embedded finance technology provider, it’s our responsibility to give banks constant, unwavering access to data. For us, that means robust transparency by design — building controls like real-time reconciliation directly into our product infrastructure.

‍The Importance of Real-Time Reconciliation

While reconciliation challenges are expected in any financial ecosystem, managing reconciliation is particularly crucial in bank-direct partnerships. 

Typically, BaaS providers handle reconciliation through an end-of-day settlement. The provider logs transactions into a ledger and settles up with the bank once a day at the close of business. Rather than having access to a constantly updating ledger, banks only receive a daily summary of account activity. 

Because Treasury Prime’s software has direct-to-core integrations, we provide real-time reconciliation to match and verify transactions instantly. Essentially, we operate as an extension of the bank’s ledger, so banks can monitor transactions as they occur and maintain complete oversight over funds at all times. 

We also take transparency a step further, creating separate settlement accounts for each payment rail. With this structure, banks can immediately spot discrepancies and identify the source of the issue, whether it stems from a wire transfer, ACH, or a card transaction. 

Real-time reconciliation means banks never need to question how, when, or where funds are moving because the information is in front of them at all times. 

‍Empowering Banks With Our Software 

Establishing direct core integrations is challenging. It requires navigating integrations with legacy technology, which is far more difficult than sending a reconciliation file once a day. 

At Treasury Prime, we took the path of greater resistance because we knew it would create a better system for our banks. And today, that additional effort means our software provides strong data governance, empowering banks to control operations as they extend their products and services. 

Imagine a bank’s fintech partner is running a KYC check to verify the identity of a new customer. Our software gives banks complete visibility into the approval process to ensure each account holder is properly vetted. Banks that use Treasury Prime’s platform can also impose rules on their fintech partners, such as limiting the total transaction volume for a partner.   

‍Complete Transparency Is the Only Path Forward for Embedded Finance

Moving forward, it’s essential that technology providers put banks in the driver’s seat when it comes to managing fintech partnerships. Banks need the same level of access to their fintech partners as they have to any other customer.

Achieving this transparency requires embedded tools like real-time reconciliation, ensuring banks are always aware of account activities, along with the capability to impose restrictions when necessary. And it requires building platforms with the right data structure to give banks full oversight over their fintech partners.

In the wake of the Synapse collapse, the stakes are higher for banks seeking to penetrate new markets through fintech partnerships. Treasury Prime is rising to the challenge of providing transparent embedded finance solutions so banks can confidently partner with fintechs to deliver innovative banking solutions for customers.

Ultimately, our goal is to help banks do what they do best — offer modern financial services — while we handle the complexities of building software that guarantees robust oversight.