Transaction banking has been of great importance to financial institutions as it aids digitally-backed seamless operations by managing a wide range of banking services that involve transactions of varying kinds for businesses, public enterprises, and educational institutes. With a focus on easing educational funding and scholarships, transaction banking can help optimise processes, ensuring efficient distribution and management of capital.

How does transaction banking simplify processes regarding educational funding?

1. Enhanced fund disbursement: Transaction banking offers automated payment systems which can manage bulk disbursement requests error-free. Given the rising demand among Indian students to seek education overseas, educational institutions need to ensure that their payment systems are robust to provide a safe and secure environment while dealing with bulk disbursements. For educational institutions, it translates to seamless transfer of scholarship funds directly to students’ accounts in a real-time and safe environment.

2. Heightened security: Transaction banking services follow strong security protocols to protect the stakeholders’ interests and funds against fraud. A crucial element for risk-free disbursement of scholarship funds, which are majorly targeted by fraudulent activities. Secure banking systems ensure that funds reach the intended recipients without any potential risks.

3. Improved financial management: Providing centralised platforms to help institutional users manage all their financial transactions, transaction banking services let educational institutions optimally have a tab on the allocation, distribution, and monitoring of scholarship funds, hence reducing the margin of errors in former manual processes. Transaction banking also provides all-inclusive reporting tools to help educational institutions with detailed reports on fund usage. These reports help audit and maintain compliance with financial regulations.

How transaction banking supports financial inclusion

1. Ease of banking services: Transaction banking service providers partner with educational institutions to provide bank accounts for students, which enables the students, especially the marginalised ones, to manage their finances optimally and receive scholarship funds directly to their accounts. Several transaction banks also sensitise students with vital financial information on managing their finances, budgeting, and planning for future expenses.

2. Online banking: As mobile and online banking increasingly have become a mainstay in the financial world, students can access their funds anytime and anywhere. This convenience is of great benefit for students who may find it difficult to access physical bank branches. Transaction banks leverage intuitive banking platforms for students to have easy access. These platforms are equipped with features like transaction histories, budgeting tools, etc.

Simplifying partnerships and innovations

1. Educational institutions partnerships: Transaction banks partner with educational institutions to develop customised financial solutions that are beneficial for both the institution and the students. These solutions include customised scholarship disbursement schedules, specialised accounts, and dedicated support services. Transaction banks often engage in R&D to innovate financial products and services that increase the efficiency of educational funding.

2. Leveraging technology: Using blockchain technology, transaction banking has great potential to grow transparency and the security of funds. Blockchain technology ensures that all transactions are recorded in an encrypted environment, hence bringing down the risk of fraud. In terms of AI and ML, artificial intelligence and machine learning algorithms can help us understand large amounts of data to identify trends and patterns in the educational funding sector.

Transaction banking, hence, keeps playing a critical role in helping optimise educational funding and scholarships by providing reliable, optimal, automated, and innovative financial services. Through automated payment systems, robust security measures, better financial management tools, and support for financial inclusion, transaction banking is here to ease the roadblocks that many students undergo while exploring educational institutions and managing their funds effectively.

The writer is the founder & CEO of TransBnk