Making Real Time a Reality (and Batch Processing a Relic)

By: Venkat Kamath –  Head of Engineering Bengaluru, Transaction Banking  

As technology advances, we expect more and more things to happen more or less immediately. You choose a movie, and it starts to stream. You order from a restaurant, and the cooks in the kitchen start preparing your meal. You send a text, and it reaches its recipient in real time.

For businesses, it’s vital to be able to keep up with these expectations. In a recent survey that examined customer attitudes, Salesforce found that 80 percent of business buyers expect companies to respond and interact with them in real time.1 Research by The Global Treasurer found that 68 percent of those who work in corporate treasury and finance rank real time systems and processes as the single biggest factor when establishing a banking relationship.2

Banking technology, though, too often frustrates our desire to get things done in real time. Yes, retail banking is making progress. You can pay money to a friend pretty much instantly on an app. You can see pending debits and deposits immediately on your banking app or website, although there likely will be a lag before they clear. But transaction banking has mostly not yet joined this modern era.

The heart of the problem is that bank systems have traditionally been built on batch processing—with transaction data stored as it’s received and then processed in a batch once a certain amount is collected or a time window elapses. This concept is the wrong way of doing things if you want to keep up with what transaction banking customers expect today.

Existing hurdles

For incumbent transaction banks, getting away from batch processing requires a major overhaul—a dauntingly complex transformation of business processes and technology platforms.

Legacy infrastructure throws up all kinds of obstacles to really operating in real time. For one thing, mainframe systems have been designed for batch processing workloads. Data moves via file exchanges that occur at scheduled times, typically once an hour. Even if you process data more frequently—micro-batching—the technology still comes up short. What’s more, because some reference data may only get updated once a day, a customer may find, for example, that a newly created account doesn’t get an account number assigned until the end of the day.

Even beyond system infrastructure issues, batch processing may foster an operational mindset that deems it appropriate to respond to issues only after processing is complete. This leads to longer recovery times when any processing failure occurs, and slower responses in many situations.

Multiyear transformation programs that attempt to change existing legacy architecture and make it able to process data in real time have experienced many failures. Banks may develop a new piece of real time processing software at the edge of the system, but this still must be integrated with core batch processing systems. That introduces massive complexity and leads to longer release cycles that make it harder for the transaction bank to respond to customer needs.  

A better way forward

At Goldman Sachs Transaction Banking (TxB), of course, we are not working to transform an existing system. We developed our platform from the ground up, starting from a clean slate. We built the platform fully in the cloud and based it entirely on APIs. Rather than trying to graft real-time functions on top of a batch processing architecture, ours is an event-driven architecture designed with real time as a first principle. Our backbone software facilitates real-time exchanges of messages and allows for concurrent processing by parallel systems—all with the aim of getting every transaction completed in real time. 

What does this mean for customers? It means that, once onboarded, they can set up virtual accounts in seconds with our Virtual Integrated Account offering. It means that the APIs available to our partners for payments and account management can process requests in real time. It means supplier receive payments faster, settlement windows are shorter, and the exchange of goods and services moves more quickly and efficiently. 

The architecture of our system also means that information and data are updated in real time—which makes them more useful. Customers get better information on cash positions and updated cash forecasts in real time. Treasurers get better information to help them react to current cash and working capital needs, which can be vital during periods of market volatility.

A faster future

The future is only going to keep picking up speed—expectations are only going to continue to rise. Today some 56 countries around the globe have either implemented or are in the process of implementing real-time payment infrastructures, predominantly for retail banking. For corporate customers and those in small and midsize businesses to take advantage, however, their transaction banking system has to operate in real time—not superficially, but deep down, throughout the entire software stack. That’s the promise we bring to the business with the Goldman Sachs TxB platform—all in the cloud, all in real time. 

Learn more about Transaction Banking


1Source: Salesforce Research, “State of the Connected Customer” January 2020

2Source: Harshit Jain, “If Time Is Money What Does Real-Time Mean for Business” (Global Treasurer) March 4, 2020