Transaction banking has been a major driver of return on equity over the past five years, yet intense competition, changing corporate treasurer expectations and the impact of new regulations are impeding this growth. So, what can transaction banks do to move ahead of the marketplace?

For the past three years, CGI has sponsored the Association of Financial Professionals' "gtnews Transaction Banking Survey." This year's survey findings offer a snapshot of the current state of the transaction banking industry through the eyes of corporates and identify which business and IT priorities should be at top of the agenda as transaction banks establish their budgets for 2016.

While the results of this year's survey show improved satisfaction among corporates with their banking partners overall, as well as in service areas highlighted for improvement last year, the forward view remains challenging. Forty-one percent of corporate treasurers are looking to renegotiate or add new banking relationships, while we also see a trend toward reducing the number of banking partners overall.

Some of the main reasons for these trends, as identified in the survey, include the following:

Technology innovation: The technology capabilities of transaction banks continue to concern corporates. Corporates are looking for service innovation around cash management, payments and FX, and more than a third are looking to non-bank alternatives.

Corporates continue to out-innovate their transaction banking partners. While transaction banks continue to grapple with maintaining legacy systems and investing in client-centric innovation, corporates are demanding more and more in terms of technology every year.

Standards harmonization: Corporates are frustrated by the lack of consistent file formats and data standards, as well as IT testing costs among their various bank service providers.

Non-bank alternatives: Over one in three corporates are looking at new non-bank alternatives, including payment network, mobile wallet and similar providers, as well as third-party know your customer (KYC) solution providers.

Information delivery and service access: This year's survey revealed that improved information delivery and service access would lead to greater efficiencies and strengthen the bank-to-corporate relationship.

Online and mobile services: Corporate demands also reflect the rising importance of online and mobile services, with nearly 60% of corporates citing both as important criteria in selecting a bank.

Multi-bank portals: While many banks offer single bank portals, corporates are looking to move to multi-bank portals due to increasing treasury department consolidation.

There's a significant window of opportunity for transaction banks, but time is running short. Leading banks are taking immediate action by harmonizing standards, delivering real-time information and streamlining KYC processes. They're also investing in digital transaction banking, as well as multi-bank or highly advanced cross-service bank portals. In addition, they're launching new value-add services.

Interestingly, in terms of growth strategies, 43% of bank respondents say that enhancing the customer experience is their top focus, ahead of cost efficiency (23%) and innovative offerings (24%). Technology plays a key role, with both corporates and banks citing technology-based capabilities as a key factor in selecting a bank partner.

Building strong partnerships

Ultimately, building strong partnerships with corporates is key to growth and success. Corporates are looking to consolidate relationships to achieve economies of scale. They desire a solid strategic partner with whom they can implement long-term successful solutions. It's important for bank partners to make a conscious effort to understand their corporate customers' business and operations, so the bank-to-corporate partnership can be elevated to the next level. A huge 94% of corporates agree with this view.

Armed with a better understanding of what corporates want and how their expectations are evolving, transaction banks can better align their strategies, make smarter investment decisions, build stronger relationships and drive future growth.