03 September 2014

Chris Principe

Chris Principe - Trade Solutions Group

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Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Transaction Banking Transistions

10 July 2014  |  814 views  |  0

Transaction Banking Transitions in Process

So how cool is this, to be talking about Transaction Banking fresh from doing the webinar presentation co-sponsored by FIBA and Financial IT Magazine.

Over the last five years or so, Transaction Banking has really taken a priority for banks and vendors. Banks have had to actively work to increase their fee revenue and find less risky forms of lending while their vendors try to have the products today that banks will need tomorrow. The challenge in finding and growing these revenue streams is many, from regulation and compliance, to legacy internal structures and platforms to understanding what it is that the corporations need.

I will hit some of these key areas that impact the criteria for Transaction Banking. For Transaction Banking to become a key profit driver for many institutions we need to identify the points that benefit the corporates as well as the impediments that both banks and their vendors face. There is widespread expectations of increased revenues and cost synergies, which provide the opportunities for revenue growth while managing risk.

Transaction Banking is the convergence of Cash, Trade, FX and Payments into a single integrated view for the corporation. The key for the corporations is Working Capital Optimization, how can I use my financial assets more efficiently and effectively in order to derive greater benefits for the business.

At times, the banks and their vendors become too focused on the individual products and how to price them losing the valuable insight that it is really about the needs of the corporations. In real life the corporations do not care what the individual products are, they care about what it takes to do my business and to do it better. From the webinar, I received several questions and comments regarding the following slide graphic which I call my head-light slide. The head-lights show the individual benefits for the bank and corporate with the intersection as the mutual advantage realized by both.

The key though all of this is the middle ground speed, efficiencies and most important Capital Returns are the goals of both banks and corporations. Every bank and corporation have shareholders, management and clients that need to see a growing, thriving business which adds value. This means that the bank has growing clients which allows both business to grow and improve the utilization of capital.

The second slide that gain some attention and was the last slide which I wanted to end the webinar leaving you with something to think about. What this diagram shows is the opportunity for extending the Transaction Banking hub to capture the B2B payments and Supply Chain Finance business of your corporate clients. This can be structured and operated as a Transaction Business Bank for initiation and settlement of transactions but most importantly for financing those transactions. Conventional services like payments, FX and mobile are far too easily commoditize, meaning competition is strong and profits margins are small or even non-existent. Financing and in particular Supply Chain Financing is where the benefits are and where the real money currently is both for the banks and corporates.

This is potentially huge money that corporates are willing to leave on the bank’s table. The future is to implement your transaction banking suite with the capabilities to not only centralize the corporate data, link the products together, but to truly give them options for working capital optimization. The bridge to the future is how to build a profitable Transaction Banking suite that extends and provides automated financing options for B2B and Supply Chain.That though is the punch line and a subject for the future.

Transaction Banking Graphics by Belpay TagsInnovationTransaction banking

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name

Chris Principe

job title

VP Transaction Banking

company name

Trade Solutions Group

member since

2008

location

Stuart

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Chris Principe has worked in International Trade as an exporter, importer and solutions provider ...

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