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Transaction Banking gearing up for transformation

Kudos to the Transaction Banking practice of PwC for recently publishing their updated review of the trends in and around transaction services. It is a recommended read and does a good job at summarising the market forces at play and what they mean for Transaction Banking, indeed gearing up for a need to transform in a big way to stay relevant.

Key themes developed in the report and echoing well what we hear day in, day out across the globe include:

  • The challenge for banks particularly in Europe and North America to properly tackle the emerging market opportunities.
  • The need for banks to move beyond commoditised transaction services and differentiate (a point I also tried to make in a recent Finextra video).
  • The issues with the banks' salesforce needing to skill up and understand more about their client, including a more systematic analysis of the data they already have about their business in order to adjust the bank's offering to the corporate's actual value chain.
  • The recurring concern around risk and capital efficiency to keep on selling trade finance despite Basel III.
  • The new demands around collateral management.
  • The urgency of reconnecting the financial and real economy echoing the back-to-basics trend which has been a lot behind the higher profile enjoyed by transaction banking and in particular trade finance lately.
  • The fact that fear of difficult funding and access to liquidity is significantly higher in the mind of corporate treasurers today than before the crisis and the impact on the banks serving them (credit availability might be more important than good and cheap transaction banking products).
  • And, last but not least, the looming shake-up of B2B commerce through mobile, social and virtual marketplace concepts, the latter raising yet another risk of disintermediation for transaction banks. It feels a tad late and cheesy to talk about 'digital revolution' in 2012 after about 20 years now of the World Wide Web rocking our consumers' habits, but I agree that we seem to be at a tipping point in the B2B space.

Transformation, disruption, innovation... exciting times for Transaction Banking!

 

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Olivier Berthier

Olivier Berthier

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