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I am happy to share the initial findings of my research on how transaction banking is transforming. I will post additional information as my research develops and new fact-based findings emerge.
Transaction banking (TB) can be defined as the set of instruments and services that a bank offers to trading partners to financially support their reciprocal exchanges of goods (e.g., trade), monetary flows (e.g., cash), or commercial papers (e.g., exchanges).
TB allows banks to maintain close relationship with their corporate clients so banks don’t want to be dis-intermediated by other players.
TB transformation depends on regional conditions. So far I have explored Western Europe, North America, and some countries in APAC.
TB in Western Europe and NA: In a stressed economy, tracking financial instruments and trading parties makes transaction banking a safe source of revenue for a bank. Main objective of TB in these regions is to ensure bank complies with regulatory constraints.
Such constraints weigh on a bank’s operational costs. Therefore TB transformation at banks in these regions aims at optimizing operations and leveraging existing assets. Banks will apply TB Lifecycle Management to track the existing processes of internal transactions,
optimize their execution and reduce waste and costs. TB is evolutionary.
TB in APAC: Main objective is to support the business growth of corporate clients by growing bank’s capacity in human skills and financial solutions. TB is at a nascent stage. Banks are working to educate staff, build platform, portfolio, and positioning of
their TB offering. Banks have strong experience in assisting the import-export trade business of their clients. Banks will apply TB Lifecycle Management to track the processes of their clients’ supply chain business to provide at any stage — and when needed—the
necessary financial products and services. TB is revolutionary in this region.
I would agree that there are significant differences regionally and along the lines that mature markets are evolutionary and newer markets are more revolutionary, I also see the revolution in many African countries. What is also true is that in these revolutionary
countries you often see the payments infrastructures also being updated to modern (sometimes real time) ISO 20022 based solutions as they prepare their country to support the trade and transaction banking required to participate in the global economy and grow
Supply Chain Blockchain Personal Coach
26 May 2008
27 Dec 2018
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