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Will the GTB landscape change in 2014?

Global transaction banking (GTB) continues to be the most profitable business for banks and has seen a steady growth across trade corridors in Asia, Europe and LATAM. But in terms of differentiation, the global transaction banking business didn’t see an extraordinary amount of innovation in 2013. Our clients, some of the world’s largest in the business, have certainly supported the needs of their globally mobile corporate clientele. But, value added services, such as real-time payments and supply chain offerings, were not exactly evident this year. Perhaps, the ever tightening grip of complex global regulations has had a bearing on the thinking of banks. Wait-and-watch seems to have been the mantra banks adopted in 2013 with respect to technological innovation.

In 2014, however, I believe in a bid to gain greater market share, we’ll witness a definitive thrust by banks to differentiate themselves through innovation. Offering information across channels, dedicated web portals for corporate clients to access and manage their portfolios, competitively priced products proactively offered through multiple touch-points, real-time payments and settlements, cash management services for real-time liquidity, etc., may well be on their way to becoming the norm rather than the exception. Banks may also more readily adopt technologies that will drive efficiency, such as SWIFT’s Trade Service Utility (TSU) and Oracle’s advanced corporate to bank connectivity protocols. In fact, banks may compete to offer services over the mobile, something their corporate clients have been actively demanding for a while. Leading the way in innovation, we think, are the North American banks, going and growing with their customers worldwide, as well as investing in the next generation infrastructure.

This year, we’re also likely to see geographic expansion. The imprint of GTB may extend into areas hitherto unexplored—Africa. Ethiopia, one of Africa’s fastest growing economies for example, is seeking to exploit its strategic location—it is a straighter air channel between Asia and Latin America—to become an alternative aviation hub. The obvious potential for trade flow in the LATAM-Asia corridor is likely to make Africa a strategic investment destination for transaction banks. Barclays and UBS are already interested, reportedly, in offering wealth management services in Africa. I see this as a precursor for more to follow in this region. GTB is one such.

We are working with some of the largest GTB businesses in the world, and we see banks continuing to spend a critical part of their technology budgets on GTB-related regulation and compliance initiatives this year (a major part of this will be serviced by vendors and not by the bank's own IT). While the quest for better customer service increases, so too will the spend on technology services that support transaction banking. Brass tacks: we see a lot of innovation in the offing this year. And technology will enable that.


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