Transaction banking has outperformed investment and commercial banking in terms of revenue growth in the post-financial crisis period. To better position themselves for success, 82 per cent of banks that took part in a survey have reorganised their transaction banking operations in the past three years—43 per cent in 2012 alone.
Transaction banking is a growth area for banks, with volumes rising steadily. This is generating intense competition in transaction banking services among regional and local banks as well as global incumbents.
In a survey-based study by Celent and sponsored by NTT Data Getronics, Trends in Transaction Banking: A Global Survey, Celent finds that banks are racing to enhance product and service menus; automate processes and increase straight-through processing (STP); and build regional—and global—operational and technology platforms to support their business.
Asia is a particular focus because over half of the international trade in that region is between countries within Asia itself. The high proportion of intraregional trade is providing opportunities for the local banks operating in Asia, where global banks might not have a granular presence, and driving them to enhance their transaction banking capabilities.
“Transaction banking is a stiffly competitive business, with even smaller local banks investing in cash management capabilities,” says Neil Katkov, senior vice-president, Asia for Celent and co-author of the report. “The banks that succeed in meeting new client requirements will improve their competitive positioning not just in their home markets, but relative to the global players as well.”
“After the global financial crisis, corporates have changed their behavior and are increasingly focused on risk and liquidity management,” adds Axel Pierron, senior vice- president of Celent’s Securities & Investments Practice and co-author of the report. “This is creating opportunities for banks, and intense competition in transaction banking services.”
The report provides a view into banks’ products, clients and regional focuses; organisational strategies to strengthen competitiveness; technology investments to support new products and enhance STP; and areas of concern for heads of transaction banking.