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Banks Prioritise Automation and Efficiency in Payments and Trade Finance to Grow their Transaction Banking Business

 

  • 69 percent cite operational inefficiencies as a barrier to growth in core businesses
  • Cross-border payments processing the top priority for investment globally
  • 84 percent said that increasing payments processing efficiency was a top priority
  • 56 percent said streamlining the trade finance business was key to future growth
  • APAC region has highest potential for corporate banking growth

16 September 2013 – Transaction bankers are going back to basics to drive revenue growth, reveals Misys’ annual survey of trends in transaction banking, published today at Sibos in Dubai. Findings also highlight significant progress by banks in the last 12 months as they consolidate transaction banking business lines and have sought new revenue streams by reacting to corporate demand for currency and counterparty risk mitigation.

The survey of 107 professionals in the trade finance, payments and cash management industry globally evaluated the state of the global transaction banking industry and the opportunities for improvement and growth.

Banks are looking to capitalise on core business lines before extending new value-added services in transaction banking, such as real-time payments services and Supply Chain Finance programmes. While marginal growth is coming from new ventures to offer these services, the biggest growth is expected to be seen in unleashing the potential of more automated payments, being able to streamline trade finance processing and offering more unified online channels for corporate transaction banking across trade, cash and treasury functions.

Regional differences in the potential for growth and demand for transaction services were also evident from the cross-section of respondents. More than a third (36 per cent) stated that they saw APAC as having the highest growth potential, while 30% said Europe was their main focus for growth.

There were regional differences in the demand for risk mitigation in cross-border trade and asset liability management. These services were mainly deemed important by SMEs in APAC with 55 per cent of banks seeking growth from these services in the region, compared with just 15 per cent for Europe.

“Increasingly corporates are demanding more joined up ways of looking across their transactions to better assess working capital and risks in their business, and we are seeing banks reacting to these demands, region by region,” said Wisam Mahmood, Global Product Director, Misys. “To maximise the return on their transaction banking business, banks are focusing on getting the fundamental infrastructure that mobilises their payments and trade finance business right in order to capitalise on new and future opportunities in the corporate banking market.”

The growing commoditisation of payments is another challenge emerging more strongly, with 58 per cent of respondents highlighting it this year, compared with 46 per cent last year. As it becomes harder to differentiate with standard payment products and services, banks are under increasing pressure to achieve greater efficiency in existing areas – and scale them at a regional or global level – while also directing resources to new product development and delivery.

In last year’s survey, 80 per cent said adding new online services was a strategic priority and many have stuck to that roadmap. 85 per cent now have an online portal offering for corporates. Of those who considered online trade services and cash management a key product for ensuring growth, 75 per cent considered regional rollout challenges to be a hurdle to growth from these services.

The results also showed that banks are focusing on improving the quality of their payments operations. 81 per cent of respondents say that reducing manual exceptions is a priority, indicative of the fact that incremental improvements in straight-through processing can still yield significant cost savings and improved customer satisfaction.

For further information on the survey, please visit: http://www.finextra.com/gtbs2013

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