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The future of transaction banking
Looking back over the past decade, one could argue that transaction banking had a good crisis.
P
Overturning the model
Payments, cash management, liquidity management, account
services, trade finance and supply chain management – all
once seen as potentially discrete segments for financial IT
firms to address – are increasingly seen as part of a wider
whole. Indeed, these siloed distinctions have always been of
little consequence to a bank chief executive’s view, whose
concern is a holistic understanding of the performance of the
transaction banking division as a whole.
For Manish Maakan, CEO, iGTB, and advocate of what he
calls contextual banking (see page 3), the financial IT indus-
try has yet to bite the bullet on getting to grips with what
corporates actually want from their banks rather than what
they have spent their time developing, based on how they see
banks traditionally operating.
reviously considered at the cautious and unglamorous
end of the spectrum, transaction banking has proved
its worth to the C-suite as a steady earner, providing
recurring fee income without straining the balance sheet.
A report released earlier this year by Bain & Co, Wolf in
Sheep’s Clothing: Disruption Ahead for Transaction Banking,
pointed to an increasingly crowded and technology-intensive
field and posed the question of how banks can stand out.
The report suggested that to succeed, “incumbent banks will
need to overhaul most aspects of their operating models,
including legacy technology systems.”
The need for a radical reassessment of the business has
been building. In 2016, McKinsey identified four key de-
velopments with the potential for system-level impact for
the transaction banking business: advanced analytics and
machine learning (AAML); distributed ledger technology;
FinTech challengers; and the EU’s Payments Services Direc-
tive 2 (PSD2), which required banks to open their payments
infrastructure and customer data assets to third parties to
develop payments and information services to be offered
direct to the banks’ clients.
Partly as a consequence of the crisis and its regulation and
partly owing to these technological advances, the siloed
world of transaction banking is being forced to revisit its
assumptions about the services its corporate and financial
institutions clients want.
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SWEPT ALONG IN THE
DIGITAL MAINSTREAM THINKING BIG SUCH IS LIFE, OR IS IT?
CLUB@SIBOS CANVASSES OPINION
ON THE FUTURE OF FINANCIAL
SERVICES IN THE DIGITAL WORLD SEPARATING HYPE FROM REALITY
CAN BE A DIFFICULT PROCESS
WHEN IT COMES TO AI ALL CHANGE IN THE
PAYMENTS LANDSCAPE
SASKIA DEVOLDER OF SWIFT ON
THE IMPLICATIONS OF PAYMENTS
TRANSFORMATION
WHO WAS NED KELLY?