Awards for Excellence 2016: Transaction services – The cons of consistency

By:
Kimberley Long
Published on:

By trying to be different, a lot of the world’s biggest transaction services houses are starting to look remarkably similar.

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Press release
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"One of our key strengths is that over the past year we’ve managed to stay consistent," one senior banker proudly tells Euromoney during an awards pitch.

But is consistency alone something to be proud of? Is continuing to offer a solid, dependable service not just the bare minimum to be expected?

In many ways, consistency is a cause for celebration. After all, meeting clients’ needs day in, day out is not to be underestimated.

In a time of uncertainty, of accelerating regulation and geopolitical risk, the ability to remain exactly the same is perceived as a commendable strength. Particularly as even some banks with established transaction services businesses are hitting difficulties. Deutsche Bank has had to admit it needs to radically update its anti-money laundering systems following investigation by the UK’s Financial Conduct Authority. The transaction services division is meant to be one of the bank’s few remaining crown jewels. And it’s perhaps best not to dwell on what happened at former stalwart RBS, which has pulled out of the business.

But for corporates left feeling jittery having seeing one bank after another exit geographies, or even whole markets, making a promise to stick around isn’t good enough.

Banks are only too keen to point out where their rivals have been withdrawing, while glossing over their own retrenchments. Consider the proposition from the viewpoint of a corporate treasurer. Any movement out of a business line or a region should be a warning sign – how can they be sure that their business won’t be next on the chopping block?

Differentiation is a buzzword across the whole global finance industry and transaction banking is not immune. But reading through the reams of submissions for the awards for excellence, what is apparent is not the differences, but the similarities.

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Kimberley Long,
Euromoney
 
Each bank was asked to provide granular insight on what makes it the best in a region, if not the whole world. Too often, it would be easy to simply copy and paste the names of different banks into the same pitch. There’ll be a section boasting about how bank X’s products have reached a new level of homogenization – impressive until you then read about bank Y’s claims to the same.

Statements on a bank’s legacy and longevity do not add any insight to the business. So, here’s a personal plea to the world’s transaction services bankers.

 

Dive straight in. 

  • How has the business developed? 
  • How has this changed things for the clients? 
  • Why did you think to develop this product or service before anyone else thought to? And most importantly of all, 
  • how have these developments and initiatives helped with the two things that really matter: winning more business from clients, and producing better returns in your business?


As it stands, one has to wonder how corporate treasurers even start to make a choice over which cash management RFP to go forward with. Making promises of consistency, or statements of legacy, are not ideal starting points.

However, it’s not all a case of 'different but the same’. The winners in Euromoney’s awards this year did demonstrate leadership and an offering that was better, if not always substantially different, to those of their competitors.

Clients are looking to move away from having a single provider for all their needs, so being the very best in one field will help grab business. Euromoney has also heard corporate treasurers express their irritation that some banks seem to only use transaction services as a way in to selling other areas of their business which may be more profitable. Treasurers do not want to be a gateway.

Then there’s technology. It’s vitally important to the transaction services business, perhaps more than any other part of global banking. But banks need to make sure they don’t fall into a marketing trap. They must implement new technology only when it makes a fundamental difference to how they run the division and serve their clients. Simply replacing paper documentation with the same forms to be submitted digitally won’t make a tangible difference to how business is run.

Here’s what differentiation really comes down to: you can have a global platform, but each client needs to feel it is tailored to their individual needs. Get that right, and your competitors will soon start to notice the difference.