Could a transaction banking alliance fly?
Although the nature of partnerships in transaction banking for FIs is hotly debated, some transaction bankers believe that the industry is ready to take a leap into the future with a model where banks form alliances to offer services.
"There is a move towards a ‘One World’ airline-style alliance," says Paul Taylor, head of GTS FI sales, EMEA, at Bank of America Merrill Lynch. Of course, banks already have such alliances but most do not tend to advertise who does what. "That’s always been the case: competition is fine but where there’s no competitive edge it makes sense to unite for an enhanced proposition," adds Taylor. "At Bank of America Merrill Lynch we have well-publicized partnerships with Garanti Bank in Turkey and Abu Dhabi Commercial Bank in the UAE. These are perhaps some of the first examples of clear, alliance-style partnerships."
Although the idea of clear-cut alliances might make sense to some, many industry veterans say there is too much value tied up in client relationships to risk diluting it by explicitly working with other banks. "Clients know that banks work with each other to help them deliver services – that information is never hidden," says one banker. "But the service is ultimately delivered by the bank that has the relationship, which also takes responsibility if anything goes wrong. An alliance would weaken that link."
Colette Selfslagh, global head of financial institutions segment at JPMorgan Treasury Services, does not dismiss the idea of multilateral partnerships between banks out of hand but notes that the practicalities of such arrangements might prove complex: "It is possible but it would be challenging. Even to put bilateral partnerships in place takes a lot of time and effort."