Transaction services 2015: Foreword
As transaction banking evolves, it faces both challenges and opportunities.
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As transaction banking continues to evolve it faces both challenges and opportunities. Over the past year the renminbi has started to make progress as a currency for trade transactions. But transaction banking has also experienced heightened geopolitical risk across Russia and the Middle East, while Europe continues to struggle with its own economic crisis.
In the 2015 Transaction Services guide we explore the changing face of transaction banking as the market modernises. A key theme to emerge is how technology is playing an ever-more important role in how the business is run. In addition to being a key function for payments, improved technology is assisting international corporates as banks continue to retrench in the face of growing regulations and expensive compliance costs.
The need to develop new funding sources has become a pressing issue for many corporates, as many banks withdraw to their domestic markets. Rather than creating new products and services, banks have been exploring how better to use the options already available. Step forward commercial credit cards, which have found a new role in the market as a facilitator for supply chain finance.
Corporates are relying on their banks more than ever for advisory services, particularly when it comes to the on-boarding of new technology platforms. However, some treasurers still feel that their respective banking partners have a long way to go to provide the services they require to obtain the correct platform for their operations.
The internationalisation of even middle-market companies is changing how best to manage corporate treasury. This is leading to the emergence of cash pooling to mitigate fluctuating FX risk. However, this process of pulling in cash from around the world does not appeal to everyone.
Despite the difficulties faced in meeting compliance requirements and keeping the regulators happy, there has been a growth in interest from global technology firms to enter the payments space. With little experience of working in the financial industry, there is speculation that Facebook and its social media peers might find they need more than just a network of millions to create a successful payments platform.
Even as technology becomes a central theme for the business, many question how much time efficiency and financial benefit it brings. Banks are faced with the question of whether it is better to buy in the best of breed or to create their own proprietary platforms.
As transaction banking continues to globalize and modernise, this challenge has become increasingly important to the banking community.