Trade Finance Survey 2020: US and Europe bring two models to transaction banking


Kanika Saigal
Published on:

Standardization in transaction banking is making it easier for banks to enter new markets, but will it be the banks that have built strong, steady relationships or those with big budgets that take transaction banking into the future?


JPMorgan is making a move that has some European transaction bankers shaking in their boots. 

A year ago, the US bank announced that it would be expanding its commercial banking business to cover Europe and Asia. The target was and is mid-cap and middle-market corporates (with a capitalization of between around $250 million and a few billion) – the types of companies the bank hopes will flock to it, eager to leverage the bank’s global network and ambitious investment plans. 

“When an American investment banking giant says that they are interested in the mid-cap and middle-market corporate space in Europe, we are going to get nervous,” says one transaction banker at a European bank based in Paris. 

“We don’t have deep pockets like JPMorgan,” says another transaction banker in Frankfurt. “They have money to spend while we have to be incredibly disciplined in this current environment. Things are getting a lot tougher for us.”

Is this all part of JPMorgan’s plan: to compete for and win corporate business from its peers in Europe? 

Andrew Kresse 160x186

Andrew Kresse,

“This is not our intention,” says Andrew Kresse, head of corporate client banking and specialized industries (CCBSI), international banking for JPMorgan.

“Our commercial banking business has been serving American mid-cap and middle-market companies operating or expanding internationally, as well as the subsidiaries of non-US headquartered companies located in the US, so our announcement in early 2019 was a natural progression to increase the number of global companies served, focusing first on the mid-cap segment headquartered in Europe and Apac [Asia Pacific]. 

“Our offering will compliment what banks in Europe and elsewhere are already doing,” he says.

Domestic corporates aren’t of much interest to JPMorgan. Multinational companies, however, are fair game. And just because it isn’t JPMorgan’s intention to compete, doesn’t mean it won’t happen.


Standardization in transaction banking, whether in terms of compliance, law or technology, is creating a level playing field in the business for the first time. 

In Europe, the Single Euro Payments Area (Sepa) and Target Instant Payment Settlement (Tips) are creating a simplified platform for cross-border transactions. Similar initiatives across the globe, such as the Clearing House’s Real Time Payments initiative launched in 2017 in the US, Singapore’s Fast and Secure Transfers and Swift gpi Instant will eventually expand cross-border payments beyond regional blocs. 

In trade finance, there are a number of consortia and initiatives to bring banks and their partners together via a single platform, including the Trade Finance Distribution Initiative,, Voltron, the Trade Information Network, Marco Polo and Komgo – the list goes on. And while it might seem that the industry is fragmented, consolidation will eventually bring consortia numbers down.

“Think about all the payment platforms and trade-finance platforms and consortia we haven’t even heard of – those that didn’t even get off the starting block,” says one senior payments executive. “Yes, there have been so many initiatives, but only the strongest will survive in the end.” 

The same theory applies to the banking sector itself. 

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Mark Buitenhek,

“Standardization and consolidation will transform transaction banking in the short to medium term,” says Mark Buitenhek, global head of transaction banking at ING.

“Some smaller players in the field unable to gain market share – that could be a bank or a fintech – will either be acquired by another institution or will cease to exist, meanwhile, larger banks and institutions will be able to enter markets and businesses that perhaps they didn’t have an interest in before,” he says. 

There are a few signs that this is already happening. Building on the success of its personal savings account Marcus, Goldman Sachs has big cash management ambitions in North America. Deutsche Bank recently hired a new head of transaction banking in southeast Asia, Burkhard Ziegenhorn, to continue the bank’s transaction banking drive in the region. 

And then of course, there is JPMorgan, which has set its sights on Europe and Asia.

“Our expansion builds upon the firm’s strong global footprint, where our corporate and investment bank has been serving clients for decades – places such as Germany, France and the UK,” says Kresse. 

“For nearly a decade, JPMorgan’s global corporate banking team has been focusing on the needs of large corporate clients around the world and the products and services they require beyond traditional investment banking, including cash management and treasury-related products and services, which are key areas of focus for our corporate bankers.

“It has always been part of the plan – to be the best global corporate bank for global companies” says Kresse.

It is good news that corporates are looking to consolidate their banking relationships, but I don’t think we are at the stage where clients want one bank to be the one-stop-shop for all their needs 
 - Andrew Kresse, JPMorgan

Kresse is again keen to emphasize that JPMorgan will not be stepping on the toes of its European peers because corporates in Europe may still require multi-bank relationships to fulfil their banking needs. 

Given their very nature, many corporates need a local bank with local products and services, a regional bank with ties to support cross-regional business and an international bank that has the capability to take a business global. 

Smaller, regional banks aren’t too worried. 

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Imke Van den
Heuvel, ABN Amro

“We are a relationship bank,” says Imke Van den Heuvel, managing director, head of coverage for Benelux at ABN Amro and based in Amsterdam.

“Our business models are completely different to some of the North American investment banks that offer transaction services, which offer a transactional approach versus a relationship approach,” she says. “Our bankers and our service colleagues have daily conversations with many of our corporate banking clients in the Netherlands and we are ingrained in our clients’ business. American banks can come in and create an overlay structure for certain transaction-banking products needed on a global level, but we will remain important because these corporates will always need a local bank for local flavour. Indeed, in times of digitalization it is the people who make the difference.

“We all still have a role to play within this spectrum,” she says. “There is room for us all.”

Standard answers

But what about larger banks in the region? The likes of Deutsche, BNP Paribas and Commerzbank all see themselves as European banks with internal ambitions. How will they fair when JPMorgan comes bounding into Europe’s transaction banking market?

But while European banks may not be after North American multinationals on the continent, the same cannot be said for North American players coming into Europe.

Moreover, data shows that corporate clients are bucking the trend of multiple bank partners.

According to research by IT consulting company CGI, half the people they questioned for their Transaction Banking Survey 2019 said that they had a desire to consolidate their banking relationships for reasons such as convenience and cost. 

In some cases, innovation and competition is shifting the focus away from the banking sector all together to fintech and technology companies that can offer certain products on the cheap.

All in all, corporate clients are looking for better deals and streamlined services from a smaller number of banks than ever before. Standardization across transaction banking means that this could happen sooner than anticipated. 

It is against this backdrop that JPMorgan made its move into Europe’s corporate banking space.

The growing share of our investments dedicated to meeting an ever-more complex regulatory environment caps our ability to invest in pure innovation 
 - Jacques Levet, BNP Paribas

Kresse was appointed head of corporate client banking for CCBSI in February to build local teams to support non-US corporate clients with credit, hedging, investment banking, trade and treasury services, leveraging the banks’ corporate and transaction banking business back home. 

He is pragmatic about the task at hand, though.

“Yes, it is good news that corporates are looking to consolidate their banking relationships, but I don’t think we are at the stage where clients want one bank to be the one-stop-shop for all their needs,” says Kresse. 

“This isn’t to say that one bank couldn’t do it all, but rather that clients would prefer not to consolidate all their needs to just one bank.” 

But according to CGI, those preferences are changing. 

“I do think it is a good idea for European transaction banks to start rethinking their strategy,” says Buitenhek at ING. “Given all the change we are seeing in the industry, European banks could stay regional but risk being acquired by a bigger bank, or they could take a leap and look at how they can become global players as well.” 

North American strength

One cause for concern is the financial strength that US  transaction banks have compared with their European counterparts. Take a look at net revenue for the first nine months of 2019, and the North American banks, overall, have performed very well. 

JPMorgan net revenue for this period hit $87.3 billion, while Bank of America’s was $68.9 billion. Meanwhile, BNP Paribas saw net revenue at $37.2 billion, Societe Generale posted $20.6 billion and Deutsche $19.9 billion. 

Two reasons for the divergence in revenue are, firstly, the low to negative interest-rate environment in the eurozone, which combines with the second – costly regulatory requirements in the region – to make a challenging business background. 

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Benoit Desserre,
Societe Generale

“European banks don’t have the same capacity as US banks,” says Benoit Desserre, head of global transaction banking at Societe Generale. “Multiple new regulations including PSD2 [the EU’s second Payment Services Directive] on top of Basel III have put a strain – a necessary strain – on European banks, and as such we have to be a lot savvier about how we invest in technology to enhance our business.” 

On top of this there is of course Sepa, cross-border payments regulation and the EU’s recast Markets in Financial Instruments Directive, among others. 

True there is also a regulatory burden on banks in the US, but they are not struggling with the extra weight of low-to-negative interest rates that leave banks in Europe with so little room for manoeuvre. 

For Marc Kirchhoff, Commerzbank’s global head of transaction services, international European banks will also make the move into North America when needed. 

“The US banks have been on our radar for some time,” he says. “But don’t forget, we follow our clients to the US and beyond as well – international business is key to transaction banking.”

But unlike US players in Europe, European banks may be limited to current clients. 

The French transaction banker says: “European banks want to gain market share in the US, but we don’t have as much capacity as they do. Yes, we can follow our clients there, but picking up new business will be hard due to some of the imbalances. This isn’t a secret.” 

Buitenhek at ING says: “Negative interest rates in Europe will actually act as a catalyst to consolidation in the banking sector – and will mean that the focus will remain on fee-driven business.”

Trend reflection

Trends in investment banking reflect those in transaction banking. 

According to the business intelligence provider, Coalition, the top four transaction banks at year end 2018 were Citi, HSBC, JPMorgan and Bank of America. European banks – BNP Paribas, Deutsche Bank, Societe Generale and Crédit Agricole – followed in fifth, sixth, eighth and 10th place respectively. 

According to Coalition, transaction banking revenue for both EMEA and the US has grown year on year since 2015, but the percentage growth in the Americas has been higher. In the Americas, transaction banking revenue grew from $10.8 billion in 2015 to $13.1 billion in 2018, representing 21% growth. For EMEA, it grew from $9.9 billion to $10.1 billion – just 2% growth.

JPMorgan Chase has a technology budget of $11.5 billion, which includes spending on innovation. Although the bank doesn’t disclose its tech spend by line of business, approximately 10% of the wholesale payments technology budget is reserved for innovation.

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Jacques Levet,
BNP Paribas

“The growing share of our investments dedicated to meeting an ever-more complex regulatory environment caps our ability to invest in pure innovation,” says Jacques Levet, head of transaction banking, EMEA, at BNP Paribas. “We will often look outside for solutions and work with other companies to offer our clients the best products because we are not trying to be better than anyone but to only be the best we can be. 

“Our clients come first and we will use a number of different approaches – such as working with others – to meet their requirements,” he says. “But we are too focused on our clients to worry about what other banks are doing.” 

Strategic transaction banking investments at JPMorgan should boost its already profitable business. Globally, transaction banking revenue for JPMorgan has grown year on year from $3.7 billion in 2014 to $4.7 billion in 2018. Tech and automation in transaction banking will supercharge revenue in the business in the future.

But this isn’t to say that the European banks are doing a bad job. 

“The environment for European and US banks is completely different right now,” says Eric Li, research and analytics director at Coalition.

Eric Li 160x186

Eric Li,

“US transaction banks are doing better in part because rates are better, but this doesn’t mean that European banks’ revenue in transaction banking is bad,” he says. “Holistically, European banks’ revenue is growing, but it’s just not as strong as what we are seeing in the US until early 2019.”

In fact, take a deeper look at trade finance and the European banks remain strong. 

According to Euromoney’s most recent trade finance survey, HSBC – a global bank with European origins – was market leader, followed by Deutsche and UniCredit. The only US bank to make the top 10 was Citi, which ranked fourth. In terms of service, UniCredit came out on top overall. 

In terms of market share globally, Bank of America ranks 14th, up from 17th place the year before. JPMorgan, however, fell eight places to 17th. 

“Over the last decade or so, some North American banks have actually been pulling back from trade finance whereas the European banks are doing the opposite, mainly because Europe is considered the gateway of trade with Asia where there is huge growth in transaction banking and trade, and there is much more cross-border trade between Asia and Europe,” says Li. “In fact, if you look at trade finance deals of North American and European banks, volumes by European banks in total are a few times larger.” 

Standardization is levelling the field, but there are still so many idiosyncrasies within Europe that navigating your way around isn’t going to be easy 
 - Mark Buitenhek, ING

In Euromoney’s cash management survey, published in September 2019, the results are slightly more mixed, but the European banks do well again. HSBC, Citi and Deutsche take the top three spots in the non-financials category. UniCredit is in sixth place, BNP Paribas seventh and Societe Generale comes in at 15th. JPMorgan sits in eighth place. 

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Ebru Pakcan,

“In cash management, European banks have generally focused on wholesale banking for European headquartered companies, and – depending on the size of their network – the number of locations they focus on outside of Europe is limited,” says Ebru Pakcan, head of treasury and trade solutions, EMEA for Citi.

“For example, Spanish banks might have a strong presence in Latin America but perhaps not so much in Asia or the Middle East; French banks will be visible in West Africa but maybe not so much Central America,” she says.

European colonial ties have had an influence over how trade flows have developed and consequently how transaction banking relationships have evolved. But given the role of correspondent banking platforms underpinning transaction flows, such as the dollar clearing services, North American banks may eventually win out. 

“Currency plays a role, and the dollar is still the dominant global trade currency,” says Pakcan. “As such, American banks have always had stronger global ties, which they can leverage in terms of transaction banking.” 


There are some differences between the European and North American transaction banks, and banks still have their individual strengths – ones that they highlight when it comes to retaining and gaining clients. 

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Marc Kirchhoff,

“In general, the US banks will focus on the top-tier corporates, are more product-centric organizations and have been successful in their approach,” says Kirchhoff. 

“Meanwhile, European banks are more relationship driven and, I think, less opportunistic. We have to be a bit more selective in terms of our investments in other markets precisely because of the different environments of our home markets. Each has its own advantages and disadvantages.” 

But how easy will it be for a bank to enter the European transaction banking sector?

“North America is one place, one market, and isn’t as price competitive as what we have in Europe,” says Desserre at Societe Generale. “Given that the context is completely different, newcomers into Europe will find it difficult to gain market share.”

Buitenhek says: “Yes, standardization is levelling the field, but there are still so many idiosyncrasies within Europe that navigating your way around isn’t going to be easy. 

“There are differences in regulation, law, foreign exchange, currencies, and everything is constantly in flux ,” he says. “Understanding all of these intricacies requires expert, local knowledge, which newcomers may not have. People tend to think that Europe is one homogenous market – and while that might be the goal, we are nowhere near that as yet.”

For Andrew Gilder, EY’s Asia-Pacific banking and capital markets leader in Singapore, standardization will create a level playing field and banks shouldn’t be worried about incumbents but rather the new players in the market. 

“There has been a lot of talk about banks collaborating and acquiring fintechs in the transaction banking space, but the reality is that they could take market share away from traditional financial institutions as competition mounts,” he says. “More sophisticated technology – this is where the threat lies.”

“Technology is a great equalizer and it is easy to scale,” says Stefan Hoops, head of corporate banking at Deutsche. “But this doesn’t mean you can apply a cookie-cutter approach to all markets you work in. In Europe and Asia in particular, where there are many countries all bundled under one region, scalability is directly related to local knowledge. So just because you have a big budget doesn’t necessarily mean you will be able to succeed.

“The top 10 global transaction banks are all pushing for standardization,” says Hoops, “but it will be difficult to do this at the front end; understanding regional differences and service will be key for some time to come.”

Talking to the European transaction banks, it is in relationships that they believe their unique selling point lies – the personalized service that they offer to local and regional clients. 

“This isn’t just something that we say in our marketing brochures but something that is in our DNA,” says Buitenhek. “We have a true understanding of the supply chain and culture of our customers here – and this will make a difference to who builds market share in the long run.”

For now, it seems likely transaction banks will remain within their niche, complementing one another, depending on the market and geography they focus on. But given recent trends for change, it seems unlikely this will always be the case.