Inspiring Innovation: The Transaction Banking Perspective

An interview with Michael Spiegel, Global Head of Trade Finance & Cash Management for Corporates, Global Transaction Banking, Deutsche Bank

In this month’s Executive Interview we are delighted to welcome back Michael Spiegel, who looks at some of the changes that are taking place in the transaction banking space, and the threats and opportunities that these present.

As 2015 comes to a close, what characteristics of the transaction banking market would you highlight that are setting the agenda for the coming year?

Both the bank and our customers are living through interesting times in transaction banking, from both a cash management and trade finance perspective. In trade finance, margins are being compressed as a result of low commodity prices and high levels of market liquidity. From a cash management perspective, interest rates remain at historically low levels and in some markets at a negative rate, while market harmonisation through SEPA and growing competition from both traditional and non-traditional players is also resulting in narrowing margins. Some bankers and commentators expect more ‘normal’ conditions to return when interest rates rise, but we would seem to be at or near an inflection point in the development of cash management and trade finance.

This inflection point is the result of two key trends converging. Firstly, complexity. Corporate treasury is becoming more complex as a result of wider geographic coverage, the emerging need for more efficient data management and analytics, and higher volumes, particularly in payments and collections. These in turn are resulting in the need for more sophisticated liquidity management solutions and broader, more integrated risk management. The use of the term ‘solutions’ rather than ‘products’ is deliberate. Complex and diverse treasury needs demand not products that solve isolated problems or address individual requirements, but solutions that span the working capital value chain from short-term lending through to FX, trade finance, cash management etc.

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