Treasury Strategy & Transformation
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Transaction Banking: Are the Rewards Still Worthwhile?

by Didier Vandenhaute, Partner, Corporate Treasury Solutions Group, PwC Belgium

“For the last two years, our bank has listed transaction banking as one of our key priorities on the first page of each quarterly report. It had never been mentioned there before.” This quote by Marc Buitenhek, Global Head of Transaction Services at ING, highlights the increasing attention transaction banking is getting in the boardroom of both larger and smaller banks. Marc Buitenhek was just one of the 37 representatives we consulted to gain insight into what’s really happening in the world of transaction banking as part of a recent survey.

Transaction banking’s time has come

One thing that was made very clear by our research was that the world of transaction banking is in turmoil

The reasons for this upsurge in interest from the higher ranks of management is twofold. Firstly, in the wake of the financial crisis, the value of transaction banking has increased significantly, but secondly, the sector is now under much greater pressure: not only is the evolving regulatory environment exerting a heavy burden, but competition is increasing between key players already active in the sector. And on top of that, new entrants are also trying to muscle in on the action.

But there simply isn’t enough business out there to satisfy everyone vying for a stake. RBS has already pulled out of the industry completely and there are rumours that others may follow, while some players have not deviated from their strategy and continue to invest. “We haven’t hesitated to accelerate our investment and focus on our transaction banking business. If you start to look at the business in a too granular way, your cash management business will gradually die!” notes Jean-François Denis, Head of Payments and Local Offers, BNP Paribas, who also took part in our research.