The past year has been a perfect storm for transaction banking, with banks battered on all sides by the eurozone crisis – posing liquidity issues for some European banks – and regulatory change, such as Basle III, which has a direct impact on transaction banks’ ability to serve their clients. At the same time, competition has intensified – including from non-traditional players such as technology companies – and costs have increased.
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| Tom Isaac, global head, client and sales management for financial intermediaries, at Citi Transaction Services |
"It’s certainly been a challenging year," says Tom Isaac, global head, client and sales management for financial intermediaries, at Citi Transaction Services. "Everyone in the market is focused on fine-tuning their business model as the long-term investment required to remain in this market increases. Many banks are looking at the affordability of future investments." Notwithstanding these difficult conditions, transaction banking remains a hot ticket. "Despite the cost of participation in the provision of cash management services increasing as a result of Basle III and other regulatory changes and higher compliance costs, the business is still attractive," says Simon Newstead, head of financial institutions market and business strategy, international banking services, at RBS.