Community
Transaction banking—the set of instruments and services that a bank offers to trading partners to financially support their reciprocal exchanges of goods (e.g., trade), monetary flows (e.g., cash), or commercial papers (e.g., securities)—tracks financial instruments through their entire lifecycle. In a stressed economy, tracking financial instruments and trading parties makes transaction banking a safe source of revenue for a bank.
Nevertheless, transaction banking suffers from European banks’ lack of agreed-upon and uniform definition of its products and services. In addition to the space’s lack of consistent terminology, market transformation is shaping new scenarios for transaction banking in Europe. Subject to external factors tied to changes in corporate treasury policies, regulatory pressures, and technological advancement, a bank’s transaction banking business is likely to morph over time.
Although the majority of European banks declare transaction banking to be a significant portion of their business, I strongly suspect that it is more marketing hype than real business strategy. For many of those banks the financial results that transaction banking units provide are completely nonexistent-- or buried in marginal comments and footnotes dispersed across the various lines of business in a bank's annual financial report. Moreover, banks’ public websites, which describe offerings for their clients (including corporate executives and decision-makers), indicate a bank’s level of devotion to various subjects and strategies. The lack of inclusion and description of transaction banking in the majority of European banks' public channels demonstrates the banks' lack of attention to transaction banking as a strategic piece of its wholesale banking strategy.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Nick Green Director at Purple Patch Broking Ltd
22 August
Oleg Stefanet Chief Risk Officer at payabl.
20 August
Venkatesh P Co-Founder and Director at Maveric Systems
19 August
Welcome to Finextra. We use cookies to help us to deliver our services. You may change your preferences at our Cookie Centre.
Please read our Privacy Policy.