The session featured representatives from three of the largest global transaction banks in Citi, Deutsche Bank and HSBC who all agreed that the burden of ongoing regulation and the liquidity implications of last year's financial crisis was driving them to embrace greater co-operation.

"In terms of regulation we are all implementing the same things," said Andrew Long, head of Global Transaction Banking and group general manager, HSBC. "So why not collaborate and then we can use the money we save to spend on our customers."

Long's views were echoed by Werner Steinmuller, head of Global Transaction Banking, Deutsche Bank who stressed that "co-operation is key. We need a common voice to interact with the regulator".

One such collaboration was the payment processing joint venture between Bank of America and Wells Fargo that was launched in May 2008 which was referred to by Catherine Bessant, president, Corporate Banking, Bank of America. "We are not always known as a collaborating bank but we needed to find some cost savings so that we could grow the business. There are often some negative associations with some of these alliances in terms of how they affect our systems but recent events, like the financial crisis have made us realise that we can work better by working together."

A huge P&L pressure is also leading transaction banks to look at new business models based on open architecture and white labelling in a bid to make their outsourcing offerings more attractive to other, smaller banks, according to Vanni d'Archirafi, chief executive, Global Transaction Services, Citi. "Open architecture is the model of the future. It makes it easy for our customers to plug in but also to plug out so it is more efficient for them and for us. The client that stays with you because it is too difficult to unplug themselves is a thing of the past."

A survey on transaction banking released by IBM and Swift at Sibos revealed that over 60% of respondents were in favour of farming out elements of their transaction banking and a number of outsourcing deals between the global banks and smaller regional players have also been announced at Sibos - including Deutsche Bank's link up with three Chinese banks - ABC, China Merchant Bank and China Minsheng Banking.

The panellists attempted to play down the concerns that a handful of global banks are in danger of running smaller regional banks out of the transaction banking market. "Together we don't have more than a 10% share of any regional market so there is still lots of room for greater competition," said HSBC's Long.

There are also an increasing number of white-labelled services being offered to regional banks by the likes of Citi, which released a new online corporate banking platform at Sibos. "Globalisation is a fact of life," said d'Archirafi. "But with white labeling the regional banks can keep the connection with their clients and we get more volume through our pipes so it is a huge opportunity for all of us."

White labelling also came up as a topic at the PaymentsLIVE! webcast panel discussion on Monday afternoon, as did another area of industry collaboration - electronic bank account management (EBAM) standards. Gary Greenwald, Citi's chief innovation officer for Global Transaction Services, described EBAM as "a true win-win initiative", in that corporates obviously benefit from streamlined account opening and maintenance, but banks can also reduce operational costs.

The on-demand version of the webcast is now available, and also features great regional and global industry insight into the payments market from: Cindy Murray, e-commerce executive in Global Corporate Banking at Bank of America; Simon McNeil, head of IT at Barclays Global Payments; and Neil Katkov, senior vice president, Asia, at analyst house Celent.

Meanwhile, Citi's Global Transaction Services reports an increase in IT investment, with most of the funds devoted to new products and so-called build the bank activities. The Treasury and Trade Solutions division of GTS increased its IT spending by 24% in 2009, compared to 2008.

GTS is one of the few Citi departments that has been allowed to use funds to develop new client products in 2009, says Citi's Greenwald. Most other divisions at the global bank have been regulated to maintaining existing IT only, he adds.

Greenwald says the GTS division has a history of investment in risk management technology, such as liquidity tools and counterparty risk exposure management systems, before the credit crunch. The Citi department also has spent the past few years working on automating many manual processes involved in GTS. A lot of the funds devoted to the increase in IT spending result from the cost savings gained through automation programmes, says Greenwald.