As the increasingly volatile eurozone once again creates huge market uncertainty, the need for optimisation and consolidation is apparent across all financial sectors. This is particularly true of transaction banking – an area affected not just by wider changes in the economic environment (a market shift towards Asia as well as the escalating debt crisis in Europe) but also by the cost and implications of myriad new regulations. As these elements ramp up the pressure on both transaction bankers and their clients, it is imperative to understand both the changes taking place and their implications for the industry.
First and foremost is the increasing turbulence in Europe and the impact this has on the availability and flow of liquidity. As sovereign debt crises within the eurozone have rumbled on, liquidity levels have been prevented from making a full recovery from the 2008 global financial crisis. Now that the eurozone crisis is escalating to August 2011 levels, this constriction on liquidity is, at the very least, set to continue for the foreseeable future. Combine this with the sluggish growth hindering key economies elsewhere, such as the US, and the spotlight is firmly placed on cash management.
