It is not surprising that transaction services, as well as particular businesses within the sector such as cash management, are a hot business. Relationships are based on annuities, so unless the client decides to switch banks, the global transaction services (GTS) business can be one of the most predictable areas for revenues. Growth in one product leads to growth in another. “But margins vary from year to year in the business everywhere,” says Standard Chartered’s group head of transaction banking, Karen Fawcett. Five years ago, margins on cash were twice what they are today, she says. Returns continue to be repressed, but there is valuable liquidity in the market.
“The liquidity you get from global transaction banking [GTB] is sticky. It is on the operational account, rather than the excess cash, which tends to go into fixed or structured deposits. We deal with operational accounts – it is more about the daily activity of clients. So as long as clients operate, we get business from them. This is the reason GTS is now in vogue in the industry – revenues are assured,” says Ms Fawcett.
