Opportunities and risks as transaction banking gains traction

Transaction banking’s increased prominence in the global financial landscape has been well documented, but its increased standing has created issues as well as openings for market participants. Its rise in popularity has led to more competition, while the impact of macro-economic conditions, higher customer expectations and an unprecedented regulatory burden has made it increasingly tough just to stay in business. At a recent round table hosted by The Banker, a panel of industry experts discussed the challenges and opportunities faced by today's transaction bankers. The event, part of an ongoing series, was sponsored by Royal Bank of Scotland, but independently written and edited.

by John Beck

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The unassuming mix of cash management, payments, trade finance and securities and custody services, which comprise transaction banking operations, make for unlikely stars in the complex hierarchies of the financial world. But given the economic crisis, their rise in status should not have been surprising.

By the tail end of 2008, the very qualities that meant transaction services were often overlooked in times of plenty – steady but less than spectacular returns and a relatively dependable customer base – suddenly seemed very attractive.