Global transaction services and the appeal for banks in ‘getting back to basics’

Abstract

This paper looks at the renewed appeal of Transaction Services (primarily payments services, cash management and trade finance, sometimes along with cards issuing and acquiring and securities services) as a source of relatively stable fee-based revenues for banks, and explores the key success factors for market leaders. The appeal of Transaction Services has grown in the aftermath of the financial crisis, which has left banks with less appetite and capacity for volatile and risky businesses, and a greater need to attract and retain deposits. Not all banks, however, may have given Transaction Services due attention in the past, so it may be harder for them to capture the benefits now. Scale is critical, along with a steadfast commitment to investing in the business and developing its products, services and capabilities. But the benefits for those that succeed are evident, in terms of profitability, the overall health of the banking company and the contribution to sustained client relationships. This paper and its conclusions are adapted from the World Payments Report 2009 from Capgemini, the Royal Bank of Scotland and the European Financial Management & Marketing Association (EFMA). Included are some proprietary performance analyses of the Global Transaction Services (GTS) divisions of banks, and a ‘mapping’ of existing GTS organisational types.