Euromoney.com TS 2014 Review | Page 6

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SIGNS OF
CONVERGENCE
“After hearing
the feedback from
clients, we decided
to evolve our
sales teams into
a working capital
sales team on the
corporate side.”
Jiten Arora,
Standard Chartered

CASH MANAGEMENT’S
POPULARITY

Transaction bankers have been talking about the
convergence of different corporate banking products and
services for a number of years. Is it now happening?
Bankers like to talk the talk about convergence but evidence
is emerging that financial institutions are now slowly but
surely converging their multi-product corporate-focused
business streams.
Initially, banks have focused on bringing together their
cash management and trade finance activities. According to
a report on trends in transaction banking published last year
by Misys – a financial-services software provider – 47% of
respondents have created a transaction banking group
combining, at a minimum, cash management and trade
finance, while 34% said they had integrated the group,
combining cash management and trade finance at an
operational level.
Nine per cent were planning to create such a group in the
near future, while only 10% intended to keep the different
areas of the business separate.

“Banks may see
[cash management]
as a valuable
entry point into
a relationship.
But there are
challenges. You need
scale to be globally
competitive in this
business, but the key
is to be able to meet
clients’ needs with
solutions that
are appropriate and
suitable for them,
and this varies
across sectors.”
Nadine Lagarmitte,
HSBC

Transaction banking is entrenching its status as a leading
– and profitable in its own right – business in the world of
banking, helping to secure lucrative ancillary work for
revenue-hungry banks.
The countercyclical nature of cash management makes
it a perfect accompaniment to the more correlated
trade-finance business, smoothing returns over the
economic cycle.
Its champions also cherish the stickin ess of the relationships
GTS brings. Managing a corporate’s cash management
embeds a bank within its fabric in a way that all but ensures
a long-term business relationship.
Banks that have not traditionally focused on transaction
banking have been keen to build up their capabilities – but
is the principal attraction being in the business itself, or
do they see it as a gateway, a way to originate other
businesses? Banks are characteristically tight-lipped
on specifics.

This convergence has been driven by the changing role of
corporate treasurers, who have gained responsibility for
a wider range of activities during the past few years and are
expecting their banks to deliver integrated solutions and
a single point of contact.

Deutsche, which is responsible for processing payments
on iTunes, was well placed to benefit when Apple decided
to make its inaugural bond issue, securing a place as
bookrunner alongside Goldman Sachs. There is little doubt
other lucrative ECM and DCM deals have been won off
the back of GTS relationships.

Read more of Rebecca Brace
Behold the great transaction banking convergence >

Read more of Solomon Teague’s
Cash management: banking’s gateway business >

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Copyright: All material subject to strictly enforced copyright laws. © 2014 Euromoney Institutional Investor PLC

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