Delivering Customer Satisfaction in Global Transaction Banking

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Delivering Customer Satisfaction in Global Transaction Banking

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What is transaction banking?

In the dynamic world of business banking, transaction banking is rapidly becoming one of the rising stars, and every bank wants a part of it. Global transaction banking (GTB) covers a wide array of commercial banking solutions and services, targeted mainly at business banking clients including financial institutions. Traditionally, transaction banking included payments, receivables, liquidity management and trade finance. Transaction banking gurus have extended this definition to include value-added mix of these services bundled with risk management, securities, FX and other subsidiary services that spill over to include the realms of custody, advisory and supply chain financing.


The key question is no longer whether or even how transaction banking has been transformed, but how to re-engage with customers, how to respond to their changing needs, how to generate sufficient returns in this new business environment, cut costs and increase business agility. In their efforts to ‘deliver for performance’, IT vendors for the BFSI sector look at what different customers most value and how banks can make the most of the resulting opportunities and value potential.


The Transactional Services & Payment Systems market is growing strongly and continues to provide a stable stream of capital-light revenues for banks, generating low cost deposits (clients’ operating accounts balances), requires less capital lending and creates stickier customer relationships than any other product or service. Banks are realizing that transaction banking is becoming increasingly competitive, with a growing focus on fee based revenues, mounting pressure to reduce OPEX, and the need for agility to respond to industry and regulatory initiatives. These changes, including the dynamics of globalization and ever changing technology, is disrupting business processes and procedures in traditional banking.


Adversity breeds opportunity
In the current times, it is no longer important to know how transaction banking is revolutionizing commercial banking, but how to deliver value to customers. Banks need to be agile enough to cater to the changing market needs, looking beyond the obvious and how to generate optimum returns. Needless to say, corporate customers today implicitly expect and demand efficiency, reliability, standardization, personalization, flexibility and easy access to working capital, no matter what product or service they are using and in what geography.
So, banks must invest in understanding customer attitude, behaviour, psyche and financial needs to retain their competitive positioning. The challenges faced by banks today are to break down traditional product silos and offer structured, personalized products and services via multiple channels. Regulations like Basel III, SEPA, PSD, AML etc. require banks to provide and track lots of compliance related data, needed both by customers and the regulators and simultaneously increasing the cost of doing business in global markets. This is not possible without having a holistic and finer view of both their customers’ needs and preferences and the bank’s in-house operations. There is an increasing need for tools and techniques to give banks a 360o view of a customer’s business and provide one perspective of their operations, thus significantly reducing the effort to consolidate regulatory data across different internal teams and provide business intelligence to create customer centric business models for an increasingly diverse and integrated customer – the bank financial value chain.
The panacea

All this is not possible without technology. Markets are becoming increasingly commoditized so innovation in the form of value added services is the only differentiator. Increasingly, the pressure is on Banks to offer integrated transaction banking solutions that meet existing and future customer needs by providing seamless, integrated, real-time and consistent experience across multiple channels. Banks are looking beyond run-of-the-mill transaction banking products and services flanked by payments, payroll, receivables and other singular processes and focus on offering personalized and wholesome working capital management solutions revolving around customer’s operating working capital cycle; gone are the days of “one size fit all” approach.


Customers need to view and manage their total financial position; anywhere and anytime, with increased focus on straight through processing (STP), personalization, interoperability and standardization. IT product players like Nucleus Software are working closely with banks to meet and exceed client requirements and be able to offer innovative solutions for corporate customers to have total transparency, freedom and greater control, allowing them to manage their corporate finances as easily and conveniently as private customers. Gartner has very rightfully opined, from the customer perspective, a more appropriate name for transaction banking should be “commercial process banking,” since commercial customers view bank transaction services as part of a process continuum for managing the commercial financial supply chain.


When it comes to channel accessibility, the impact of mobility on individual consumers and commercial customers can’t be negated. Mobile has created a new channel through which banks can provide the convenience of anytime, anywhere banking to their customers. Some of the key factors driving banks to roll out mobile banking to their corporate customer base as indicated by Aite Group in their Corporate Mobile Banking, 2011 report are: demand from corporate treasurers, enhancement of the customer experience, the ability to accelerate fee-generating activities, and the potential for fee-based revenue. Most of the banks today offer payment authorization, alerts, account balance aggregation and statement reporting as some of the staple features on mobile for corporate customers; payment initiation on mobiles is something that corporates are cautious of.


The future of transaction banking

Transaction banking as a global business has largely remained under-leveraged though it was one of the most resilient businesses during the financial crisis despite plunging trade volumes. Despite shrinking margins, significant revenue growth of approximately 170% or a compound annual growth rate of roughly 11% is expected from 2011 to 2021 (Source: BCG, Transaction Banking advantage, 2012). With the right focus, proper positioning and alignment with customer preferences, transaction banking will continue to deliver value and be a leading focus for banks for many years to come.


NOTE: This article is an updated version of one that appeared on on February 12th, 2014


Nucleus Software is a leading provider of transaction banking solutions, which are used by some of the largest global and regional banks in the world. To find out more about our next-generation software product, FinnAxia, see here.

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About the Author

Dinesh Verma, Head Product Management - Global Transaction Banking, Nucleus Software

Mr. Dinesh Verma heads Product Management and Domain Consulting function for the Global Transaction Banking solution from Nucleus Software. He brings with him over 18 years of experience in banking (retail & wholesale) and IT consulting in areas of Product Management (Core Banking, Transaction Banking & Internet Banking solutions), Domain Consulting, Banking Operations, Trade & Treasury.

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About Nucleus

At Nucleus Software we are committed to providing efficient, modern yet proven software solutions for the global Banking and Financial Service industry. We have been pioneers in developing Retail Banking Software, Corporate Banking Solutions, Transaction Banking, Cash Management and Internet Banking Software since 1986. Our success spreads across more than 50 countries, and we serve our customers globally through our direct and partner operations across US, Europe, Asia-Pacific, Africa and the Middle East. We are known for our world-class expertise and innovation in lending and transaction banking technology. Our two flagship products, built on the latest technology are: FinnOne™ and FinnAxia™.