Archive

Welcome to the new-look financial-i magazine and our first edition for 2010. This year also happens to mark the 10th anniversary of financial-i, which started out looking at the impact of business solutions and market infrastructure on global transaction banking (GTB). But what do we mean by transaction banking? Well, the term means different things to different people. Increasingly, however, banks are organising multiple business lines under the moniker of GTB or Global Transaction Services (GTS).

GTB experienced somewhat of a renaissance during the recent financial crisis as risk-taking and volatility took a back seat to the stability of processing payments, extending trade finance guarantees, clearing and settling securities and moving money cross-border. While other aspects of the financial markets ground to a halt, companies and public sector organisations still needed to make payments both domestically and abroad and global transaction banks continued to facilitate that. The CEOs of banks started to see this little-known business for what it really was – a stable revenue stream with low risk and volatility. Therefore, it seems only fitting that we feature on our cover one bank that benefitted substantially from the rise of GTB, Citi. It is probably fair to say that without GTB, or GTS, Citi may not have survived the crisis intact.

Yet, in many respects, the market is still determining what GTB means to them and the value and synergies it can deliver to the end customer. As banks chart this course, financial-i will play an essential role in defining what GTB means to different banks and their customers. How does the services offered by global transaction banks impact customers’ working capital, reduce days sales and days payables outstanding? How are customers benefiting from this closer alignment between cash and trade and cash and securities?

Back to basics - Travelex is finding a profitable niche for its international payments business. David Sear, managing director, Travelex Global Business Payments, says its “high-touch” customer service and beneficiary management are unrivalled even by global banking competitors, and that providers should focus on getting the basics right first before thinking of the next innovation in payments.

As the acute phase of the financial crisis passes, the role of export credit agencies (ECAs) in stimulating trade flows is now more important than ever, says James Pumphrey, director, Structured Trade and Export Finance, Deutsche Bank.

Coming to the rescue - Treasury and Trade Solutions (TTS) is the largest business within Citi’s Global Transaction Services (GTS), accounting for approximately 70% of the USD 10 billion GTS makes in annual revenues. TTS was one of the strongest performing businesses for the bank throughout the crisis, says Paul Simpson, global head of TTS. And in the crisis’ wake, an increasing number of public sector organisations, including the US government, rely on Citi’s network spanning more than 100 markets, to make payments abroad. More so than ever before, it seems Citi’s and governments’ fortunes are inextricably linked.

The financial crisis may have seen a renewed focus on Letters of Credit, but open account is still the predominant form of trade. However, some banks are struggling to find a place for themselves in the confusing morass that is open account, which means different things to different providers. The question now is can banks innovate and provide customers in the open account space with more client-centric solutions?

(photo of Kamel Alzarka, Falcon Group)

A room with a view - When Susan Hauser started Microsoft’s financial services software vertical 15 years ago it counted a handful of Wall Street names among its customers. It has since grown into a major global business, and as Hauser takes on a new position at Microsoft’s Redmond headquarters, she says Microsoft is more relevant than ever before as banks look to reduce costs and gain a 360 degree view of the customer.