By Brian Wilkinson, Head of Faculty and Development, Alpha Development
A good transaction banking relationship is the foundation of the primary client relationship. It should be solid enough to withstand disruption. Securing the primary relationship with clients through transaction banking creates opportunities for the relationship manager as well as implementation and client support team members to deep sell other services and products.
Transaction Banking is Crucial for Clients
If transaction banking is only about faster payments and a better payments and collections user experience, then the industry is in a tech arms race to zero fees. Clients rely on their transaction banks to provide services for payments, collections, working capital, and liquidity. The critical pivot that transaction banks must make is the ability to use data and implement technology that supports client business processes. Such primary relationships succeed and endure because of a combination of 3 non-replicable factors:
1. Infrastructure – that is aligned with the client’s management and accounting framework
2. Advocacy – a skill set that gives all members of the CST the conviction and confidence to interact with clients to sell and implement solutions
3. Capability – an ability to catalyse lead or be members of multifunctional teams that implement with success
The Client Transaction Banking Value Proposition
Transaction banking supports the operational processes of a client’s financial supply chain, often across multiple jurisdictions, through a range of solutions, including:
This helps clients manage their profitability and provides seamless access to all bank services in an on demand ecosystem that is fully aligned to the clients’ own management control frameworks.
The Bank’s Transaction Banking Value Proposition
From the bank’s perspective, client transaction banking accounts represent one of the most important and stable sources of funding for the bank’s own balance sheet. Moreover, by offering data analytic tools and meeting clients’ payments and risk management requirements in real time, banks themselves have good visibility over client balances, can optimise their own liability management and use transaction data to drive asset growth and mitigate risk.
For banks, transaction banking is valuable because it is:
Invest to Develop a Successful Transaction Bank
The importance of transaction banking means it is critical to invest in:
Notably, transaction bankers need and rely on high level enquiry and advocacy skills. Tomorrow’s transaction bankers will be problem-solvers; they will harness their knowledge of financial systems and technology to a clear understanding of the client’s business model, business data, commercial processes and business strategy. Only then can a transaction banking team advocate solutions that create value for clients and bank stakeholders alike.
Alpha Development has created a full suite of training for transaction banking teams to:
Take a look at a selection of our transaction banking courses such as Introduction to Transaction Banking, Banking Cash Management, Transaction Banking: Trade Finance & Bank Guarantees or contact us straight away to schedule a course for your team.