“Global transaction banking has been considered an ancillary business in the past, a poor relation to investment banking and retail banking.But it could account for up to 25 per cent of a bank’s revenues and is very “sticky” – happy customers don’t switch provider.”
Head of Global Transaction Banking at Intesa Sanpaolo.
For Intesa Sanpaolo, transaction revenues account for nearly $1 billion a year. They derive from the fees due whenever a payment is made or received, for example when a company transfers money, when it pays bills or requires an international guarantee. Today the market is increasingly global and is worth tens of billions of dollars, offering welcome potential for growth.
With this in mind, the bank has reviewed how it sees transaction banking and is positioning itself as a high-end service provider, leading the way towards cutting risk and providing an efficient and effective service that builds deep relationships with its clients.
Digitalisation is key
In reviewing its products and processes, the Global Transaction Banking has leveraged on the bank’s Digital Factory project, which aims to digitise the main 40 complete processes in the next three years, five of which are related to the transaction banking area.
"Digitisation will make us more rigorous, more efficient and help us deliver a better service. This will help us attract new customers.It will save us and all our customers time, make it easier for them to set up new processes and execute existing ones with less risk"
The Digital Factory will actually allow all the different departments of the bank to sit in the same room, accessing the same information, speeding up decision-making and ensuring those decisions are better informed.
“We will improve our capability to manage electronically customer documents regarding trade finance and leveraging to an innovative and efficient workflow. Additionally, we are going to simplify the structure of our contracts allowing a simpler way to interact with the bank.”
it’s all about cultivating a strong, long relationship that gives customers peace of mind
so they no longer have to concern themselves with the minutiae of daily activities with the bank. Often, this simply means cutting down the number of steps involved in a particular process.
Cutting the complexity
It’s not just about time. Digitisation also makes the processes more rigorous. “Business operations will work even better than today,” Favale says. “Today, so many people are involved in all the processes that it can get very complicated. The main issue is often sharing and tracking documents and projects. Digitisation makes this much more straightforward.”
It will also feed into providing the bank with a 360-degree view of its customers – a medium-term goal for the organisation. “At the global transactions department, our level of knowledge needs to be more holistic and high level than for relationship management,” he says.
“We know a customer’s payroll, its subsidiaries, its whole structure, its partners and who it is doing business with – everyone to whom it makes or takes a payment.”
"This means we can tailor the service, make it better, increase the client’s confidence.” In addition, it will help with cross-selling.
This renewed focus on delivering a high-quality transaction service plays well to Intesa Sanpaolo’s heritage. Competition in global transaction banking is fierce, with new “over the top” players picking up market share as well as possible disruptive scenarios enabled by Blockchain technology. They are starting from scratch and can create a bespoke business model and framework. With Blockchain, they can also sidestep burdensome regulations and cut costs.
What the new players can't do
Given the dependence that clients have on a smooth service, Favale believes that Intesa Sanpaolo’s reputation for delivering appropriate, robust solutions along with its new digital investment makes it a far more convincing player. And while regulations add to a bank’s costs, in this arena, says Favale, the benefits outweigh the expense, helping to cut operational and reputational risk.
In the last decade, Intesa Sanpaolo distinguished itself in promoting the compliance culture in every phase of its product life cycle and became a benchmark well respected by Italian and international authorities.
“Clients working with us know they may count on safe advice and a good business environment, reducing their own risks.
“It’s quite simple,” says Favale. “Doing business with us means less risk and less trouble.” At Intesa Sanpaolo, global transaction banking is no longer an ancillary unit – instead it is recognised as a core department that is helping customers to do their business better.
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