Growing Prominence of Transaction Banking in Asia

Asia’s leading banks have maintained strong balance sheets amid the tempest of the financial crisis, and many have embraced transaction banking as a source of predictable and balance sheet-friendly revenue, according to a new research report by Penrose Financial and Kapronasia. ‘The Future of Transaction Banking in Asia’ report identifies the key challenges for transaction bankers in the region.

Key findings include:

• While the global economic downturn has adversely affected corporate clients, transaction bankers have seen their stock rise as banks look to build low-risk businesses.
• Corporate clients are increasingly sophisticated and promiscuous in assessing their banking relationships, using the economic crisis to their advantage.
• Huge opportunities exist for transaction bankers in a geographically and culturally diverse market, provided they better understand their customers and deliver superior technologically and enhanced models.
• Linking banking systems to a myriad of client systems and addressing diverse standards remains hugely problematic given the extreme differences in maturity of technology across Asia-Pacific.
• Hand-in-hand with long-term technology planning continuing to hamper development, a significant number of challenges remain in the Asian market. Those banks in the region that adapt to changes in the market will be the ones to benefit from the current complex corporate financing landscape being faced by clients in the region.

Zennon Kapron, managing director, Kapronasia, said: “Asia is a complex and highly fragmented region that is challenged by diverse cultures, currencies and regulatory regimes. Asian banks are certainly bolstering their transaction banking businesses, and pinning their hopes on a growth in payment revenue in this export-heavy region. Our research shows how Asian banks are starting to prepare for these challenges, and how adaption to the new world-order is key in retaining and gaining market share in a challenging environment.”

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