Many big banks, global in their reach, have switched attention to transaction banking in recent times. One big reason for this shift of attention could be the subdued deal making that seems to be affecting the Asian quadrant for these big financial institutions. This has prompted them to choose transaction banking as the target for their available resources.
Effort to Balance out slow Revenue from other channels
For the majority of the financial institutions, this is simply a way to ensure that the gradual decline in revenue generation from many other sources does not impact their bottom lines too drastically. Shifting attention to transaction banking, in particular within the Asian region, makes sense for them, given this objective. This is a location that is witnessing a huge increase in intra- regional trade and given that this already happens to be the largest trading location worldwide, the benefits are just too many to discount. Add to this the fact that supply chain connections are now not just confined to China and it is easy to see why and how banks can enjoy a slew of monetary advantages from such a move.
Interest in Transaction Banking
Some of the global players that have opted for this step include HSBC and Citigroup which already had footprints in this arena but are making a clear effort to expand it now. What is surprising is that some firms that have traditionally remained tied to investment banking are also exploring this channel now. The list includes Deutsche Bank and JP Morgan.
One of the main reasons for the switch from investment banking to transaction banking could be the high volatility that is an integral part of the former. That region has neared saturation point so closely that not much can be done to take the business ahead. The investment banking business does become a strong foundation for the bank's transaction activities though and this is an advantage that these big banks are leveraging in the most efficient way possible, say experts.
A clear indicator of how much the transaction banking business has picked up in the Asian region is the increase in a number of professionals skilled in this arena being recruited in recent times. In contrast, investment banking divisions in the Asian region have seen many trim down to bring the employee number within reason.