New competition and service commoditization
Banks are in the midst of a trade war with traditional and greenfield players. Global transaction banking products and services are becoming commoditized—with clear signs of decay in historically profitable services, such as check processing.
Increased complexity and globalization of investments
Corporate transactions and investments are increasingly global. There is significant growth in cross-border activity, an upsurge in alternative investments, and the use of alternative exchanges. This presents opportunity for growth and revenue diversification.
Threat of negative interest rates
The potential for negative interest rates in the UK, Europe, and elsewhere looms large. This reality threatens to increase cost and margin pressure for financial institutions that lack the ability to calculate and charge negative interest rates to clients. Market uncertainty also makes risk based pricing more challenging.
Focus on prescriptive regulation
In this environment, forward-looking banks have an opportunity to provide new value-add advisory services to help corporates navigate new regulatory complexity.
Elevated client expectations
Clients want more transparent pricing and prenotification of service charges as part of the shift to a “no surprise” culture around fees and billing and, they are more willing to shop for the best deal. This creates further pressure on revenues and increases competition for the right corporate customers.