Time for bold moves in transaction banking

By 2012, the banking landscape will be different. There will be few really efficient global commercial banks, some transaction specialists’ global banks, many shifted regional retail banks and new non-banking entrants. Payments will be a more regulated, open and competitive business in many regions. As banks will focus on payments as a source of more recurrent, stable and lower-risk revenues, they will separate distribution from manufacturing to deliver innovative personalised products and services through different integrated channels — mobile banking being a key one — at the right price to current and new customers and to untapped segments. Back offices will have simplified operating models and consolidated payments platforms based on new technology concepts such as SOA or cloud computing, thus reducing the cost-to-serve ratio. This paper advises banks to focus on five key levers to achieve higher profitability in the forthcoming payments landscape: strategic cost reduction, robust customer management, pricing optimisation, integrated risk management and inorganic growth and divestitures. In their path to becoming high performers in the payments arena, successful banks will capture the benefits of digitalisation, mass customisation, social networking and mobility, positioning at the centre of an ecosystem of bank and non-bank players to create new profit pools for the benefit of all participants and users.