 "We'll continue to invest early to capture any opportunity: Satvinder Singh")
The businesses of transaction banking, trade finance and securities settlement are a lot more attractive to bankers in the current uncertain economic environment than a decade ago. Deutsche Bank is one of the few lenders that run transaction banking as a separate division globally. Satvinder Singh is the global head for institutional cash and securities services business at Deutsche Bank. He is also a member of the bank's global transaction banking division's executive committee. In an interview with Somasroy Chakraborty, he discusses the growing importance of transaction banking business. Edited excerpts:
Why is transaction banking gaining importance globally?
Before 2008, transaction banking was relatively unknown even though it has always been critical to the smooth running of the world's economy. Post-crisis, transaction banking with its stable and low capital intensive revenues and client centricity looked more attractive to many banks as it provides steady returns and new commercial connections. It has played an important role in powering economic recovery and strengthening international trade.
Like most global banks, Indian banks are beginning to show greater interest in transaction banking, realising that it is at the core of banking. A few Indian banks are beginning to re-organise structurally to sharpen their focus on transaction banking and create a single value proposition for their clients. While traditionally Indian banks have focused on their inherent strengths in services such as cash management and trade finance, some banks are now looking at businesses such as custody services and depositary receipts. Indian banks are naturally strong in their home market. But international banks such as Deutsche Bank, with global presence and expertise, have significant advantages when it comes to cross-border business.
Two years ago, Deutsche Bank had announced an ambitious plan to more than double its transaction banking profits by 2015. Are you on track to meet that target?
We are well on our way to meeting our revised targets for 2015, and I believe that our recently announced new structure will help us achieve them. For instance, we introduced 'coverage teams' that will focus on new client acquisition. We also combined product, sales and coverage teams into one unit, making it easier for our clients to navigate the bank while increasing our ability to deliver solutions to them.
How big is your transaction banking business in India?
Deutsche Bank is the largest provider of outsourced fund administration services in India and the largest custody bank by market share. We have strong in-country market capabilities that are at the forefront of innovation. Some of the solutions we provide in other countries today were introduced first in India. This is our largest market in Asia-Pacific for transaction banking and it is a pivotal market for the bank.
How do you plan to capture the opportunities after the recent wave of business optimism in Indian capital markets?
We will continue to invest early to capture any opportunity. International investor sentiment and business expectations from India have turned extremely positive after elections. There is a growing expectation that Indian economy will present significant opportunities over the next three-to-five years. The new FPI (foreign portfolio investors) regulations could not have come at a better time. So, the optimism and positivity is well placed.
Why is transaction banking gaining importance globally?
Before 2008, transaction banking was relatively unknown even though it has always been critical to the smooth running of the world's economy. Post-crisis, transaction banking with its stable and low capital intensive revenues and client centricity looked more attractive to many banks as it provides steady returns and new commercial connections. It has played an important role in powering economic recovery and strengthening international trade.
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Are Indian banks also focusing on this business?
Like most global banks, Indian banks are beginning to show greater interest in transaction banking, realising that it is at the core of banking. A few Indian banks are beginning to re-organise structurally to sharpen their focus on transaction banking and create a single value proposition for their clients. While traditionally Indian banks have focused on their inherent strengths in services such as cash management and trade finance, some banks are now looking at businesses such as custody services and depositary receipts. Indian banks are naturally strong in their home market. But international banks such as Deutsche Bank, with global presence and expertise, have significant advantages when it comes to cross-border business.
Two years ago, Deutsche Bank had announced an ambitious plan to more than double its transaction banking profits by 2015. Are you on track to meet that target?
We are well on our way to meeting our revised targets for 2015, and I believe that our recently announced new structure will help us achieve them. For instance, we introduced 'coverage teams' that will focus on new client acquisition. We also combined product, sales and coverage teams into one unit, making it easier for our clients to navigate the bank while increasing our ability to deliver solutions to them.
How big is your transaction banking business in India?
Deutsche Bank is the largest provider of outsourced fund administration services in India and the largest custody bank by market share. We have strong in-country market capabilities that are at the forefront of innovation. Some of the solutions we provide in other countries today were introduced first in India. This is our largest market in Asia-Pacific for transaction banking and it is a pivotal market for the bank.
How do you plan to capture the opportunities after the recent wave of business optimism in Indian capital markets?
We will continue to invest early to capture any opportunity. International investor sentiment and business expectations from India have turned extremely positive after elections. There is a growing expectation that Indian economy will present significant opportunities over the next three-to-five years. The new FPI (foreign portfolio investors) regulations could not have come at a better time. So, the optimism and positivity is well placed.