- Transaction banking is becoming increasingly technology-driven, with banks expected to embed directly into client operations and act as a central hub for diverse financial services.
- Despite rapid innovation in areas such as AI, real-time payments, and APIs, the industry faces ongoing tension between modern digital solutions and legacy systems that must continue to coexist.
- Future progress depends on collaboration, interoperability, and attracting new talent.
Global banks have been under significant pressure to modernise trade finance. At the 2026 BAFT Europe Forum, held in London, one of the closing panels, ‘Transaction Banking Global Leaders – A View from the Top’, focused on the evolution of the transaction banking industry and its preparedness for the future. The panel was moderated by Dean Sposito, Head of Institutional Cash and Trade, Western Europe at Deutsche Bank.
In summary, momentum across the global transaction banking industry is being met with speed bumps; but there are still significant opportunities for innovation to accelerate progress once again.
Future readiness, of course, encapsulates artificial intelligence (AI) and real-time payments; these continue to dominate conversations at industry events. But it also requires laying the foundation for market entry and access – whether that’s by encouraging talent into trade finance, or widening liquidity provision and reducing the trade finance gap.
A transaction banking renaissance
Transaction banking is proliferating to become an all-encompassing ecosystem. Expectations are mounting for banks to become a one-stop shop for corporate treasuries and non-financial platforms alike.
“[Clients] are asking us to be embedded directly into their own operations – integrated into their systems,” said Mencia Bobo, Global Head of Global Transaction Banking at Santander CIB.
Beyond expertise, corporate treasuries want their banks to become a lot more astute; to become the single-entry point for all of their other financing needs. With global transaction revenue estimated at just over $1.4 trillion, opportunities abound in the industry. “We are moving from a more passive role to a very active role in the operations of our clients,” remarked Bobo.
Since the establishment of ISO 20022, the popularity of application push interfaces (APIs) and the resulting API-fication (the transformation of existing processes into components accessible by API), and enterprise resource planning (ERP) connectivity have allowed banks to integrate even further within their clients’ infrastructures.
The mechanics of trade payments have no doubt become more sophisticated, becoming a “genuinely exciting business,” according to Michael Spiegel, Global Head of Transaction Banking at Standard Chartered. For Spiegel, the banking industry is nothing short of dynamic, driven by mounting pressures such as evolving regulation and compliance requirements, digitalisation, and overall cost-cutting.
A contributing factor is the expansion of multi-bank networks. It has been reported that large-scale connectivity is tantamount to innovation in 2026.
This comes as no surprise. “Central bank digital currencies (CBDCs) are being explored across Europe and beyond,” said Spiegel. He referenced the Single Euro Payments Area (SEPA) Instant in Europe, the Faster Payments Service (FPS) in the UK, PayNow in Singapore, the eNaira in Nigeria, and the European Union’s (EU) broader instant payment regulation. As CBDCs become more central to global payments, banks could adopt the role of digital intermediary, translator of payment regulation for their clients.
Friction between tradition and modernity
Looking at developments in the Nordic region encapsulates the notion of transaction banking in flux, with demands for modernity at odds with traditional banking streams.
“Banks used to sit at the centre of everything. Now, payments are increasingly initiated by corporates and consumers through wallets, enterprise resource planning (ERP) platforms, and embedded services,” said Kirsi Wiitala, Head of Transaction Banking at Nordea. The demand for embedded finance puts pressure on banks to see multi-rail strategies as a non-negotiable standard to remain competitive.
Just as banks straddle open banking and embedded finance, so too does trade finance continue straddling digitalisation and paper-based documentation. “We know that traditional rails are going to co-exist. In my view, for the next years to come, we are simply going to keep running both in parallel,” said Sposito.
The most recent CGI-BAFT survey revealed how political and economic challenges alike pose significant challenges for banks to be able to fully invest in technological overhauls. Intelligent process automation (IPA) is the holy grail for most banks – sitting alongside pressures to modernise back offices, API services, analytics, and much more.
Bobo reflected on Santander’s approach to the surge in innovation in transaction banking. “Our approach is to stay close to the different trends without betting everything on one outcome,” she said. “We need to be very careful about the risk of investing in things simply because they are fashionable.”
Diligent approaches exist. As Spiegel commented, “It is critically important to use existing infrastructure and make it work better.”
India’s unified payments interface (UPI) aimed to do exactly this. A decade since its launch, it has built a presence across South Asia and the Middle East. However, it faces challenges in its aim to truly go global – largely due to other emerging markets, such as China and Brazil, developing their respective real-time payment systems like Alipay and Pix.
However, Spiegel pointed out that it “comes down to collaboration and interoperability.” Interoperability is certainly the headline aim.
For instance, Hong Kong’s global shipping business network (GSBN) collaborated with IQAX and ICE digital trade (IDT), and delivered a landmark electronic bills of lading (eBL) transaction, hailing a new era for trade finance interoperability. This notable transaction involved New Sea Shipping, HSBC Thailand, Lenzing Thailand, CZ Bank, and Jiangsu Dasheng Group.
It’s a breakthrough is thereby a testament to the scalability of banking rails. In Bobo’s words: “If we genuinely want to drive change and be part of it, we have to show up, be active, and commit.”
Tokenisation – urban legend or reality?
“There is absolutely a future for tokenisation,” said Spiegel, but “in terms of real-world use of blockchain at scale, not that much has actually happened yet.”
The opportunities of blockchain are yet to fully mature. On 5 March, Nedbank and Crypto.com announced a partnership to transform Africa’s potential in cross-border finance, moving the continent away from legacy payment rails.
Stablecoin has become a buzzword in trade finance, already associated with its volatile history. With China’s more stringent controls of the yuan-pegged stablecoins, contrasted with the Financial Conduct Authority’s (FCA) ‘stablecoin sprint’, economies seem to be adjusting at their own pace.
For Sposito, “It’s an area where many of us are already members of relevant initiatives and working groups, and it’s a space that transaction banks absolutely need to be paying attention to, because it is going to expand significantly.”
Future talent in transaction banking: Battling inertia
Banks are no stranger to the fact that innovation is a true marker of their resilience and competitiveness. CGI’s 2025 Transaction Banking Survey emphasises industry truths: industrialise payments, improve real-time data, and develop a frictionless multi-bank ecosystem.
As Spiegel puts it, “Transaction banking is foundational. It is foundational to our client relationships, to our institutional relationships, and to our relationships with each other in this room.”
But most young people entering the financial industry don’t consider transaction banking, instead opting for the more conventional investment banking pathways. This information dissymmetry is, in Wiitala’s perspective, one of the key barriers from attracting new talent. “Back in the old days, transaction banking was very much considered a back office operation,” she said. There is a need to remind the industry that transaction banking is actually the “engine for the whole bank to grow and to acquire”.
Bringing young talent can encourage looking at combinations and collaborations, with a tech-first perspective: as many young market entrants have grown up with. “How can we combine, for instance, finance, tech, and advisory takes all together?” said Wiitala. “That’s something we must improve.”
Transaction banking is the ‘up-and-coming’ edge of trade finance. Digital transformation shows no sign of slowing down, and the leading banks are proactively balancing the need for independent innovation with essential collaboration.
It’s the right approach to be cautiously optimistic about the future of transaction banking. The banking renaissance brings hope, but it will always be anchored by its inevitable share of trials and tribulations.
