When we look at transaction banking
metrics in Asia, there is a natural inclination to look at everything
through the lens of market share. Who is gaining, who is falling, and
where are the banks on that always important league table of rankings?
East & Partners has been conducting its twice yearly Asian Transaction
Banking (ATB) report for more than a decade, and over time it emerges that
another metric has gained in importance and that is wallet share.
Looking back pre-Global Financial Crisis it is clear that in the early
part of the last decade, primary relationship market share was the
dominant metric as competitor banks focussed on new customer acquisition.
At that time, primary providers could count on getting an average of 76
percent of the share of wallet their customers spent on transaction
banking services. In the May 2005 report one bank received more than 88
percent wallet share.
Times have changed, and with them wallet share metrics. Asia’s Top 1000
Corporates, researched in East’s ATB program, have shown – over time – an
increased willingness to engage with secondary banking providers and share
their wallet with them.
In 2005, for example, secondary transaction banking providers took at
average 11.4 percent of customers’ wallets. The best of breed figure was
18.5 percent, and the lowest was 5.3 percent.
Contrast that with East’s most recent ATB report, the research for which
was conducted in May 2013. In this round of the program, primary provider
wallet share is at 56.7 percent, with the best of breed result at 74.0
percent.
Among secondary providers, the best result is now 24.4 percent – more than
double the average figure from 2005. |
One bank – the same transaction
banker which had 18.5 percent secondary wallet share in 2005 – is still
the best of breed, but has lifted its wallet share to 34.5 percent. The
lowest wallet share recorded by a secondary provider in May is 18.9
percent, higher than the best of breed result from 2005.
While there is no doubt that the size of the transaction banking pie has
increased in size since 2005, primary providers are just not getting the
same size piece of pie as they used to.
Customers are increasingly banking “way from home” in transaction banking
and are clearly comfortable doing so. From their perspective, it makes
good risk management sense and perhaps drives some price tension among
their providers.
The trend also speaks to the competitive nature of banking in Asia.
Foreign banks aspiring to penetrate the Asian business banking markets are
typically following their national corporates up into the region with
trade and debt products, and then moving to add some transaction banking
products to the mix.
One bank doing this, with some success, is Australia’s ANZ. At one time an
Australian ANZ institutional customer in Asia would typically have used
ANZ for trade finance, but used the transactional solutions of another
bank.
Now, ANZ has improved its transactional capabilities in the region, and is
beginning to grab secondary transactional banking market share.
Banks which are doing this are benefitting from the ongoing momentum for
secondary wallet share, a trend which East’s research suggests has some
distance yet to run. |
