Global transaction banking (GTB)—which encompasses trade finance, wholesale banking payments, and liquidity products such as deposits and overdrafts—is a staple of global banking that generates almost $1.3 trillion in annual revenue. GTB accounts for roughly half of the wholesale banking revenue pool (Exhibit 1). It has long been a reliable workhorse: Revenue growth has been robust in the past five years, supported by rising rates, payments digitalization, and growing global trade.
Our research, which includes surveys and data from our proprietary GCI Analytics database, aggregates deposits and treasury management activity from most large financial institutions and highlights a substantial increase in volatility in GTB. Most strikingly, our Corporate and Commercial Deposits Survey from this year shows a significant shift in customer loyalty, with as many as one in five companies switching their primary operational deposits partner in any given year.
In this article, we assess the current state of the industry, including the major trends, and estimate the value at stake for winners in the new competitive environment. We conclude with a playbook on how to chart a path toward boosting GTB profitability by 50 percent (excluding any impact from changed interest rates) even as the industry navigates this period of turbulence.
GTB: A sector in flux
Several concurrent trends are reshaping the transaction banking landscape and sparking the current volatility, with four major shifts underway.
Two are mainly macro in nature: continued geopolitical uncertainty and potential near-term rate cuts that, if realized, would likely reduce revenues. The other two trends are more structural: rapidly changing customer expectations and more-intense competitive dynamics, including from software players, fintechs, and the rise of private credit. Looming over all of this is agentic AI, which is helping reshape customer expectations and fuel competitive pressures, even as it gives institutions a potential tool with which to respond to these challenges.
Operating in an environment of potentially lower interest rates
The postpandemic rebound in both short- and long-term rates was a boon for GTB players, expanding their net interest margins. Now, as further rate cuts loom, this growth engine risks going into reverse, especially for the wholesale business, where the revenue impact is larger than for retail. To avoid falling off a revenue cliff in the event of a lower-for-longer rate environment, GTB businesses will need to double down on fee income growth while seeking to preserve their net interest margin through pricing that is more finely grained.
New risks from geopolitical uncertainties
Rising geopolitical tensions have introduced a range of challenges and opportunities for financial institutions that have implications for GTB. Beyond tariffs, geopolitical drivers—including import and export controls, domestic industrial policies, and foreign investment restrictions—are reshaping global trade dynamics. As highlighted by McKinsey Global Institute research, future supply chains may look radically different, requiring banks to prepare for a broader spectrum of shocks affecting them and their customers.1 To navigate this evolving landscape, we see banks focusing on several areas:
- Building a geopolitical risk knowledge center and task force. This will help banks identify and manage risks in their own books and make their clients’ supply chains more transparent.
- Training the front line. Training the front line builds bankers’ awareness of the emerging issues clients are facing, provides them with new tools and analytics (such as leveraging supply chain insights to identify new leads), and educates them on the potential funding and hedging solutions the bank can offer.
- Investing in compliance and risk mitigation. Compliance and risk mitigation measures help manage an environment of increasingly complex sanctions and export control. Banks must establish their own robust capabilities, help their clients navigate the rapidly shifting environment, and ensure that clients’ financial activities meet their regulatory obligations across a range of jurisdictions.
- Supporting clients as they build supply chains in new jurisdictions. As clients shift their supply chains, they will deal with new counterparties and new banks in new jurisdictions. Banks need to nimbly adapt to these changes and make these transitions as smooth as possible. Specifically, with trade increasingly denominated in local currencies, banks need to invest in currency-trading capabilities and potentially establish new payment corridors. Similarly, as clients deal with new counterparties, enabling seamless trade finance and working capital solutions (such as digital letters of credit) can help ensure that cross-border trade remains efficient and disruption-free, even as a company’s footprint changes.
The increasing importance of customer experience
Customer expectations are rapidly evolving, with a heavy focus on user experience. Customers are surprisingly willing to switch banks—McKinsey’s 2025 Corporate and Commercial Deposits Survey found that up to 20 percent do so each year for operational deposits, which have been viewed as stickier historically (Exhibit 2).
Our survey also found that, after the obvious price factor, experience is most critical (Exhibit 3). Corporate and commercial treasurers are increasingly holding their transaction banking providers to the same standards they apply to apps in their personal lives, and they will switch to competitors if they are not satisfied—even for supposedly stickier services. Treasurers are asking why it is easy to open an account or transmit money to a relative on the personal front but much more difficult to onboard and pay a new supplier. The willingness to tolerate classic industry pain points in onboarding, new account opening, entitlement management, complex API integrations, and below-par service is lower than ever.
By contrast, clients value the next “hot” product comparatively less. Industry adoption of real-time payments, for example, remains relatively low despite the speed benefits, with regular automated clearing payments through the ACH or SEPA2 networks “good enough” for many use cases. Virtual account adoption also varies and, in many banks, is concentrated in only specific sectors such as e-commerce and real estate. We still see that the much-heralded API revolution is more relevant for larger clients, with smaller ones preferring portals, although this is starting to change as software players push adoption.
Overall, the adoption of these more-advanced features remains limited by the sophistication of clients’ own technology capabilities. Consequently, many banks are shifting their focus to “brilliant basics” in a seamless way and building the front-end experience and platforms to support that.
Intensifying competition
Competitive pressure is intensifying across the global landscape. This is driven by firms of all types seeking new sources of revenue and growth, better onboarding processes making it easier for customers to change providers, lower costs, and the greater availability of partners for digital innovation.
At the top of the market, global systemically important banks (GSIBs) are allocating large portions of their technology budgets to upgrading transaction banking services, with annual investment in changing technology reaching hundreds of millions or even billions of dollars. GSIBs are investing heavily in modernizing their platforms to better address the evolving and increasingly complex needs of their customers (providing seamless digital experiences) and are able to invest in multiple product and sector offerings simultaneously.
We have also started to see substantial investment from new entrants. In the United States, this includes banks, such as Goldman Sachs and RBC Bank, that have set up greenfield attackers. These new entrants are attracted by the falling cost of entry, recurring fee-based revenue streams, and access to operational deposits. They can offer best-in-class user interfaces and experiences—unencumbered by legacy technology—to differentiate themselves from incumbents.
Technology providers are also encroaching on traditional banking areas. The advent of software as a service and API connectivity has created a new set of niches—with treasury management platforms such as Kyriba or GTreasury and platforms for the office of the CFO (such as Bill.com) set to capture customer mindshare and position themselves between clients and their banks. They are offering a single bank-agnostic solution to customers, allowing them to easily see a single view of their position across institutions. They are increasingly generating traction and revenues with corporate clients of all sizes across an array of sectors and geographies and disrupting banks’ direct access to these clients.
Another threat comes from digital payments attackers—such as Airwallex or Stripe—that are moving upmarket from their initial focus on retail and small and medium-size enterprises and now serving larger companies with a global footprint. These companies bring together software and payments in increasingly integrated offerings—often with more-competitive pricing and new capabilities such as real-time global disbursements—that can surpass the capabilities of all but the largest incumbent banks.
In some cases, banks can work jointly with these firms rather than compete, seeking to create win–win outcomes. For fintechs and software firms focused on customer acquisition and retention, national domestic banks are increasingly seen as critical partners and routes to market. Banks aim to deliver state-of-the-art services to their clients, even if these services are not developed internally. Consequently, many banks are increasingly white-labeling third-party technology or acting as distribution channels for branded solutions. This approach accelerates time to market and enhances customer functionality by combining the agility of software firms with the distribution power of banks. This symbiotic approach is allowing players to rapidly meet the growing demand for integrated, innovative financial solutions while limiting investment spend.
Finally, the emergence of stablecoins may also pose a new competitive threat for traditional banks and payment rails. As described in a recent McKinsey article, stablecoins are a potential alternative payment rail offering real-time 24/7 settlement as well as possibly improved speed, costs, and transparency when compared with legacy systems.3 Over time, this could lead to disruptions on two fronts for transaction banks.
First, through tokenized deposits and money market funds, stablecoins could affect the net interest income earned on deposits. These may move off bank balance sheets, risking margins and deposit volumes. Second, stablecoins could particularly affect cross-border payments, where the ability to move money globally in seconds through a network of liquidity partners could disrupt one of the most profitable product areas in GTB.
The growth of private credit
Private credit has grown to what McKinsey estimates to be a $2 trillion market of managed assets.4 The focus has historically been on direct lending to sponsor-backed companies, but leading firms now aim to enter much broader areas of commercial finance, including working capital and supply chain finance, that are squarely part of transaction banking. This surge is largely driven by greater investor appetite for a broader set of investment-grade private credit assets and borrowers seeking a wider set of funding alternatives. We are consequently seeing a lending shift to an “originate to distribute” model in which banks originate loans but then offload the risk to nonbank balance sheets through a range of structures, including securitization, asset sales, and synthetic risk transfers. A growing number of banks have started actively partnering with private credit funds to distribute trade finance and invoice receivables. These private credit firms will become increasingly important providers of capital and funding in the transaction banking space going forward and compete directly with traditional banks.
The value of getting transaction banking ‘right’
The changing dynamics noted above present considerable opportunities but could also present risks to institutions that do not keep up. We expect to see more sharply defined outperformers and laggards around the world over the next few years; the best players will build client bases with deep, multiproduct relationships, and laggards will face declining margins as they compete on price. Our GCI Analytics data shows that fully cross-sold clients generate three times the revenue earned by deposit-only customers of a similar size, from a combination of greater product penetration and lower rates on deposit balances (Exhibit 4).
The overall value at stake from getting transaction banking “right” can be substantial: Strengthening cash management can lead to significant increases in incremental revenue. Our research across North American banks has found that median performers see an improvement of about 50 basis points in revenue relating to outstanding corporate and commercial loans compared with lower-quartile performers, while upper-quartile players see improvement by another 87 basis points (approximately), compared with median players (Exhibit 5). Respectively, for every $20 billion of commercial and industrial lending, that equates to more than $100 million of incremental value for median performers and about $175 million for upper-quartile performers, representing enormous value at stake.
A playbook for growing transaction banking value by 50 percent
We see six different “plays” for the GTB industry that could lead to 50 percent growth of pretax profitability, not taking into account potential shifts in the rate environment (Exhibit 6). Taking a structured approach to implementing these plays could lead to long-term competitive advantage and allow banks to come out of the industry’s changing dynamics as winners. And (agentic) AI, discussed further later in this section, enables most of these plays and is a powerful accelerator of the overall business.
Customer journey experience: 10 to 20 percent impact on operating profit
In an era in which product offerings are both compelling and diverse, the true differentiator for customers will be their experience throughout their end-to-end journey. The ability to complete tasks in the most integrated and seamless manner—for example, through instant foreign-exchange integration on a platform—will set businesses apart, attract clients, increase volumes, and reduce attrition. Banks should therefore think about rewiring and redesigning their customer experience to make it easier for clients to transact and for the bank to operate efficiently.
As clients can more easily scale transaction volumes, access new products, and become aware of and find solutions for unmet needs, we have seen operating profits for median performers increase by 2 to 4 percent as a result of revenue uplifts. Ultimately, delivering a great customer experience—including a single point of contact for client service, incident management teams that rapidly identify and resolve customer issues, and easy and transparent access to all bank capabilities—is a critical enabler for growth.
Rewiring key customer journeys can have an even bigger impact on cost, where we have seen improvements of up to 10 to 18 percent on operating profit, depending on the organization’s starting point on straight-through-processing capabilities. Building modern platforms and making client self-service quick and efficient reduces manual activity and the need for larger servicing teams while simultaneously improving experience. Reorganizing servicing teams into smaller, nimbler pods aligned by client size can also deliver better outcomes at less cost.
The perennially challenging area of client onboarding exemplifies how excellent service can have a substantial impact. Interventions such as enabling customers to onboard themselves digitally, using prepopulated forms leveraging existing client information, and implementing intuitive status tracking for clients and internal teams can be transformative. They can deliver great experiences, help clients to do more business more quickly with a bank, and reduce demands on support teams, which can then be smaller. This is an area in which early use cases for agentic AI are delivering unprecedented productivity increases; for example, one large institution has reduced its onboarding team by 60 percent by leveraging a series of AI agents to perform many typical tasks.
To get started on improving end-to-end client journeys, we see banks adopting the following principles:
- Relentlessly obsessing over client-centricity. Every product and experience decision is based on client need, preferably rooted in a North Star vision. Banks regularly seek client feedback through interviews or surveys and client advisory groups.
- Embedding an end-to-end customer journey mindset in decision-making. Creating transparency on how clients interact with the bank allows institutions to understand how fixing a pain point in one area might have adverse effects later in the value chain. Having an end-to-end, or front-to-back, perspective will ensure that things that matter will be fixed.
- Reimagining the customer journey with AI. Move beyond a series of isolated use cases to look at the full journey, and deliver novel experiences such as allowing customers to interact with their data through conversational AI.
- Offering hyperpersonalized experiences. For example, provide a one-stop shop for assistance and leveraging knowledge of the client, regardless of the channel they use.
- Aligning the organization around objectives and key results. Identify the key goals that each strategic initiative should contribute to. Setting the right priority areas and objectives ensures hyperfocus on which initiatives to prioritize.
Sector specialization: 5 to 10 percent impact on operating profit
Evolving from a one-size-fits-all approach to a sector-oriented strategy involves aligning client segmentation, tailored product and technology solutions, and relationship manager coverage by industry verticals. This approach has helped banks move beyond transactional roles and into real strategic partnerships with clients, identifying and solving their problems. The fundamental premise underpinning this model is that each sector’s ecosystem has unique cash flow dynamics that drive very specific product and solution needs.
The real estate sector illustrates the value of this approach. The biggest challenges clients face include fragmented visibility across entities (such as separate accounts for hundreds of commercial properties), manual treasury processes, and forecasting tools with limited precision (such as an inability to project rent rolls at the asset level). Winning institutions have developed differentiating capabilities such as digital escrow accounts, dashboards with highly granular reporting and analytics, and advanced asset-level cash forecasting.
Similarly, the retail and fast-moving consumer goods sectors typically rely on distributors and supplier financing because of cash flows driven by the supply chain, and they have a critical need for seamless consumer-to-business collections, including virtual accounts, integrated and international multicurrency collections, and API integration with their proprietary sales channels.
Banks have a narrow window to act: Clients are increasingly turning to third-party software companies (for example, property management platforms such as Yardi, RealPage, or DoorLoop in real estate) that will further disintermediate banks and reduce margins.
Acting now could unlock meaningful growth of 5 to 10 percent by pairing tailored offerings with the right specialized coverage teams. Sector-driven approaches make it easier for bankers to advise their clients, find the right bank solutions, and engage at a deeper and more granular level with their clients’ needs. Historically, this was an approach taken by larger banks, which had the scale to enable sector specialization across the board. We now see smaller organizations choosing specific sectors in which to double down, aligned to their lending book and where they can add real incremental value.
Fintech partnerships: 3 to 5 percent impact on operating profit
While banks have long faced the choice of build, buy, or partner, we increasingly believe that the future is tilted toward partnerships, especially with fintech innovators. Fintechs offer a range of innovative services that bank customers want. Partnering with them considerably reduces the time to market compared with relatively slow internal bank build efforts to develop something similar. These partnerships also make continued investment in critical client propositions more likely: Fintech business models are typically predicated on continuous, iterative innovation to maintain and deepen product–market fit, whereas many banks will reduce investment after the initial build. Interestingly, some of the largest global banks, such as HSBC and Citi, which in theory are well positioned to build purely proprietary solutions, are some of the most prolific partners and have internalized this logic.
Regional banks, which face greater investment constraints, may want to follow their example. To do so, these banks would need to develop their “partnership engine,” systematically scanning for opportunities and deriving value from the ones they pursue. The most successful partnerships include the following:
- a strong alignment of interests, often with gain-share type agreements
- clear synergies on both sides, beyond simply adding more distribution and sales
- a go-to-market approach that leverages the speed of fintech processes and the regulatory experience of the bank
When they are well designed, we see such partnerships regularly driving 3 to 5 percent upside in profitability, with improved offerings in the chosen area leading to higher volumes and increased fees.
Front-office excellence: 10 to 20 percent impact on operating profit
The next lever, a structured commercial approach (“front office excellence”) is typically the foundational element in driving growth in transaction banking and can yield upside of 10 to 20 percent over the baseline.
Many banks face challenges in marketing their transaction banking offerings to clients, effectively resulting in a broken “commercial engine.” In many cases, corporate or commercial relationship managers (RMs) are generalists with limited fluency in more-technical transaction banking products or the most effective ways to market them. In other cases, RMs and transaction banking specialists do not coordinate well, and operate in an overly independent and siloed way, rather than bringing the best of the bank to clients in an integrated fashion.
Sometimes, the right incentives are not in place. For example, RMs may be offered incentives based on revenue or loan growth (even if the returns are lower) rather than on overall client profitability and prioritizing greater fee-based services. At other times, transaction banking specialists may take an overly passive approach, focusing too much of their time on servicing and administrative activities better handled by dedicated support staff, and too little on structured outreach to clients. Last, the approach to segmentation, sales routines, and tracking can be inconsistent across teams. Addressing these common challenges through a structured program of front-office excellence can yield meaningful benefits. We believe that AI will help unlock significant gains here, with automated lead generation and much more intuitive “conversational” customer relationship management systems providing transparency and helping with coordination.
As a consequence, efforts in front-office excellence focus on setting up client-facing teams to be as effective as possible; giving them the right training, tools, and data to do their jobs; and bringing sustained discipline and consistency to client outreach.
Some common elements along these lines include the following:
- upskilling teams to ensure clients are interacting with knowledgeable specialists who have strong product expertise
- establishing a workable operating model between coverage and treasury specialist teams
- creating the right incentives for collaboration and deeper relationships between teams
- systematically reviewing preexisting lending relationships to identify pockets of opportunity and under-penetration and lookbacks on planned cross-sales
- equipping teams with the right analytics, leads, and tools
- setting explicit targets, KPIs, and incentives and ensuring granular performance tracking
- driving a structured sales performance cadence with well-defined routines, tracking, and structured outreach campaigns
- in some cases, creating specialized teams such as deposit “war rooms” to ensure focus on specific goals
Pricing excellence: 5 to 10 percent impact on operating profit
Pricing excellence goes hand in hand with a structured approach to front-office excellence and outreach. Banks typically lack a data-driven understanding of client elasticity, take an overly standardized approach, fail to provide RMs with sufficient guidance on custom rates and discounting, and lack the right tools and dashboards.
We have consequently seen structured pricing programs drive meaningful improvement with uplifts in profitability of 5 to 10 percent. Some elements of these programs include the following:
- a simplified pricing approach (including bundles) that maximizes client value across the full client relationship
- transparent fee structures for clients (including suggestions and prompts on cost reduction tied to behaviors the bank would like to provide incentives such as larger deposit balances)
- advanced pricing engines to identify customer elasticity and specific pricing guidance to RMs to manage attrition risk and grow volumes
- investment in the appropriate tools, analytics, and auto-suggestions for RMs
- agile operating model with treasury and other groups to make rapid adjustments
While much of the focus has been on deposits historically, such approaches apply to the lending and payments businesses as well.
Servicing model optimization: 8 to 10 percent impact on operating profit
The last lever involves optimizing the organization and operating model in servicing. Many firms still struggle to be as efficient as they could be, with simpler and more automated ways of working making a real difference. We have seen profitability improvements of up to 10 percent, driven largely by cost savings from the following:
- increasing levels of straight-through processing and digital self-service capabilities through targeted technology investments
- consolidating multiple fragmented servicing teams into smaller, leaner teams—often side by side with the sales teams to enable better collaboration
- establishing the right location mix across onshore, nearshore, and offshore locations
We are seeing more and more AI transformations of servicing domains, with early-adopting banks seeing productivity gains of more than 50 percent in areas such as onboarding.
AI as the final unlock
AI is embedded in all six levers of the playbook and serves as an accelerator in each, so we have not yet addressed it as a separate lever. We have seen AI use cases deployed in front offices, often with substantial productivity uplifts—including dynamic pricing models, tailored commercial insights, automated call summaries, and proposal preparation. In the middle office, automation can help unlock savings in organizational and operating models by automating manual tasks. In IT, it can accelerate digital delivery through code-generating copilots. In short, AI has the potential to fundamentally rewire the organization.
Furthermore, as firms think through delivery, we are seeing a shift from individual proofs of concept to a more agentic approach. Firms are thinking about how they can fundamentally reorganize teams with squads of agents working side by side with bankers and appropriately supervised. Firms are also heavily focused on adoption, change management, and the revised talent model for the organization that results.
Given the changing dynamics of the industry, the time to act is now. With multiple new competitors, emerging new payment rails, and geopolitical volatility, revenue pools have rarely been so volatile. Making incremental improvements is no longer sufficient to keep up with competitors or with evolving customer demand.
We believe there is a significant revenue and cost opportunity that players are leaving on the table. With increased uncertainty in interest rate levels—and an increasing need for other sources of revenue—taking bold action now can lead to long-term sustainable growth of wholesale banking departments.
