Payments and trade flows will continue to expand, but transaction banks cannot assume that rising volumes or larger balance sheets will translate directly into comparable revenue growth. As traditional services become more commoditised, differentiation is increasingly extending to what banks can build around the transaction itself.

That is broadening the economics of the business. Transactional foreign exchange (FX), embedded treasury, application programming interfaces (APIs), new-economy clients, digital assets and new forms of working-capital finance are creating potential revenue pools, while data and artificial intelligence (AI) are giving banks new ways to turn the information embedded in payment, liquidity and trade flows into client value.

Tsvetanka Nankova, Global Head of Sales, Institutional Cash & Trade Finance at Deutsche Bank, said the shift ultimately requires banks to rethink where their competitive advantage resides. That will require banks to concentrate on capabilities that remain difficult for platforms and non-bank competitors to replicate, rather than attempting to own every client touchpoint, while using partnerships to extend their reach.

Growth moves beyond transaction volumes

Nankova argued that transaction banking is entering a different phase of development. Payments and trade volumes will continue to grow, but she does not expect revenue growth to come from volume or balance-sheet expansion alone. Instead, new revenue opportunities are emerging where transaction banking intersects with data, platforms, new rails and technologies.

In payments, she identified transactional FX as one opportunity, with improved data and AI potentially enabling smarter FX and real-time pricing across currencies. Embedded treasury and APIs represent another as corporate clients increasingly seek API-based cash management, liquidity pooling and automated reconciliation.

New-economy companies are also becoming more important to transaction flows. Nankova pointed to fintechs, marketplaces and digital-asset firms as increasingly significant originators of payment volumes. Digital assets and programmable money can create further opportunities, although she expects near-term revenues to remain relatively modest. The larger strategic question, she said, is whether banks can provide trusted settlement infrastructure within tokenised financial ecosystems.

The common thread is that growth is extending beyond the economics of the individual payment or financing product. Value can also be created by embedding financial capabilities into the client's underlying treasury, procurement and commercial processes.

Data moves from reporting to decision intelligence

Banks have an unusual information advantage because they can see clients' payment, liquidity and trade flows. But access to data does not by itself create competitive advantage. The more important question is whether banks can convert operational information into decisions and actions for clients.

Nankova identified cash-flow forecasting, liquidity optimisation and payment routing among the potential applications, alongside anomaly and fraud detection and ESG reporting linked to treasury activity. AI can make these services scalable and potentially more valuable than the underlying payment or trade transaction itself.

"We are definitely moving from a business that is volume and balance sheet based to a transaction banking business that is more data and digital solution focused," Nankova said.

Better analytics are therefore not simply an operational efficiency tool. They can support cash-flow forecasting, liquidity optimisation, payment routing and risk detection, turning transaction data into services that directly influence client decisions.

The distinction is between information and intelligence. Nankova argued that the next competitive step is to turn transaction data into decision intelligence that can influence decisions and workflows, rather than simply producing more sophisticated reporting.

"Strong banks will turn data into decision intelligence rather than just building sophisticated reporting dashboards," she said.

That may also deepen integration with clients. As products themselves become more commoditised, Nankova said contextual expertise becomes more important. Banks that understand clients' operating models can embed themselves more deeply into processes and flows, potentially making process integration more important to the relationship than technology alone.

Regulated balance sheet remains difficult to replicate

The rise of platforms, fintechs and infrastructure providers does not necessarily remove the traditional advantages of banks. Instead, it makes banks more selective about which advantages they need to preserve.

Nankova identified regulated balance sheet and risk intermediation as fundamental strengths, together with the trust and financial integrity that regulation supports. Platforms may be able to orchestrate transactions, she argued, but they cannot replicate a regulated balance sheet at scale.

That distinction becomes particularly visible during periods of stress. Nankova argued that this is when the ability of regulated banks to provide liquidity becomes especially important.

"Banks absolutely need to move away from a mindset where they own every single client touch point," Nankova said.

The implication is not that balance sheet becomes less important, but that banks need to deploy it more intelligently. Nankova also pointed to models such as originate-to-distribute, where institutions do not necessarily retain all assets on their own books, as one way of changing how balance-sheet capacity is used.

Execution at scale, data and network intelligence form another layer of advantage because they can enable banks to improve advice to financial institutions and corporate treasurers and integrate more deeply into client workflows.

The model becomes more ecosystem-driven

The emerging transaction-banking model does not require banks to build everything themselves.

Nankova argued that partnerships with fintechs and infrastructure providers can make sense where they help optimise money flows across a client's wider ecosystem. Multilateral institutions can play a different role by helping banks reduce risk and expand the markets they can feasibly serve across geographies and client types.

The emerging model is therefore more selective. Banks retain the capabilities where regulation, balance sheet, trust, execution and contextual expertise create genuine differentiation, while partnering where external infrastructure, technology or risk-sharing capabilities can extend the client proposition.

This creates a different definition of competitive advantage. The bank does not need to own every component of the client relationship. It needs to determine where its own capabilities create differentiated value and where collaboration produces a better outcome.

For transaction banks, the challenge will be converting that combination into economics. Commoditisation puts pressure on differentiation in traditional products, but the same changes create opportunities to monetise intelligence, embed banking more deeply into client workflows and serve emerging financial ecosystems.

Nankova's argument ultimately points to a different source of growth: not simply processing more transactions, but extracting more value from the information, trust and connectivity surrounding them.

If transaction banks can turn data into decisions, regulated balance sheets into intelligently deployed capacity and partnerships into broader client capabilities, commoditisation may not shrink the business. It may change where the value is created.