Sebastien Avot sees fragmentation less as a geopolitical abstraction than as an operational reality reshaping how transaction flows move across markets. As Asia Pacific regional head of institutional cash and trade at Deutsche Bank, he sits close to the practical consequences of shifting corridors, changing liquidity expectations and growing demands on cross-border execution. In his view, the most significant changes are visible not in geopolitical commentary, but in how clients are reconfiguring flows and what they now require from their banking partners.

“Over the last 12 to 24 months, we’ve seen diversification of supply chains and trade finance corridors,” he said. That shift is changing long-established assumptions about where flows move, how liquidity is managed and what execution capability needs to look like in practice.

The language of fragmentation often focuses on trade tensions, supply chain resilience and macroeconomic uncertainty. Avot’s perspective is more grounded in operating reality. Fragmentation increasingly shows up through different settlement routes, more fragmented liquidity needs, changing clearing requirements and the need to operate confidently across unfamiliar market environments.

That is changing client expectations. Efficient execution remains essential, but it is no longer sufficient. Institutions increasingly need support in managing fragmented infrastructure, local market complexity, regulatory variation and increasingly dynamic funding and risk requirements.

That broader shift raises a strategic question for transaction banking. If fragmentation becomes a structural feature of global commerce rather than a temporary dislocation, what role should transaction banks play? Avot’s answer is clear: institutions increasingly expect them to simplify complexity, not merely process transactions.

What does fragmentation actually change in transaction banking?

Fragmentation changes the operating assumptions behind transaction banking.

“Clients are looking at de-risking the traditional trade corridors,” Avot said. As institutions diversify away from established routes, the transaction banking challenge becomes more complex than simply redirecting flows. Different corridors bring different operating environments, regulatory conditions, settlement frameworks and risk considerations.

“We see demand for a lot more localised solutions,” he said. That reflects a practical reality. As clients expand into less familiar jurisdictions, standardised global infrastructure alone becomes less sufficient. Execution increasingly requires local capability connected to broader international reach.

“They’ve reached out to us for expertise around liquidity management, clearing routes and working capital financing,” Avot said. The reference is telling. Fragmentation is not simply increasing transaction volumes in different places. It is changing what clients need from transaction banking infrastructure.

Non-financial risk also becomes more prominent. Sanctions risk, market access constraints, regulatory variation and logistical disruption all create operating complexity that transaction flows must navigate. That broadens the transaction bank’s role beyond execution into risk navigation and market enablement.

For Avot, fragmentation is therefore not simply a macroeconomic backdrop. It is a direct operational force reshaping transaction banking itself.

Where are global flows moving?

Fragmentation does not necessarily reduce transaction activity. It redistributes it.

One of the clearest shifts is the rise of Southeast Asia as a more prominent production and transaction hub. “Southeast Asia has really positioned itself over the last couple of years as a new manufacturing hub,” Avot said, pointing to Vietnam, Thailand and Indonesia as increasingly significant markets.

India is another important shift. “India is becoming a global exporting hub,” he said. That evolution extends beyond traditional industrial activity into digital infrastructure, software-related activity and broader cross-border connectivity.

These shifts are also creating stronger South-South flows. “We see increasing export volumes towards Africa and Latin America,” Avot said. That observation matters because it reflects actual transaction evidence rather than abstract strategic forecasting.

Regional integration is also deepening. North Asia–Association of Southeast Asian Nations (ASEAN) connectivity is becoming more strategically important as supply chains are rebalanced and production footprints diversify.

The implication is straightforward. Transaction banks must increasingly support a more distributed and less predictable global transaction environment, where growth emerges across a wider mix of markets and corridors.

Why is end-of-day liquidity no longer enough?

One of Avot’s strongest operational observations concerns liquidity visibility. “Two or three years ago, clients were happy to have a liquidity position at the end of the day,” he said.

“Now they want almost live liquidity positions.”

That change reflects a deeper shift in operating expectations. As flows become more fragmented across jurisdictions, currencies and settlement environments, delayed visibility becomes harder to tolerate. Institutions need faster information to manage funding, settlement timing and operational exposure.

Foreign exchange (FX) adds further complexity. “They need to manage their FX risk,” Avot said. Local currency settlement becomes more relevant as clients enter more fragmented and regional operating environments, increasing the need for real-time exposure management.

“They need a real-time view of their exposure in different markets,” he said. This materially changes the role of transaction banking infrastructure. Execution alone is no longer enough if clients lack visibility, responsiveness and control.

What now defines differentiated execution capability?

Fragmentation changes what execution capability actually means.

“You need local expertise, market-by-market, sub-region by sub-region,” Avot said. In fragmented markets, global scale without local execution capability becomes less useful.

Equally, local execution without broader connectivity is insufficient. “These need to plug into global capabilities,” he said. The differentiator lies in connecting fragmented local market realities to resilient international infrastructure.

Clearing remains central. “We have a global reach in terms of clearing capabilities,” Avot said. In stable environments, clearing capability can appear commoditised. In fragmented markets, continuity, connectivity and reliable access become more strategically important.

More challenging operating environments further raise the execution bar. “Not a lot of banks are able to play in markets with geopolitical complications, financial stress or less regulatory stability,” he said. That capability becomes increasingly relevant as flows diversify beyond familiar operating environments.

Execution, in this context, becomes less about transaction processing efficiency alone and more about enabling reliable market participation.

Why are transaction banks becoming complexity navigators?

Avot describes a more structural evolution in the role of transaction banking.
“Clients see the transaction bank as a complexity navigator,” he said.

That phrase captures the core shift. Transaction banking is no longer viewed purely as infrastructure or execution utility. Clients increasingly expect transaction banks to help them operate effectively across fragmented and more demanding environments.

“They rely on us to navigate very complex environments,” Avot said. That includes fragmented clearing infrastructure, changing market conditions, regulatory complexity, risk management and funding requirements.

Expectations are also broadening beyond traditional execution. “They want faster execution, application programming interface (API) connectivity, innovative balance sheet funding solutions and advisory,” he said.

The role therefore becomes more integrated. The transaction bank is increasingly expected to combine infrastructure, connectivity, execution and intelligence into a coherent operating capability that simplifies complexity for clients.

Why does simplicity become the strategic advantage?

Avot sees the next layer of differentiation extending beyond execution infrastructure.

“They expect us to be a reliable data provider,” he said. That expectation reflects a world in which decision-making increasingly depends on visibility, information quality and operating intelligence.

“They need innovation and interoperability across ecosystems,” he added. As transaction environments become more distributed, the ability to connect platforms, systems and counterparties becomes strategically important.

The competitive edge may therefore increasingly belong to institutions that combine infrastructure with usable intelligence. Data, interoperability and operational visibility become part of the transaction banking value proposition rather than peripheral enhancements.

For Avot, fragmentation is not simply making transaction banking more complicated. It is redefining what strategic relevance looks like. The institutions that remain important will be those able to simplify fragmented execution rather than add to complexity.