Corporations do not think in terms of payments, liquidity management, trade finance or  treasury except insofar as banks have educated them to do so.  Automotive corporations prefer to talk about making cars, hotel corporations about servicing rooms, lawyers about helping with legal matters, and so on. 

A simple model of the core corporate value chain is shown on this page (adapted from work done by Standard Chartered Bank). 

While services are slightly different, most corporations fundamentally:

• Buy raw materials, using a mix of financial and shipping processes

• Do a transformation of them into finished goods

• Sell finished goods, again requiring shipping and financial processes, and thereby

• Earn money, creating wealth

If transaction banking is defined as supporting the financial elements of this core corporate process (coloured blue in the graphic), it is clear firstly that banking products are used across the value chain and secondly that they are under attack: Amazon, for example, extending its offer into the financial space (Fulfilment by Amazon).

Transaction banking means servicing this value chain, in the customer’s terms, rather than selling disparate products.  Yet banks need to process products in silos in order to ensure efficiency, robustness, compliance and cost-effectiveness.

How can a bank maintain this focus on efficiency and simultaneously focus on the many different needs of many different customers?  That is the product silo conundrum.