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Banks will also continue to invest in technology to improve relationship management, unify corporate banking portals, improve analytics, enhance client integration, and automate enrollment and onboarding of new customers.

"The banking industry consolidation frenzy of late 2008 driven by the financial and economic crisis will have an important impact on the wholesale banking market," said Susan Feinberg, senior research director in TowerGroup's Wholesale Banking service. "Banks that have adopted a wholesale banking convergence strategy are in a better position than those that are organized along more traditional lines in terms of being able to offer integrated payment solutions, open account trade capabilities, supply chain finance, and electronic invoicing products."

The trend toward launch global transaction services units reflects bankers' growing recognition that traditional bank silos were not meeting wholesale clients' need for integrated solutions. The success of these units during the first half of 2008 is evidence that "transaction banking" is a critical engine of predictable revenue growth for leading wholesale banks. TowerGroup believes that by replacing previously siloed products with integrated solutions and delivery channels – along with centralized client touch points for sales and service – banks can better position themselves to meet the changing needs of corporate clients.

Although many wholesale bankers expected market instability to continue through 2008, few predicted the global breadth and depth of its impact on financial institutions and wholesale banking clients. Limited credit availability and stricter lending standards are hurting businesses of all sizes, restricting their ability to fund expansion and finance inventories.

"The time is ripe for wholesale banking executives to make the case for further business and technology investment to capitalize on a business segment that is helping their institutions overcome the weaknesses in other segments," said Patricia Hines, research director in TowerGroup's Wholesale Banking service. "Continued investment in wholesale banking will be especially important because we expect revenues from retail and investment banking to plummet as institutions attempt to redress the excesses of the past through a laser focus on risk management."