The term “transaction banking” encompasses a range of previously disparate services for corporate and institutional

banking customers that include payments, cash management, trade finance, and securities services.
# notice this definition. Because it is important to understand transaction banking’s customers are corporations, not
individuals.

The payments process also includes parallel messaging that informs participants about the transfer of funds
throughout the system. These messaging protocols are governed by SWIFT, a cooperative society owned and
operated by the banking industry. SWIFT uses secure messaging, connectivity, and common messaging standards to
enable its customers to automate and standardize financial transactions, including bank transfers. SWIFT does not
hold funds or manage accounts.

Trade financing structures are provided with ultimate recourse to the seller.
# this is an important point. “recourse”

The term “securities services” is primarily associated with custody services. Typically, the custodian stores the
electronic record representing the asset. However, in some cases the asset may have physical form (for example,
gold bullion).

The Basel III liquidity coverage ratio requires banks to calculate expected cash outflows by multiplying the
outstanding balances of various liabilities and off-balance sheet items by the rates at which they are expected to be
run-off or drawn down (a similar approach is used for contractual receivables/inflows).