Global Salon: Transaction Bank

Chad Wallace, Executive Vice President, Global Transaction Banking at Scotiabank, offers his insights on digital transformation sweeping transaction banking and the strategies needed to thrive amid rapid disruption.

Global Finance: Your career has included serving Mastercard, Goldman Sachs and Capital One. What are the biggest changes you have seen in transaction banking?

Chad Wallace: Over the past decade, the most significant change I have seen in transaction banking is how it has evolved as a central pillar of a bank’s overall strategy and growth.

I think back to my time at Capital One, and the biggest point of progress was moving our client infrastructure to the cloud. This was a big project in 2015. We were also trying to build our capabilities in the commercial bank. An important part of my development was learning how to work closely with engineers to shape and deliver products.

When I started there, I didn’t know anything about corporate banking, I had only worked in consumer banking before. Understanding product management and development in this context, working with engineers and building with customers was an important moment in my career. This became the source of my differentiation compared to other product leaders in the commercial bank – ultimately paving the way for many new career opportunities for me.

Fast forward to Goldman Sachs, where we came up with the idea of ​​building a transaction banking business from scratch: something that hadn’t been done in over 30 years. we created a platform [TxB] Which allowed our clients to manage their treasuries, starting with the US and later expanding to the UK and Europe. We have essentially created a fintech within a 150-year-old organization.

At Scotiabank, over the past year, we have been deliberately investing in modernizing our transaction banking capabilities across our international footprint; Focusing on scalability, connectivity and disciplined execution. It aims to make it easier for clients to manage liquidity, payments and trade in the markets while maintaining strong governance and flexibility.

Overall, transaction banking has shifted from being a supporting actor in the bank to becoming the main character; This is a key driver of growth and innovation, which is reflected in the investments we are making at Scotiabank.

GF: How has the perception and position of transaction banking professionals in the industry changed over the past decade?

Wallace: Transactions were always transferred to the back office for banking professionals to manage payments. If something went wrong they were blamed, but if something went right no one cared. Now, this is completely different. Today, transaction banking sits at the intersection of customer strategy, technology, risk management and growth, and this shift has accelerated significantly over the past decade.

From Scotiabank’s perspective, what we are now seeing is transaction banking being recognized as a key driver of customer primacy and sustainable earnings, not just an execution function. The reason is simple: payments, liquidity, trading and cash management are places where customers feel banked every day. When those capabilities are modern, reliable, and well-integrated, they become strategic, not just operational.

If we talk about the huge pivot of the transaction banking “brand” and the skill set in the workforce, it has changed radically over the last five to 10 years: from the forgotten team to the forefront of innovation and importance at the CEO table and board discussions.

Early in my career, I was involved in building an embedded finance capability. This involved exposing a set of APIs, allowing technology customers to build on top of them. I was part of the early design discussions for a model where a licensed technology platform could leverage our capabilities to offer accounts, wallets and other financial services that they were not previously able to provide, and to do so in a compliant manner. We spent a lot of time understanding compliance. I see other companies have followed suit. Depending on the regulatory environment and their ability to comply, some survived and some did not.

Now, we are seeing more and more investments being made in the transaction banking business, and it is becoming important for future growth. This is why there has been so much innovation in the payments ecosystem with concepts like stablecoins and tokenized deposits. This was not the conversation we had 10 years ago. It’s interesting how fast things are moving in this area and the willingness of the CEO and board to invest to ensure we have the right products and technology.

GF: What are the advantages and disadvantages of stablecoins and other digital currencies?

Wallace: The difference between stablecoin and token deposits is important. Tokenized deposits are overnight deposits that can be programmed for movement and have programmed triggers, making them more flexible and nimble than traditional fiat currency. A key difference is that token deposits are integrated into liquidity and funding structures enhanced by modern technology.

On the other hand, stablecoins are often US Treasury-backed. Tokenized deposits are essentially the application of blockchain technology to existing overnight deposits, which are managed by banks and in some cases backed by FDIC insurance. Banks are focusing on token deposits, but are also recognizing the need to accommodate customers who use, hold or send stable coins.

GF: JPMorgan Chase CEO Jamie Dimon recently clashed with Coinbase CEO Brian Armstrong over whether crypto exchanges should be able to pay recurring fees on stablecoin deposits. What are your thoughts?

Wallace: Generally speaking, we are advocates of level playing field for all players in the ecosystem. Considering the models and regulations surrounding the launch of tokenized assets in different countries, I believe that tokenized assets will be increasingly used by banks to maintain liquidity.

Some aspects of currency need to be managed appropriately, and fintechs need to be supervised according to the specific risk of their business, but I am a big supporter of competition and innovation. Encouraging both will lead to better products and ideas across the board. Banks, fintechs and technology companies must be prepared for this change.

GF: How do you provide a truly integrated banking experience across America?

Wallace: Our primary task is to globalize our product offering, particularly to provide an integrated, globalized proposition to our multinational corporate customers. This will create a connected footprint, allowing them to transact more effectively.

We are building technology components, especially cloud-based, real-time capabilities, to drive the bank’s operations. This includes the ability to move data and money seamlessly across different corridors.

Additionally, we are actively integrating with major ERP systems, accounting systems and treasury workstations. Ultimately, our goal is to operate a bank that is fully integrated with these platforms, eliminating the need for customers to log into a separate bank portal. The goal is a “consumer-grade experience” where a CFO can manage payables and receivables within their system without logging into a bank portal.

I believe that Embedded Finance is the core of the future of banking: being where the customer is. For CFOs who use their ERP application, we want to integrate within that application, allowing them to manage both payments and data flow seamlessly.

We have a significant roadmap already launched with SAP and Oracle as well as others. Many of these applications are SaaS-based, allowing rapid implementation of bank connectivity. Instead of a complex project to connect, integration is often as simple as clicking a button for instantaneous set-up. “This way we are achieving significant scale.”

GF: What is Scotiabank’s strategic focus regarding the use of AI?

Wallace: Scotiabank has used AI for fraud detection for years, and now for customer insight reports, giving customers recommendations and a monthly overview of where they can improve their payment flow. More broadly across the bank, AI is being incorporated into both customer facing and internal processes to improve experiences and help make better, faster decisions.

While we are actively investigating agentic AI capabilities for tasks such as optimizing liquidity, our immediate focus is on embedding technology that enhances revenue generating opportunities and enhances the customer experience and is deployed within a robust governance and risk framework.