In recent years, banking groups have faced increasing pressure to transform their operating models in response to digitalization, changing customer expectations, and heightened environmental, social, and governance (ESG) requirements. As these developments reshape business models, value chains, and risk management processes, the role of central entities may evolve significantly from a transfer pricing perspective.
In the article “Are AI and ESG Redefining Transfer Pricing Roles in Banking?” published in Tax Notes International, Principal Elena Bonnet and Managing Director Amanda Pletz explore how investments in AI platforms, data governance, and ESG frameworks are changing value creation, risk allocation, and decision-making processes, with important implications for transfer pricing. The authors examine whether traditional cost-based remuneration models remain appropriate and discuss why banking groups may need to reassess their transfer pricing policies to reflect evolving business models and the growing strategic importance of central functions.
