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Supply Chain Finance 2.0

Today the SCF market is established on the premises that risk is priced on the anchor buyer’s credit worthiness. This is what I would call SCF 1.0

I am however seeing signs of a significant shift where financial support will be assigned using innovative credit scoring techniques based on the borrowing company’s operational performance supplemented by fast credit underwriting processes that use multiple financial supply chain data sources plus unstructured social media data.

This is what I call SCF 2.0

 

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Comments: (2)

Balasubramaniam Gd
Balasubramaniam Gd - DBS - singapore 20 July, 2015, 09:42Be the first to give this comment the thumbs up 0 likes

How do we mitigate fraud and operational risks in these enviornments ?

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Enrico Camerinelli
Enrico Camerinelli - Aite Group - Boston 22 July, 2015, 08:36Be the first to give this comment the thumbs up 0 likes

Certainly the adoption of digital exchange of data helps to prevent fraud, since visibility of transactions is increased. It all depends, of course, on the willingness of parties to open to such transparency. Most unlikely in tax-heavy regimes.

As per operational risk, that's exactly the point of SCF 2.0: The visibility acquired through the exchange of data and behavior of trading parties (e.g., was the purchase order in line with forecast? Were the goods delivered in quality, quantity, time agreed upon? Were there any disputes regarding the delivery?) enable better control of operational performance and mitigate the correspondent risk.

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Enrico Camerinelli

Enrico Camerinelli

Supply Chain Blockchain Personal Coach

Aite Group

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26 May 2008

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Financial Supply Chain

In the world of international trade, the process of exchanging payments, information and documents between buyers, sellers, banks, and other involved parties is becoming increasingly important for financial institutions. This community aims at presenting views and innovative ideas related to this financial supply chain space.

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