13 February 2016

Banks seek out new opportunities in supply chain finance

11 April 2014  |  5898 views  |  0 cash

The importance and potential of supply chain finance as a line of business for European banks has been emphasised in a survey by working capital outfit Demica which indicates that one third of banks sampled have created SCF-specific roles with directorial status.

The study, which examined job titles at the top 50 largest banks in Europe, identified that close to 45% of top European banks have already created SCF-specific roles/job titles. Nearly one fifth of these banks have sales functions specifically related to SCF and 16% of them have SCF-specific product managers.

SCF - in which transaction banks provide top corporates with short-term financing to pay suppliers - is viewed as an emerging business opportunity, particularly in a post-crisis regulatory landscape, where access to short-term liquidity is at a premium.

Driven by the strong appetite to use their balance sheet to support commercial trade-related transactions, banks are now jockeying to gain SCF businesses, says Phillip Kerle, chief executive officer of Demica.

"By helping client organisations integrate physical supply chain processes with the financial supply chain, banks will not only seize new business opportunities, but also help companies transform their supply chains into a true competitive advantage," he says.

Europe's largest transaction banks have been working intensively to define common terminology as they look to expand their range of supply chain finance services and compete for cross-border business.

The topic is set to feature high up the agenda at the annual EBAday conference in Helsinki in June, where the Euro Banking Association will report back on progress achieved in assisting member banks to explore new market opportunities for possible SCF services.

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