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Has the Supply Chain Finance World Gone Flat?

On a roadshow in Asia recently, while talking to our transaction banking and corporate customers, I was struck by how flat the world of Supply Chain Finance seems to have become. 

On the one hand, the community of players involved in financial supply chain services seems to struggle to move domestic trade receivables or payables financing programmes to the global stage.  This may be because of the perceived local particularities of their models or even the difficulties of agreeing definitions of these financial products – for instance, "is my reverse factoring the same as your 'confirming' and is my vendor financing the same as your early payments programme?". 

Arguably the latter is improving fast with a global standardisation effort to define these products better, with involvement from BAFT-IFSA to S.W.I.F.T. and the International Chamber of Commerce.  However, overall we still hear complains about a perceived lack of common global requirements from corporates around working capital financing or more precisely, setting up supply chain finance programmes.

Additionally, there seems to be an enduring secrecy attached by banks to their often tailor-made SCF models, as these are regarded as highly competitive differentiators in servicing their corporate customers.

On the other hand, we are seeing significant similarities in SCF needs across the globe. Our team at Misys have been invited to help many banks to build their SCF propositions and infrastructures over the last few years. These projects are often triggered by the receipt of a Request for Proposal from large corporates and when we review the corporates' detailed requirements, I can't help but notice the massive similarities across regions. From a large commodity producer in Indonesia to a top retailer in North America or a leading car maker in Europe, the questions are often the same, for example, local expertise on both buyer and supplier sides, availability of an advanced self-service electronic channel with the bank, support for both open account and traditional trade instruments in a unified way, speed and quality, early payments or financing…to name a few.

While there are of course many specificities, are these really regional or has the world of Supply Chain Finance become flatter?

 

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Olivier Berthier

Olivier Berthier

CEO

Moneythor

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Singapore

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