Latin American banks must exploit their core competencies in the rapidly growing B2B marketplace before they are squeezed out or relegated to a clearing and settlement role by new non-bank competitors, according to new research from Speer & Associates (S&A).
A new study conducted by S&A suggests that the Latin American B2B marketplace is set to take off dramatically over the next two to three years. This is partly due to the entrance of new players and the emergence of new business models as a result of technological initiatives.
S&A believes financial institutions are well positioned to play a leadership role in the emerging B2B marketplace because of their strong capabilities in payments, cash management and international trade, but warns they must move quickly to assure a dominant role.
Richard Speer, S&A's chief executive officer, comments: "The path to profits for financial institutions lies in solidifying the customer relationship by offering a wide selection of value-added services such as in-bound logistics, foreign exchange, financing, procurement cards, digital certificates, electronic billing, inventory management, credit services and e-payment and settlement."
"As more transaction data resides on bank-driven B2B networks, banks could use their risk management experience to their advantage, by linking the data to their risk management systems," he suggests.
According to the study, the most successful B2B exchanges are emerging in the following environments:
* highly fragmented industries with many small- to medium-sized companies and few major competitors. The more fragmented the pool of suppliers and the channels of distribution are, the more likely a new online intermediary can garner market share;
* industries in Latin America which remain much more dependent on manual, paper-based methods of procurement, accounting, and inventory management;
* large industries, notably in Mexico, Brazil, Argentina and Chile, which ensure marketplace liquidity and significant sources of revenue from transaction fees;
* organisations with the financial power and access to credit that enables them to invest in technology, infrastructures, and required personnel with necessary skills. They shoulder the credit risk for the SMEs that do not have the capital to invest; and
* B2B participants who can leverage network and systems technologies across the region.