There is no hotter topic in trade and supply chain finance (SCF) than technology, yet progress is difficult to measure. In April, London-headquartered SCF fintech Demica published the results of a pioneering industry survey, quizzing professionals from across the world on their expectations for the future of SCF. Maurice Benisty, chief commercial officer at Demica, discusses the survey results, including widespread industry optimism, lingering challenges around automation and complexity, and the finding that banks may be on the brink of a technological revolution.
GTR: What was the background to this survey, what did you decide to focus on, and what was uptake like?
Benisty : At Demica, our business has gravitated towards bank partnerships, resulting in many of the world’s largest trade banks, such as HSBC, Lloyds Bank, Standard Chartered, BBVA and BMO, white-labelling the Demica platform to meet their next-generation product requirements. We launched the survey to ensure that we understand the opportunities and challenges that SCF market participants are seeing, and to share insights more broadly across the industry. The survey asked questions about IT, where they are looking to spend their budget, and key product priorities. However, we deliberately tried to keep the survey broad, so also targeted product management teams and specialist sales teams within the banks. We were delighted by the participation rate; we ended up with 143 respondents across 37 countries.
GTR: Generally speaking, did responses suggest a positive outlook for the future of supply chain finance?
Benisty : In terms of businesses’ expectations for performance, the response was overwhelmingly positive. We encountered a uniformly positive view across the industry, one that does not vary much by region, with widespread expectations of growth in terms of assets, team size and business expansion.
Since then there have been economic headwinds, of course, and we have reflected on whether the war in Ukraine plus the continued issues around supply chain disruption will get in the way of SCF growth. Our general sense is they won’t, not least because of the inflation that has come into the system, which increases the working capital requirements. In addition, as the cost of traditional lending facilities goes up, receivables and payables finance become more cost-effective alternatives for corporates of all sizes.
GTR: The survey touches on challenges faced by industry participants, as well as opportunities. Are there any points raised that resonated with you?
Benisty : A reliance on manual processes continues to be challenging for banks, particularly around supplier onboarding, know-your-customer checks and connectivity with originator systems. This impacts both customer and employee experience, which in turn constrains growth. There can also be staff-related challenges; finding good front-office people and training them is a challenge across regions.
With payables finance, one finding that resonated was where banks reported challenges managing long customer acquisition periods, which can extend into years. Other competing products have shorter cycle times: when a bond matures, there is no way around that and it jumps to the top of the treasury priority list. But supply chain finance programmes are often more complex to implement and do not have that same sense of urgency, which makes the cycle times considerably longer.
GTR: One of the survey’s headline findings was around the need to upgrade technology, with over 70% of respondents saying they expect to move to new platforms within the next five years. What is driving that, and what will the next generation of SCF offerings look like?
Benisty : There are several factors at play here. First, some platforms are coming to the end of their lifespans, and some of the technologies that have been deployed have become expensive to maintain, with expertise required from IT professionals in short supply. Second, customer experience is changing dramatically. If you think as a consumer, when your smartphone doesn’t load an app you want to use immediately, that is not an acceptable outcome. So if you’re a bank treasurer, and you want to access information quickly about the performance of your receivables facility, you’re going to be frustrated if there are a lot of manual processes involved in executing that simple task. Customers are increasingly asking, ‘why should this be?’
In terms of what the next generation of platforms will look like, there has been a change in the conversation. Four or five years ago, a lot of our discussions with banks were around ‘buy versus build’. They’re not really saying that any more; they are prepared to buy if the right solution is out there and a lot of investment has gone into developing those solutions. This has been evidenced by the level of RFP [request for proposal] activity increasing significantly over that period. Another factor is that the overwhelming majority of banks now have information security policies that enable cloud deployment. For Demica, this means we can create separate instances for our clients with data physically hosted in an environment that meets regulatory requirements. It also makes it much easier for us to develop products that can be deployed to multiple banks, thereby continuously increasing investment over time.
GTR: More than 90% of respondents say they are prioritising environmental, social and governance (ESG), but only 15% are actively using ESG rating services in live transactions. Why do you think that is, and do you see that gap being narrowed?
Benisty: ESG has clearly become a priority for banks. However, it remains to be seen how banks or alternative funders will build ESG ratings criteria into the supplier onboarding process. That is going to take time, it isn’t easy, and that helps explain that gap in the survey.
However, the demand is there. Large corporates want to be able to present their ESG framework, and select their suppliers based on that criteria, as part of their ordinary course of business. Those corporates then want their bank to prioritise pricing against those criteria, based on the ESG rating of the supplier. It’s still early days but there is genuine intent for that approach.
Tags: BBVA, BMO, Demica, Environmental and social governance (ESG), Fatr, HSBC, Lloyds Bank, Maurice Benisty, Standard Chartered, supply chain finance (SCF)
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Any questions regarding this Policy and our privacy practices should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.
Established in 2002 and with offices in London and Singapore, Exporta Publishing & Events Ltd is the world’s leading trade and trade finance media company, offering information, news, events and services for companies and individuals involved in global trade.
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This Data Protection Policy explains when and why we collect personal information about people who visit our website, how we use it, the conditions under which we may disclose it to others and how we keep it secure.
Why do we collect information from you?
Our primary goal in collecting personal data from you is to give you an enjoyable customised experience whilst allowing us to provide services and features that will meet your needs. We collect certain personal data from you, which you give to us when using our Site and/or registering or subscribing for our products and services. However, we also give you the option to access our Sites’ home pages without subscribing or registering or disclosing your personal data.
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The Data Protection Act 1998 described how organisations – including Exporta Publishing & Events Ltd – must collect, handle and store personal information. These rules apply regardless of whether data is stored electronically, on paper or on other materials. To comply with the law, personal information collected must be stored safely, not disclosed unlawfully and used fairly.
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All our Sites use cookies and similar technical tools to collect information about your access to the Site and the services we provide.
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Services on the Internet are accessible globally so collection and transmission of personal data is not always limited to one country. Exporta Publishing & Events Ltd may transfer your personal data, for the above-listed purposes to other third parties, which may be located outside the European Economic Area and/or with a different level of personal data protection. However, when conducting transfers, we take all necessary steps to ensure that your data is treated reasonably, securely and in accordance with this Privacy Statement.
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The Data Controller is Exporta Publishing & Events Ltd. Exporta Publishing & Events Ltd is subject to the UK Data Protection Act 1998 and is registered in the UK with the Information Commissioner`s Office.
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Exporta Publishing & Events Ltd allows you to challenge the data that we hold about you and, where appropriate in accordance with applicable laws, you may have your personal information:
In certain circumstances, the Data Protection Act allows personal data to be disclosed to law enforcement agencies without the consent of the data subject. Under these circumstances, Exporta Publishing & Events Ltd, will disclose requested data. However, the Data Controller will ensure the request is legitimate, seeking assistance from the board and from the company’s legal advisors where necessary.
We will occasionally update this Privacy Statement to reflect new legislation or industry practice, group company changes and customer feedback. We encourage you to review this Privacy Statement periodically to be informed of how we are protecting your personal data.
Exporta Publishing & Events Ltd aims to ensure that individuals are aware that their data is being processed, and that they understand.
To this end, the company has a privacy statement, setting out how data relating to individuals is used by the company. This is available on request and available on the company’s website.
We keep this Policy under regular review. This Privacy Statement was last updated in April 2018.