How are banks investing in Trade Finance today? CEB Towergroup Vendor Analysis
9 December 2014
At a time when LC volumes are flatlining and the potential of intermediation in Open Account grows banks are looking to new business models, enabled by emerging technologies to sharpen their tools and find a competitive edge.
The history books and almost every book written about trade finance remind you that it is one of the oldest pillars of financial services, even dating back to Babylonian credit notes etched in clay. The fundamentals of the business have remained largely the same over the years but the pace of change and innovation in international trade has never been so great as it is today. Banks have the dual challenge of finding a competitive edge in a commoditised business, whilst also finding ways to capture new revenue opportunities and gaining the integration to unleash innovation and compete for corporate business in a world dominated by open account trade.
By 2020 forecasts suggest that an additional USD 17 trillion of trade will be conducted on open account terms. It is estimated that 45% of bank trade revenues are expected to come from Supply Chain Finance. Today, international factoring and approved payables finance account for less than 5% of the total volume of bank assisted financial supply chain management.
The potential is huge but how are banks repositioning to capture this market potential?
According to the latest findings from CEB Towergroup, banks are now actively innovating to remain the middle men in international trade. The firm’s recent trade finance vendor analysis report looks at the investments banks are making today and compares the vendors in the market.
For further insight into the trends affecting technology investment in trade finance you can also access an exclusive web seminar with Towergroup and Misys which discusses how you can remain relevant in new ecosystems of trade and supply chain finance:
1. See the key drivers of transformation in trade and FSCM
2. How can trade and supply chain convergence drive ROI from existing outlay on new product development?
3. How are banks reacting to the rise of P2P and supplier networks – what are the perceived threats and opportunities?
Get the CEB Towergroup report (Exclusively available here to non-members)
View the on-demand webcast here