As trading partners increasingly adopt open-account transactions, banks see new opportunities to become involved in supply chain finance.
Boston, December 5, 2012 – A new report from Aite Group reveals bank opportunities in supply chain finance (SCF). Based on a September to November 2012 Aite Group survey of 31 trade finance executives at 30 banks around the world, the report outlines supply chain finance mechanisms, bank- and vendor-offered tools, and financing opportunities for supply chain partners.
Trading partners have increasingly adopted open-account transactions instead of traditional trade finance, eliminating banks’ long-established support of trade finance processes. While these trading partners glean lower fees by avoiding bank services, they absorb new open-account expenses such as those related to internal document comparison and additional in-house staff. Banks want to reinsert themselves in this process and can bring value-added services to the international trade market. Key activities for which banks can add value to trading partners include document presentment and data matching, reconciliation of documents and payments, and discrepancy handling and dispute resolution.
“The growing use of open-account transactions has presented banks, particularly those with total assets of at least US$10 billion, with the opportunity to provide SCF solutions to trading partners,” says Nancy Atkinson, senior analyst with Aite Group and author of this report. “Given that approximately half of banks will work with vendors to implement SCF solutions, opportunities exist for vendors that can meet banks’ SCF needs.”
The report references the following vendors used to implement SCF through banks: CGI, China Systems, CODIX, HDP Corporate Finance, Orbian, Premium Technology, PrimeRevenue, S1 (acquired by ACI Worldwide), SmartStream, and Syncada.
This 22-page Impact Note contains 11 figures and eight tables. Clients of Aite Group’s Wholesale Banking service can download the report.