On October 27, Global Finance conducted a Sub-custody Roundtable, moderated by publisher and editorial director Joseph Giarraputo.
Lex Greensill, former head of SCF at Morgan Stanley, founded his firm in 2011.
Most SCF is done on a confirmed basis.
As SCF grows and looks to attract a wider pool of investors, and as it supports more-complex financing structures, the need also grows for greater transparency to bring more clarity and certainty.
But it remains critical to keep in mind the need to balance the technology hype against other factors, such as a provider’s safety and security, reputation and market standing.
Still, they have identified a niche that is not currently well served by the usual SCF providers and can be better addressed with newer technologies and business models.
Among the winners of this year’s Global Finance Best Supply Chain Finance Providers, there is a growing recognition that SCF needs to benefit all parts of the supply chain.
Add into the mix a global pandemic that caused significant demand and supply shocks in global supply chains and cash shortfalls for companies that have had to endure months of disruption and lockdowns, and we have the kind of perfect storm that allows SCF to flourish and potentially realize its full potential.
This year’s ratings, which cover 102 countries and eight regions, were based on performance during the period from the fourth quarter of 2020 through the third quarter of 2021.
It is not necessary to enter in order to win, but experience shows that the additional information supplied in an entry can increase the chance of success.
Global Finance uses a proprietary algorithm with criteria—such as knowledge of local conditions and customer needs, financial strength and safety, strategic relationships and governance, competitive pricing, capital investment and innovation in products and services—weighted for relative importance.
Winning the global award for Best Supply Chain Finance Provider–Bank is not just about the number of markets served or the number of supply chain finance programs a provider supports.
Liquidity remains a significant portion of any SCF program, and Citi’s global reach permits it to source liquidity from its balance sheet or a pool of investors.
Fintechs in SCF come and go, but Orbian, founded in 1999 by Citi and enterprise-software provider SAP, continues its mainstay status.
The fintech also recently launched a fixed rate offering—an alternative to pricing programs based on Libor or other floating-rate mechanisms—that lets suppliers lock in a rate on any discounts for up to five years.
Leveraging its digital-first strategy and application programming interface had doubled from 60 to 120 days with growing cross-border transactions, its finance team were spending more time physically matching invoices and custom and tax declaration forms with their corresponding payments.
Using a combination of DBS Bank’s Supplier Payment Services, providing automatic and selective payments for suppliers; its digital supplier onboarding tools; and its DigiDocs offering, the bank made the customer journey entirely paperless for Stora Enso.
Sustainability may be a current buzzword in finance, but it does not always easily translate into action for small and midsize enterprises .
In the apparel sector, it is helping SMEs that produce natural yarns and fibers in rural areas to scale up their business and become more agile.
Describing itself as “the first market-ready solution for eNotes,” which are unconditional promises to pay specific sums to other parties on a selected date, FQX combines an old concept with new technology in the form of its Swiss Trust Chain.
FQX’s eNote infrastructure can be integrated into the financing platforms of banks and fintechs, “ for the standardized and globally scalable transfer of unconditional promises to pay, radically facilitating supply chain and corporate finance,” the vendor adds.
For one fast-moving consumer-goods vendor, assessing, researching and servicing an extensive network of distributors proved to be time-consuming and expensive.
Nonetheless, Japanese banking giant MUFG, which entered US SCF following its 2019 acquisition of GE Capital’s Trade Payables Services platform, is one of the few banking providers whose proprietary SCF platform supports standard SCF and dynamic discounting.
For one large US-based customer looking to improve its working-capital metrics across different business units in various countries, MUFG proposed a solution that combined a receivables purchase program for its largest suppliers and dynamic discounting for its remaining suppliers.
The platform’s ability to tap into multiple funding providers has led customers to expand their SCF programs to reap the benefits of better financing availability.
Getting ahead of supplier risk issues that can crop up at any time in complex global supply chains is the holy grail for many companies.
The engine analyzes millions of data points from media and other sources to identify relevant supply chain threats in real time.
With a heritage of 160 years in the region and a robust sub-Saharan network, the bank possesses an in-depth knowledge of local market regulations and customs. Leveraging the strong trading ties between Africa and China, Standard Bank was also one of the first African banks to forge a relationship with a Chinese bank, namely the Industrial and Commercial Bank of China, which acquired a controlling interest in the bank in 2015.
Through APIs, the bank can help customers transition to paperless trade more seamlessly by making it easier for the client’s ERP and trade systems to interact with bank systems in real time.
A digital-first mindset and a comprehensive suite of APIs mean DBS can also partner with fintechs looking to disrupt the trade and supply chain finance industry more readily.
Although Scotiabank has scaled back its presence in the Caribbean and Central America, it still operates in 25 countries across the region, with strong historical ties to key markets—such as Jamaica, where it has supported trade since 1889.
Instead of a one size fits all approach to SCF, UniCredit uses in-house innovation and collaborates with fintechs to develop fully customized working capital offerings to meet the financing needs of its customers in Central and Eastern Europe.
The Spanish bank has provided local banking services in Latin America for more than 40 years, and its SCF programs encompass core markets, such as Mexico, Peru and Colombia.
As the largest banking group by assets in the UAE, First Abu Dhabi Bank is one of the first banks in the Middle East to develop a fully automated SCF offering, which is in production with several international customers and programs. Throughout 2021, the bank implemented various SCF programs collaborating with government agencies to support SMEs.
The North American corporate banking giant, which invests billions in technology annually, looks to compete with innovative fintechs in SCF by investing in APIs and data analytics to deliver greater operational efficiencies and insights to its clients and their suppliers.
The new cloud-based platform is designed to make it easier for the bank to onboard the entire supplier base of creditworthy buyers without imposing any limits on the number of invoices or amount of financing.