Supply-chain finance is primed for a leap in productivity, if it can put the theoretical benefits of blockchain to work in practical applications.

 

Author: Anita Hawser

Much of the excitement in supply chain finance (SCF) right now is around prospects for using blockchain or other distributed-ledger technology to automate today’s largely cumbersome, manual, paper-based processes, as well as provide greater levels of transparency, for the movement of goods and payment.

Blockchain projects in SCF are still in the initial phases of development and have yet to enjoy widespread adoption. In face, some pundits have already written off the technology, given how long it is taking for a fully functioning commercial application to come to market. Yet given the number of intermediaries typically involved in the supply chain, it is hardly surprising that new technologies like blockchain are taking time to bear real fruit.

Other key trends in SCF include a shift away from proprietary, single-bank provider platforms. To provide greater funding flexibility, companies are looking for multiple banks or financing providers to participate in their programs. Multibank platforms like PrimeRevenue, Orbian and Demica, which can draw upon a wide range of funders, including banks, hedge funds and private equity, are likely to benefit from this trend.

Other platforms like Taulia and C2FO enable buyers to self-fund programs, by offering early payment in return for a discount.

This year’s awards, however, continue to reward those providers with the longest staying power. While they may not all be experimenting with new technologies like distributed ledger, they continue to support large-scale SCF programs spanning multiple currencies and countries.

Supply chain finance is well established in North America and Western Europe. But it is still a relatively new concept in markets like the Middle East, where banks, instead of investing in proprietary platforms, are partnering with well-established technology providers that leverage “best-of-breed” Cloud-based platforms to connect buyers, suppliers and funders.

While the major trade banks continue to tinker around the edges of their proprietary SCF platforms, a lot of the innovation resides with third-party platforms that are leveraging new technologies and that recognized early on the need to attract multiple funders and investors to SCF.

Meanwhile, reverse factoring on a bank platform remains the most widely used supply-chain finance option, according to PwC’s 2017 SCF Barometer. Approximately 71% of companies surveyed by PwC favor reverse factoring, and 59% of those use a bank platform. Dynamic discounting is used by 51%. Preshipment and inventory finance are still at relatively low levels (18% and 22% respectively), according to PwC; but this is perhaps more a reflection of the small number of providers that can offer financing much earlier in the supply chain before the goods are shipped and the invoice is even approved. This kind of financing requires a better understanding of the relationship between buyer and supplier and is an area ripe for innovation from either a fintech or a third-party provider that has better visibility of those trading relationships. 

 

For more on the awards ceremony, click here.

 

GLOBAL WINNERS

Best Supply Chain Finance Provider -- Bank

Standard Chartered Bank

Best Supply Chain Finance Provider -- Non-Bank

Orbian

Best Customer Implementation

MUFG—Public Private Partnership Supplier Financing/Waskita Karya

Best Platform Connecting Buyers/Sellers/Financial Institutions

Orbian

Best E-Procurement

SAP Ariba

Best Analytics for Credit Scoring/Supplier Risk Assessment

Dun & Bradstreet

Best Invoice Discount Management

Basware

Best Integrated Trade, Cash and Supply Chain Management

Citi

Best Web-based SCF Solution

GT Nexus

Best Pre-Shipment Financing Solution

BNP Paribas

 

REGIONAL WINNERS

North America  

Citi  

Latin America

Santander

Caribbean

Citi

Western Europe

BBVA

Nordic Region

Nordea

Central & Eastern Europe

UniCredit

Middle East

SABB

Asia-Pacific

DBS Bank

Africa

Rand Merchant Bank

For more on the winners, click here.