Demica has released its 2023 Benchmark Report for Banks in Trade Finance, its second annual report covering key trends across all supply chain finance products.
Demica surveyed 190 supply chain finance professionals based in 40 countries around the world on a variety of topics including the impact of global events, staffing changes, asset growth, ESG product priorities and technology.
The report includes commentary by representatives from ITFA, Morgan, Lewis & Bockius, LLP, and Microsoft, alongside Demica’s in-house experts to shine a light on the individual challenges of different geographies and product teams, reflecting on 2022 and looking forward to 2023.
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Asset sizes continue to grow, assisted by global inflation.
In turbulent times, demand for trade finance products has increased with asset sizes growing across products. 55% of trade finance professionals believe that this is because inflation increases demand for low-cost cash.
Changes to disclosure rules generally not considered concerning by bankers.
The report highights that despite much discussion, banks are unconcerned with changes to disclosure rules in trade finance. 92% of respondents working in payables teams don’t expect the new accounting disclosure rules to change the nature of the payables finance products they offer to their clients.
The adoption of ESG in trade finance.
There has been much discussion about the need for banks to adopt ESG ratings and be part of the solution to the climate crisis. After years of extensive discussions, it seems that things are trending in a positive direction as banks are increasingly using ESG ratings services in live trade finance transactions, showing increased commitment to sustainability in working capital finance.
Banks in trade finance still working to adopt new technologies.
45% of respondents reported still operating on systems more than ten years old, and 60.66% expect to replace legacy platforms within five years, indicating that we’re in a procurement super-cycle for banks, as they look to compete better technologically.
The use of blockchain in live supply chain finance programmes remains extremely limited with very limited numbers of respondents aware of either proof of concept trials or deals live in production. Bank’s focus continues to be on meeting their own internal information security requirements, user experience and leveraging established technologies to generate operational efficiency.
Headcount has grown in trade finance in line with last year’s predictions, and banks adopt hybrid working on a long-term basis.
Headcount in trade finance banks has continued to grow, almost exactly in line with the predictions from Demica’s 2022 Benchmark Report. Looking into this more deeply, the report also covers how banks are looking to attract and reward talent, with their benefits and hybrid working policies.
Demica is a market-leading fintech, powering the trade finance programmes of the world’s largest trade banks and corporations. Demica’s proposition is simple: our intuitive, cloud-based platform enables financial institutions and corporates to automate and scale their working capital solutions. Today, we have over US$20bn of programs running through our platform, across the full spectrum of working capital products. Funded by a diverse range of banks and institutional investors, these programs enable companies to strengthen their supply chains and redeploy capital to drive growth. To learn more, visit Demica.com.