Transaction banks work to define common standards for supply chain financing

Nov 01, 2017

Mark Coxhead



Transaction banks work to define common standards for supply chain financing

With the market for supply chain finance (SCF) schemes set for explosive further growth, Europe’s largest transaction banks are coming together to define common terminology as they look to expand their range of services and compete for cross-border business.

Recent research from Demica cited SCF as the ‘must have’ accessory for transaction banks, revealing average annual SCF growth rates of between 30% and 40% at major international banks.

The topic was high up the agenda at the recent EBAday conference in Berlin, where the Euro Banking Association published a comprehensive guide to the business, exploring market opportunities for possible SCF services and making recommendations for a definition of a common terminology for the financial supply chain.

Erkki Poutiainen of Nordea Bank Finland is chairman of the EBA Supply Chain Working Group. He took time out with Finextra to explain why SCF is now the hot “new thing” for transaction banks and the importance of establishing an agreed market structure and common terminology for the business.

Eugenio Cavenaghi, director trade & working capital at Barclays Bank says that smaller corporates are finding it hard to find access to credit. Supply chain finance can “bridge that gap” for firms, who do not have the resources of large, multi-national organisations who are seeking international financing support.

He highlights three areas where banks can collaborate and work together in offering supply chain financing services, referencing supplier onboarding, technology and infrastructure support, and credit availability.

Cavenaghi spoke to Finextra after coming off the ‘Supply chain finance – getting the formula right’ panel at EBAday.

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