Roundtable participants:

• Ozgur Akdeniz, North American trade sales head, Citi
• Geoff Brady, global head of trade and supply chain finance, Bank of America (host and chair)
• João Galvão, head of trade finance sales, Americas, Standard Chartered
• Joon Kim, global head of trade finance, working capital and portfolio management, BNY Mellon Treasury Services
• Glenn Ransier, global standby and demand guarantee product manager, Wells Fargo
• Jonathan Richman, head of US trade finance and working capital, Santander
• Anubhav Shrivastava, commercial bank trade head, JP Morgan
• Michael Stitt, head of supply chain finance origination, US Bank
• Maureen Sullivan, head of supply chain finance, MUFG

[From left to right: Geoff Brady, Michael Stitt, João Galvão, Anubhav Shrivastava, Maureen Sullivan, Glenn Ransier, Joon Kim, Ozgur Akdeniz]

Brady: How would you assess the trade and supply chain landscape over the course of the last year? What have been some of the major trends driving demand, appetite and capacity?

Richman: We continue to see increasing overall demand, and the fundamental trend of corporate clients wanting to have good working capital management continues unabated. But demand has increased in different ways. A lot of corporates now are emphasising operational efficiency and new ways to support their trading partners. They are reshoring, and that requires different types of trade finance; they need more resilience in their supply chains, and that also requires more trade finance. They’ve got ESG goals, which can be better met with more use of trade finance.

Overall, I’m very bullish. I think there are a lot of reasons to be optimistic that we’ll continue to see more growth and new products.

Sullivan: We’re not witnessing a slowdown in demand. Despite the jump in interest expense, our clients are laser-focused on working capital solutions and trying to find more low-cost financing alternatives. We’ve witnessed suppliers who were not interested in some of our programmes two years ago, but who then came back and found them much more attractive – not only because it’s a lower cost all-in, but because it’s a potential alternative source of liquidity. Additionally, we have a very large book of receivables programmes, and our clients want to cash out their receivables earlier. That’s because they want to deploy that cash, either to pay down costlier debt, or to get ahead of some future purchases in light of some inflationary pricing pressure they may see on those products. We are focused on large corporates, which has been a fairly stable marketplace for us. I agree with Jonathan – we’re pretty bullish on how this product will continue to perform into the near future.

Galvão: The big topic that we see is the geopolitical tension shifting a little bit. We see in intra-Asia trade, where Standard Chartered has a strong footprint, how markets like Vietnam and India are becoming more important. If you tie in electric vehicles, these markets are becoming even more important for the financing of mining and refining of nickel and copper, for example. That’s a trend that’s going to stay. The CHIPS Act is pushing some companies from Asia to set up plants in the US. This is all leading to a shift in the landscape in terms of who we finance and how we finance them.

Shrivastava: In my 10 to 15 years in trade, I don’t think I’ve ever seen the kind of demand pickup in working capital solutions and trade that we’ve seen over the last six to nine months. And I think part of the reason for the demand uplift is that after the Covid-19 pandemic, corporate management teams have had time to sit down and consider their capital strategy, and one of the things that they converged upon is supply chain resiliency and how they can make their trading partners more stable. But also, how do you generate capital in an environment where capital cost has gone up? Interest rates have been a major driver. Four years ago, who cared about the next incremental dollar? And now the interest rate is 5%. If you could deploy that capital, you could maybe get 10%. It’s a similar reason that dynamic discounting took off big time in that period. Now when people consider supply chain finance, they see you can generate capital within your supply chain.

Brady: What do you think is driving the increased demand? Do you think it’s interest rate concerns? Is it globalisation, or reshoring and nearshoring? Is it working capital management? Or something else entirely?

Akdeniz: I think the key realisation we’ve observed over the last 24 months, but that has really taken hold in the last 12 months, is that the age of free money is over. If you’re not considering your working capital as a source of cheaper liquidity for your own business, you’re already behind the eight ball and, as Maureen has said, we’re speaking to clients now who previously never entertained the idea of a working capital solution. That’s been a clear market change. Interestingly, during 2020 and 2021, we would have probably had around 10 requests for proposals from clients to bid for their business, but since the start of the year, we’ve had over 20. So, clients are not only thinking about it but also approaching this business in a way they probably weren’t in years gone by. I think supply chain finance is more prevalent and the fact that all companies are getting in on it shows that it’s an important discussion.

Kim: The recent supply chain finance disclosure rule changes by the Financial Accounting Standards Board (FASB) have likely contributed to an increase in how people are approaching supply chain finance. We’re probably onboarding more obligor names this year than any other year – the pace is picking up, particularly on the receivables side as well.

Ransier: I think the FASB rules actually help banks because companies have started disclosing supply chain finance programmes and we’re seeing the big corporates all getting involved much more than they ever would have dreamed of some two or three years ago. On the corporate side, our clients are starting to mention that they’d prefer less reporting for these programs. They’re a little bit worried about FASB trying to drill down further and enhance reporting requirements.

The de-globalisation drive in different markets has meant de-risking for companies. I find it interesting that instead of looking for new suppliers, some of our clients are looking to shore up their existing suppliers. They’re not looking to take any risks with new companies. Generally, companies say if it’s cheaper to build a gadget in a certain country, we will go there, but I don’t see that as much anymore. They are really looking to support their supply chain with financing. It’s been a very interesting couple of years.

Brady: To what extent have the adjustments to physical supply chains – such as nearshoring, onshoring and the demand for sustainable suppliers – impacted what banks are doing from a financing perspective? Has it broadened the landscape for us, or has it made it more challenging? Has it brought us to new jurisdictions?

Stitt: For us, there have been a couple of counterintuitive developments. As a working capital shop, we’ve been primarily domestically focused, so providing for suppliers in different jurisdictions is challenging. But one of the things that we’ve seen clients do is move from a supply chain finance or open account structure and back to an import letter of credit (LC) with discounting. All the original gangster trade finance solutions, which were not particularly attractive three or four years ago, are now becoming more attractive if you can get the economics to work for both the supplier and the buyer. It’s a solution that all the banks know and are willing to participate in. Even though it’s documentary and it’s a little clunky, or at least is perceived to be, it works every time. We’re seeing a resurgence of interest in those solutions to access markets that would be more difficult from a financing standpoint. As an old trade guy, I love that.

Sullivan: I don’t see that trend. I think for institutions that have invested heavily in making sure that they can cover global suppliers – we have probably 50 different countries we can embrace suppliers in – our clients aren’t asking us to look at documentary trade, because it is clunky and expensive.

Ransier: I agree, because I haven’t seen an uptick in import LCs at all, but certainly standby LCs have done well to support ongoing shipments or sales. Banks that have closed recently have brought that product back into focus, and there’s an effort by corporates to move to larger banks to ensure that their banks are supporting their underlying contracts.

Richman: I think there’s a tremendous broadening going on with our product set and the audience for it. It goes way beyond just the traditional trade finance products; a lot of our clients’ trading partners need to build new plants, for example, that require different types of trade finance instruments. The old ways of doing supply chain finance where we all zeroed in on the bigger suppliers are less applicable now that we are able to capture the wider supply chain of our clients and their smaller suppliers. This is the focus now for a lot of clients, and it’s the way that we win new business and the way that our clients take the next step forward.

Sullivan: One of the things we’ve been monitoring pretty heavily is the impact that working capital has on inventories. All of us in the room have been fairly competent at managing and coming up with solutions that address our clients’ days sales outstanding, or days payable outstanding. But when it comes to days inventory outstanding, the hidden third leg, we all struggle. For a variety of reasons, including regulatory issues, that’s not something that many of us can embrace. But that to me is where an opportunity really lies in the future to truly address a company’s cash conversion cycle – if we can hit all three of those measures.

Brady: Maureen has raised an interesting topic. I think we would all agree that many of our clients are asking about inventory, especially given the changes some of them are making to physical supply chain management. What are the key challenges and hurdles with inventory financing? Do we need to scale in order to get closer to some ubiquitous inventory solutions? And how far along that path do you think we are?

Shrivastava: Just like how in the early days of supply chain finance we really had to educate clients about the benefits of the product and how it works, we are now at a similar stage with inventory finance. We’ve talked to a lot of clients about inventory, and I feel like clients are not ready yet. It will take us as a group to consistently educate clients. I think that’s where we are in the cycle of inventory finance; it’s going to take some kind of event for inventory finance solutions to get standardised, and only then will we see it pick up. We’re definitely seeing deals, but I’d say only around one in 100 clients are willing to go there, and that’s if they are under stress and have no choice. But if you present it as an efficiency play, the enthusiasm isn’t there yet.

Akdeniz: My experience is that once there’s a million-dollar-plus structuring fee that clients have to pay, or 8% or 9% margin, it’s an immediate non-starter for the companies that we actually want to implement this solution. In the highly leveraged, sub-investment-grade space, that sort of margin might work. But when you put it all together and incorporate the need for third parties to make it work, I’m just not sure if it’s something that the industry wants to move towards. I’m uncertain if, after careful examination, this will be anything more than an occasional exceptional event due to potential limitations in scale.

Kim: A key question is how do we broaden inventory finance? One thing that we’re reviewing is what are we trying to solve. Typically, when we do supply chain financing, we are interested in investment grade or better; we want to do post shipment, post acceptance, and this is how we can improve firms’ working capital. The supplier side becomes essentially an onboarding type of task; more of an implementation issue. Not all banks can play everywhere, so we don’t necessarily want to establish commercial banking just for the sake of onboarding suppliers across the globe. Domestic onboarding we can handle ourselves. Why don’t we think about leveraging the financial institutions that have a very strong presence in markets where they have the onboarding capability? Those banks may be able to offer pre-shipment financing for those clients who are the suppliers, meaning you essentially can create a holistic solution.

Ransier: I haven’t seen client demand for inventory financing, at least in my personal experience. Repo products have existed for quite some time now, but there’s not a lot of trust in the US for warehouses, and there are costs to vetting them. Repos are a very viable product and considered very safe, but as some of us know, they have their own set of challenges, and frankly, I don’t see companies in the US wanting to hold inventory to begin with. So, at least for our market, I think Joon hit on the real issue with supply chain finance, which is that a lot of companies have wanted to support their local suppliers’ needs for pre-shipment finance and that’s something that banks haven’t solved. But it’s something that businesses in America really want.

Richman: I agree we’re at a very early stage with inventory finance, but I’m very optimistic that it will develop. It took a very long time for supply chain finance to become pervasive in the market, and the same challenges in terms of lengthy sales and complex processes, the number of people involved, the accounting treatment – all of these things are issues just like they were in supply chain finance in the early days.

But the prize is big for our clients. It’s not just a metric on a balance sheet, it’s helping clients maintain resilient and efficient inventory levels and reaping the significant benefits of being able to support trading partners, get bulk purchase discounts and secure vital supply. A lot of clients are in the early-stage process and evaluating and piloting these solutions. I think they’ll develop, whether as a form of inventory finance, as a pre-shipment component of the supply chain finance programme, or as prepayment finance as we do in the commodity sector. I think there are many ways to get clients to reap those benefits, and they will evolve over time.

Galvão: My view is that the solution that should prevail is the one that adds value in terms of logistics and warehousing. Otherwise, you’re going to have form over substance. For large clients, this is going to be an issue; if it’s just window-dressing inventory finance it won’t be well received by an accounting team at a large corporate, who will say it’s not an off-balance sheet item. I think it’s early days, but a solution will have some element of helping on the logistics side.

Brady: What do you think the biggest game-changer could be in the industry in the next three to five years? I’ll throw one out to start: the power of data and how it can be used to facilitate, improve and expand trade financing. 

Sullivan: I echo that view on data transparency. It really speaks to the idea of the capability to finance earlier in the cycle. We’ve all been limited in that sense because what we have is data that tells us about an approved invoice. But if you had the analytics, and you had AI to support it, perhaps to predict behaviour between a buyer and supplier, you could consider the in-transit phase. Then if you had more data, you could go back to the pre-shipment phase, where you could have some level of predictability of performance between buyer and supplier. Right now, we do it based on financial statements and that has a very limited effect. The data is out there. The question is, how do we harness the data to help us make better decisions? We haven’t come up with the tools yet.

Shrivastava: I think the challenge with that is even if you get the data transparency, even if you create solutions, the problem is the bank adoption. A lot of institutions are not even comfortable with plain vanilla supply chain finance. So, I agree completely with data being on the agenda. It’s a great theoretical idea, but I don’t see our risk organisations adopting that. To make it an industry standard will take a lot of work to get risk teams really comfortable because it’s not going to be a single source of truth until everything is implemented on blockchain.

Richman: I think data has a few parts to it that can be transformational. One is making ourselves accessible to our clients, and that means our clients and our counterparties being able to connect with us in an automated and efficient way. If you’re not able to do that, then you’ll be out of the business. We need to embed our product offerings into our clients’ systems. Then the game-changer aspect of it is being able to use that data intelligently. We talked about it from a credit concept perspective, but we need to be able to adapt our capital models in order to be able to deliver real value to clients, and those capital models need to reflect the value that the data brings to us. That always takes banks a lot of time. But if we don’t do it, then probably non-banks will do it for us. We are making a lot of progress on this front.

Galvão: AI is going to be a game-changer for us. For example, look at the potential to save costs on know-your-customer (KYC). Often, we look at the cost of KYC and it’s an impediment. AI can help banks automate the whole bureaucracy of KYC. Also, AI is going to be crucial for helping to connect the dots between various data points that are collected.

Ransier: I see access to finance as an emerging issue, with different governments tightening monetary policy. The larger clients have no issues getting their loans, but I’m already seeing the smaller and the midsize corporations having some issues obtaining financing; even if they want to pay 7% to 9%, they’re having challenges. That’s going to slow growth over the next couple of years if we don’t figure that out.

Brady: How much progress have banks made on the trade finance digitalisation journey?

Sullivan: Everyone has their own journey in terms of how they’ve introduced it into their back office. I think that’s where it was first concentrated to bring operational efficiency – using OCR, AI, etc. It has helped reduce operational costs. Really, the challenge is the rails have never been established on a global basis that we all can leverage in terms of how to transfer that data from one institution to the next. We still rely on Swift, which was launched 60 years ago and its messages have a lot of limitations. We’re on the journey, but there’s a lot more that needs to be accomplished. I think there are improvements in how quickly you can onboard clients. But then to make this a meaningful experience there needs to be a uniform set of rails, and blockchain hasn’t done that. It’s still out there, but who’s using it?

Brady: What comes first – collaboration on the part of the transactors, or the technology rails? Do you think if the technology is there, the ecosystem will adopt it? Or do you think that collaboration needs to be there in order for the rails to be established?

Sullivan: I think in a way it has to be a collaborative event. And I don’t know who’s going to lead that.

Ransier: Actually, I think Swift is that trusted middle ground. Currently, there is no central repository that everyone trusts and can access. You have all these individual system players, and each one has its software and rules, but there’s no desire by the banks or their clients to purchase 10 different systems and understand the individual consortium rule sets. I think Swift needs to take the lead and somehow create a trusted repository because we all have different technologies, but banks and corporations all talk to Swift.

Kim: For me, it’s definitely collaboration first. In documentary trade, Swift created a wonderful proof of concept where two banks can exchange paper documents in a digital way and can treat those as original documents. So the technology is there, but there hasn’t been a collaborative process to commercialise these sorts of technological breakthroughs.

Akdeniz: Currently there isn’t a need or a desire to do more than one transaction or to go past the proof-of-concept stage. Not all banks have an unlimited appetite to do all the things that their clients want to do. Something which I think could change that is the further development of an ecosystem around asset sales between the banks, which will actually get lenders speaking a lot more and developing relationships because they have to, as opposed to just for making a proof of concept. That’s what could get the industry to take the next step.

Brady: That’s a good topic for discussion: the capital that comes into trade finance. Is that better served by the banks or the capital markets? Or perhaps a blend?

Stitt: The more we can adopt structures similar to capital markets, the higher the velocity of the transactions and the scalability is going to be. We need to think about how to adopt those sorts of things, otherwise, the capital markets may figure it out and leave the transactor and settlement guys like us out if we’re not careful.

Shrivastava: I think it depends on the risk and return of what you’re getting into. If you think about the high-investment-grade asset class and the pricing that we will see compared to when you get into more non-investment or even speculative grades, it has a completely different market which can yield much higher returns, but then the risk is also much higher. Eventually, I think a lot of this book will remain on the bank’s capital; I don’t see this moving much towards the capital market.

Sullivan: I don’t think the market is big enough yet to support capital market sizes, but it may get there. Looking at the trajectory of supply chain finance assets in the last 10 years, it’s still a pretty small market. But the trajectory is positive, we see continued growth, but I think it’s a little premature right now.

Brady: In the context of an increased focus on greenwashing, have you seen the appetite for ESG and sustainable transactions increase, stay the same or decrease over the last 18 months? Is there still the same level of interest from the market on this topic? 

Stitt: For us, there’s less interest. That period of clients driving the discussion has kind of tapered, and I think that companies are trying to figure out what they want to do, as opposed to diving into a conversation on this topic with their bank. There’s still a lot of interest, there just haven’t been a lot of actual deal closures around those solutions.

Richman: I think interest in ESG is actually increasing a lot. Maybe it’s because I work for a European bank, but I think it’s coming to a theatre near you in the US as well. There may be new rules that require a large list of corporates to report on their supply chain emissions, and our clients are looking for tools that will help them get the data they need from their suppliers in order to be able to report and measure their progress against their supply chain emissions targets. Even US corporates today already have these targets, and more and more will likely have them in the future. Supply chain finance in particular can be a real enabler for clients in meeting these goals.

Sullivan: I don’t know if our phone has been ringing as much as we’ve been ringing our clients’ phones to try to have these conversations. There is obviously interest, but every company is trying to understand what the metric and the KPIs are. Will it really drive behaviour? Is it too big of a hill to climb, even though they know it’s the right hill to be on? One of the challenges that we’ve seen in our client conversations is alignment between procurement and the sustainability group within those companies – do they have the same goals? I think until that gets to be part of the DNA at companies, we’re still going to be out there educating, still looking to help them drive the behaviour that we think can be improving suppliers. Being able to embrace a broader swath of diverse suppliers is also something that we work on. I think it’s still a concept that’s in motion and we are advocates for it. But there still needs to be some adoption at companies in terms of this being a strategic initiative that we want to move forward.

The post GTR Americas roundtable: Banking leaders chart future of trade finance appeared first on Global Trade Review (GTR).

The full integration, which was announced at the SAP Sapphire event in Orlando, Florida last week, will enable businesses on the platform to connect to Taulia’s suite of payables, receivables and inventory finance solutions, helping them streamline payment and procurement processes across supply chains and free up working capital.

“Taulia’s first integration with the SAP Business Network took place towards the end of last year, and that was for its supplier finance offering,” said Tony Harris, chief marketing and solutions officer at SAP Business Network, speaking to GTR on the sidelines of SAP Sapphire.

“The latest connection we have announced at Sapphire is for supply chain finance and early payment discount. We also now have the integration with business sustainability ratings provider EcoVadis on the network, given its tie-up with Taulia this time last year,” he added.

According to Harris, the next step will be to connect the network to Taulia’s new virtual credit cards, a digital payment method that was added to its suite of working capital management solutions in October last year. As of Q3 2023, companies on the SAP Business Network will be able to use Taulia’s virtual cards, which work like traditional credit cards, as payment to suppliers in their procure-to-pay processes.

SAP outlines in a statement that future virtual cards-related releases will aim to incorporate the ability to pay on order and offer early payment options for suppliers.

To better understand what the integration between Taulia and SAP means in a practical sense, and how the development may be shaping the future of working capital management and supply chain finance, GTR spoke to Harris and two other experts: Danielle Weinblatt, chief product officer at Taulia, and Thomas Mehlkopf, head of working capital management at SAP.

GTR: What does Taulia’s integration with the SAP Business Network mean, starting with an overview of the network itself?

Harris: There are two components to the SAP Business Network. The first is that it’s a marketplace for millions of companies, or trading partners, that cover every type of good or service you can imagine.

We started with the Ariba Network, acquired by SAP in 2012, which focused purely on indirect procurement, and have evolved the marketplace over the years to cover the entire supply chain, including direct procurement of materials and processes. More recently, we’ve developed the network even further with asset management, logistics and, with the Taulia acquisition and integration, finance. Our buy-side customers interact with the marketplace to discover, connect to and transact with these suppliers of goods and services. We’re currently managing US$4.5tn of commerce a year on the network.

The second component is that it’s a B2B transactional collaboration platform, which in essence means that it can extend the capabilities of processes beyond the capacity of what a partner company’s system can manage.

Weinblatt: As a company on the SAP Business Network, Taulia’s integration means you only need to either upgrade your cloud integration gateway add-on, or you have one add-on implementation integration that connects you both to Taulia, the enterprise resource planning (ERP) system and the Business Network. One integration supports all three platforms. Practically, this means reduced core IT and implementation costs and maintenance, and faster timelines. And then, when you’re thinking about the end-user experience, it’s seamless. It’s a single sign-on and click-through from the Business Network to Taulia and vice-versa; data is bi-directional.

Mehlkopf: Going back to why SAP acquired Taulia in the first place; it was to achieve the sweet spot of the combination of procurement and finance. It’s a natural fit. Bringing the two together on one platform is something that we see resonating very well in the market.

Many of the supply chain finance programmes you see today have an issue with scaling. Sometimes only the top 10 suppliers are able to join a programme because the onboarding process is quite cumbersome.

Given SAP has millions of suppliers already trading on the network and Taulia has, we believe, a state-of-the-art onboarding process, we’re really able to bring our solutions to scale.

It also means we’re able to service the long tail of smaller suppliers, which is especially important given the current high interest rate environment and the fact that there’s even more pressure on companies to find increasingly favourable financing options.

Weinblatt: There’s a tile embedded in the SAP Business Network that asks, ‘do you want to accelerate your invoices?’ To Thomas’ point on being able to scale programmes more robustly, that’s an opportunity that is made clearly available to suppliers, whatever their size. We believe that this ease of use and seamless experience will really grow the adoption of supply chain finance and help better democratise what we’re offering.

GTR: To date, the supply chain finance industry has been dominated by banks and fintech companies, but we’ve recently seen some big tech firms and other solution providers enter the fray. Do you believe this to be a growing trend, and if so, what’s driving it?

Harris: Yes, we are seeing more tech firms identifying opportunities in this space, particularly those companies with procurement applications, given their proximity to invoices. They’re realising that because they’ve helped manage the order process and overseen the invoice coming into the customer’s system, they may as well also facilitate the payment and take a slice of that action as well. The payment and financing element is a natural progression and I think you’re going to see more and more of that happening.

Weinblatt: At the same time, it’s important to remember that there’s tremendous trust, credibility and experience when it comes to SAP, unlike certain big tech players, given the way they’ve leveraged data, for example. We are transparent with our customers about what we do with their data and how that’s beneficial to them.

The other angle to this is that you need a lot of resources to be able to do what SAP does. There have been a number of false starts in this space. I think we’re now reaching the point where people are realising the real benefits of partnering with a company that has exceptional talent and that can actually deliver upon its promises, because that’s what it has done historically, tried and true. We’re certainly seeing that with the banks that we partner with.

GTR: What are the standout issues affecting your customers today, and how is this guiding SAP’s next steps in the working capital management space?

Harris: There are three business imperatives that we’ve identified by talking to our customers around the world: supply chain transparency, supply chain resilience and sustainability. It’s no surprise that SAP has made these topics the three core themes of the Business Network.

Transparency is all about understanding what’s happening within the supply chain: who are the players and what are the risks that companies might be exposed to, financial or otherwise? Only if I can get visibility into the players in my supply chain, and beyond tier one into tier two, tier three, can I mitigate for those risks. That’s one of the challenges we’re looking to solve for.

Then supply chain resilience, or as I call it, ‘plan B’, what we’re seeing with our customers, and one of the reasons for the growth of the network, is companies are looking for alternative suppliers across their supply chains. In the 20 years I’ve been working in and around procurement software technology, what used to be a common need for consolidation of supplier bases, has now evolved into a search for alternative suppliers in case of supply chain disruptions. Supply chain financing is an important aspect of the resilience angle: companies need cash to keep their businesses going. Again, that’s something they can tap into on the SAP Business Network, through Taulia’s capabilities.

Sustainability, the third element, has only grown in importance across most companies. Whether that’s carbon emissions or fair working policies, everyone wants information along those lines about the companies they’re doing business with. SAP recently released the SAP Sustainability Data Exchange, a new application designed to securely exchange standardised sustainability data, including product footprints, along the value chain. We continue to do more and more in this space.

Mehlkopf: We set out to create a holistic working capital management platform covering payables, receivables and inventory, and we have made strong progress over the last year in all three areas. No other platform covers working capital management as holistically as we do, from providing the right transparency to financing, and on our scale. For finance decision-makers, whether they be CFOs or treasurers, optionality is key. So there might be a time when payables solutions are more relevant; at other times companies may prefer a receivables or inventory solution. Companies want optionality when it comes to partner banks as well.  Taulia provides this level of optionality in a very efficient way.

In terms of next steps, we’re very focused on embedded financing. SAP customers generate 87% of total global commerce. We run mission-critical business processes and have access to relevant customer data. Now that Taulia is part of SAP, we’re excited to see how that can be used to make better informed decisions, for example in the payments space, given that SAP touches so much of global trade.

Weinblatt: With embedded financing, it’s about understanding and optimising the customer journey and processes, but it’s also about leveraging the data.

We understand buyer-supplier interactions, and we have all the invoice data. The next step is figuring out how to use that in a thoughtful way to be able to command a lower cost of financing and work with an increasingly diverse set of funding partners through our multi-funder platform. And to then give those funders the visibility to what’s happening on the network, what’s happening inside the ERP, so that they increase their level of comfort. We want to lower the costs, both from an efficiency perspective in terms of embedded experiences, as well as the actual cost of financing based on the data.

The post Analysis: What Taulia’s integration with SAP means for the future of supply chain finance appeared first on Global Trade Review (GTR).

GTR revealed the shortlist for the Leaders in Trade awards in February, and the winners were revealed for the first time at the GTR Charity Awards Dinner on May 3.

Congratulations to the winners! A full write-up on their achievements will be published in GTR Q3 2023.

Regional awards:

Best trade finance bank in:

East Africa:

Shortlisted nominees: MCB, Standard Chartered Kenya

Winner: Standard Chartered Kenya

West Africa:

Shortlisted nominees: BACB, Ecobank

Winner: Ecobank

Southern Africa:

Shortlisted nominees: RMB, Standard Bank, Zanaco

Winner: RMB

Middle East:

Shortlisted nominees: Arab Bank, ADCB, Bank FAB, Emirates NDB, HSBC

Winner: Bank FAB

North Africa:

Shortlisted nominees: BACB, Ebank, QNB ALAHLI

Winner: BACB

North America:

Shortlisted nominees: Bank of America, BNY Mellon, TD Securities

Winner: Bank of America

Asia:

Shortlisted nominees: Habib Bank Zurich (Hong Kong), HSBC, Mizuho

Winner: Mizuho

Eastern Europe:

Shortlisted nominees: Raiffeisen Bank International, Ukrgasbank

Winner: Ukrgasbank

Western Europe:

Shortlisted nominees: Crédit Agricole CIB, ING, UniCredit

Winner: Crédit Agricole CIB

UK:

Shortlisted nominees: Barclays, Lloyds Bank

Winner: Lloyds Bank

Global awards: Other industry players

Best trade or supply chain finance law firm:

Shortlisted nominees: Allen & Overy, DLA Piper, Sullivan

Winner: Allen & Overy

Best export finance law firm:

Shortlisted nominees: Baker McKenzie, Norton Rose Fulbright, Sullivan

Winner: Sullivan

Best export credit agency:

Winner: UK Export Finance (UKEF)

Best fintech in trade:

Shortlisted nominees: Contour, Enigio, MonetaGo, Tradeteq, Traydstream

Winner: MonetaGo

Best fintech startup in trade:

Shortlisted nominees: 360tf, Beacon, Cleareye.ai, SupplierPlus, TradeWaltz

Winner: Cleareye.ai

Best trade finance software provider:

Shortlisted nominees: CGI, China Systems, Finverity, LiquidX, Surecomp

Winner: Surecomp

Best alternative trade or supply chain finance provider:

Shortlisted nominees: Demica, PrimeRevenue, Raistone, Taulia

Winner: Taulia

Best trade credit and political risk insurance underwriter:

Shortlisted nominees: AIG, Allianz Trade, The Hartford

Winner: Allianz Trade

Best trade credit insurance broker:

Shortlisted nominees: Aon, BPL Global, WTW

Winner: Aon

Best political risk insurance broker:

Shortlisted nominees: Aon, BPL Global, Marsh, WTW

Winner: BPL Global

Global awards: Banks

Best development bank:

Shortlisted nominees: Africa Finance Corporation (AFC), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC)

Winner: EBRD

Best bank for ESG (trade or supply chain finance):

Shortlisted nominees: Bank of America, BNP Paribas, Deutsche Bank

Winner: Deutsche Bank

Best bank for ESG (export finance):

Shortlisted nominees: BNP Paribas, SMBC

Winner: BNP Paribas

Best bank for digitalisation:

Shortlisted nominees: Citi, DBS Bank, Lloyds Bank

Winners: Citi & DBS Bank

Best supply chain finance bank:

Shortlisted nominees: Banco Santander, Bank of America, Citi

Winner: Santander

Best commodity trade finance bank:

Shortlisted nominees: Société Générale, SMBC

Winner: Société Générale

Best export finance bank:

Shortlisted nominees: Barclays, Standard Chartered

Winner: Standard Chartered

Best trade finance bank:

Shortlisted nominees: BNP Paribas, Citi, Deutsche Bank, HSBC

Winner: HSBC

The post GTR Leaders in Trade 2023: The winners appeared first on Global Trade Review (GTR).

The names listed under each category are based on submissions sent to GTR and, where relevant, Best Deals signed in 2022 were referenced as further substantiation. Where only one name is listed, this institution is the outright winner.

Winners in all categories will be recognised and announced at GTR’s annual charity awards dinner in London on May 3.

Thanks to everyone who sent in a submission, and congratulations to the nominees!

Regional awards:

Best trade finance bank in:

East Africa:

Shortlisted nominees: MCB, Standard Chartered Kenya

West Africa:

Shortlisted nominees: BACB, Ecobank

Southern Africa:

Shortlisted nominees: RMB, Standard Bank, Zanaco

Middle East:

Shortlisted nominees: Arab Bank, ADCB, Bank FAB, Emirates NDB, HSBC

North Africa:

Shortlisted nominees: BACB, Ebank, QNB ALAHLI

North America:

Shortlisted nominees: Bank of America, BNY Mellon, TD Securities

Asia:

Shortlisted nominees: Habib Bank Zurich (Hong Kong), HSBC, Mizuho

Eastern Europe:

Shortlisted nominees: Raiffeisen Bank International, Ukrgasbank

Western Europe:

Shortlisted nominees: Crédit Agricole, ING, UniCredit

UK:

Shortlisted nominees: Barclays, Lloyds Bank

Global awards: Other industry players

Best trade or supply chain finance law firm:

Shortlisted nominees: Allen & Overy, DLA Piper, Sullivan

Best export finance law firm:

Shortlisted nominees: Baker McKenzie, Norton Rose Fulbright, Sullivan

Best export credit agency:

WINNER: UK Export Finance (UKEF)

Best fintech in trade:

Shortlisted nominees: Contour, Enigio, MonetaGo, Tradeteq, Traydstream

Best fintech startup in trade:

Shortlisted nominees: 360tf, Beacon, Cleareye.ai, SupplierPlus, TradeWaltz

Best trade finance software provider:

Shortlisted nominees: CGI, China Systems, Finverity, LiquidX, Surecomp

Best alternative trade or supply chain finance provider:

Shortlisted nominees: Demica, PrimeRevenue, Raistone, Taulia

Best trade credit and political risk insurance underwriter:

Shortlisted nominees: AIG, Allianz Trade, The Hartford

Best trade credit insurance broker:

Shortlisted nominees: Aon, BPL Global, WTW

Best political risk insurance broker:

Shortlisted nominees: Aon, Marsh, WTW

Global awards: Banks

Best development bank:

Shortlisted nominees: Africa Finance Corporation (AFC), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC)

Best bank for ESG (trade or supply chain finance):

Shortlisted nominees: Bank of America, BNP Paribas, Deutsche Bank

Best bank for ESG (export finance):

Shortlisted nominees: BNP Paribas, SMBC

Best bank for digitalisation:

Shortlisted nominees: Citi, DBS Bank, Lloyds Bank

Best supply chain finance bank:

Shortlisted nominees: Banco Santander, Bank of America, Citi

Best commodity trade finance bank:

Shortlisted nominees: Société Générale, SMBC

Best export finance bank:

Shortlisted nominees: Barclays, Standard Chartered

Best trade finance bank:

Shortlisted nominees: BNP Paribas, Citi, Deutsche Bank, HSBC

The post GTR Leaders in Trade: The shortlist appeared first on Global Trade Review (GTR).

Roundtable participants:

• Ben Arber, global head of commercialisation and managing director, US and Canada, MonetaGo
• Geoff Brady, head of global trade and supply chain, global transaction services, Bank of America
• Alisa DiCaprio, chief economist, R3
• Merlin Dowse, executive director, global trade finance product management, JP Morgan
• Andrew Holmes, head of origination, North America, Demica
• Ravesh Lala, VP, hybrid cloud strategy and solutioning, IBM
• Carl Wegner, chief executive officer, Contour
• Shannon Manders, editorial director, GTR (moderator)

From left to right: Merlin Dowse, Carl Wegner, Alisa DiCaprio, Andrew Holmes, Ravesh Lala, Geoff Brady, Shannon Manders, Ben Arber

GTR: What’s your take on the current state of bank-fintech collaboration in the trade finance space, and how has this evolved over the last few years?

 DiCaprio: At R3, we started as a consortium of 42 banks, so the bank-fintech relationship has always been part of our DNA. Over the past two years, there has been a bit of a difference in two respects. The first is, a lot of our projects with the banks have matured, like Contour, for example. Secondly, we’ve also seen a lot more activity from financial market infrastructures and less from banks. This is because banks are much more experienced in the space now and know that there are products they can purchase as opposed to building themselves.

Wegner: There has been a significant shift in how this relationship has evolved. Today, the industry is using solutions that have been developed by fintechs over the years, whether they’re on the blockchain or not.

I think there’s also been a realisation that collaboration between fintechs and financial institutions is crucial to build these utility platforms. If one bank builds it alone, it will be difficult bringing in the rest of the banks on the same platform. Collaboration is key to building a system that everyone can join.

GTR: Fintech culture is still very different from bank culture. Do you think we’ve reached a point where there’s some cohesion in the way that banks and fintechs work together? Does there need to be some sort of meeting in the middle?

Brady: I don’t know that we need a perfect middle ground between the two of us. Part of what makes fintechs useful is their approach of ‘failing fast’ and being able to test and learn quickly. Banks, being regulated, have more constraints. I think it’s important that the fintech community bring an innovative vibe – they are the cool kids wearing high-top sneakers. But conversely, many investors are reassured when there are also people wearing suits whose job it is to consider worst case scenarios. Perhaps there is a conflict there but it’s likely never going to go away and I’m not sure it needs to. The key thing is to figure out how to make the two parties work together.

Dowse: That’s where I’ve seen change. Before, fintechs would come in and say, ‘this is what I have, this is what it does, you can take it or leave it’. But now it’s a lot more, ‘how can I fit it to accommodate you and your needs?’ There’s a lot more conversation, collaboration and willingness to tweak an existing product set because you need to evolve with the trends in the industry.

Lala: The culture at fintechs has changed as well. If you go back five years, there was a lot of talk about disintermediation and how the banks can’t do this or that. But I think fintechs have realised the need for collaborating with banks. Especially in our industry, banks are at the centre of it all – they own the customer relationships, they own the capital. Fintechs have become very open to suggestions from banks and are realising that they can get value from banks as well. This gives them new ideas which, when incorporated, create value for both.

Arber: As an ex-trade banker now in fintech, one of the things that has changed dramatically is that many of the critical value-added activities which required human intelligence are suddenly being made possible via artificial intelligence and cloud computing. This includes really challenging areas like automating document checking and anti-money laundering red flags – which traditionally have taken trade operations folks years of training to perfect. That’s empowering a greater level of digitisation to show that you can take a process of receiving paper documents at one end, and then delivering an appropriate decision at the other end. The most difficult parts of that process can be automated.

GTR: What have been some of the standout bank-fintech partnership successes?

Brady: ‘Standout’ might be a strong phrase. Successes don’t necessarily need to be great leaps forward. They can be smaller steps. Even the way we work together today versus five years ago is a success. One of the things that we’ve had to figure out and agree on as an industry was what each of us brings to the table. The banks bring the established relationships; the fintechs typically bring new ways of thinking. Our progress as an industry recently has been a result of leveraging those strengths – knowing when to engage each other and when to get out of the way.

Dowse: We’ve seen successful fintech partnerships when there is a great collaboration and where the goals are clearly defined and attainable. In other words, we have been able to digitise those processes that are within our own control. In terms of partnerships, alliances, etc, we’ve had success with a few ventures and a couple of learning moments, which will help us navigate what’s yet to come. I think that’s key: we’ve tried various bits and pieces, and we take those learnings and apply them as we move forward.

Arber: That willingness to experiment is relatively recent. It’s gone from doing everything in-house, to working only with the best partners, to now actually experimenting and trying things. For example, the innovation team operating a sandbox environment at a global bank saying, ‘we’re looking at API options for a supply chain solution’. Rather than evaluate vendors through a long procurement process, they just plug in three or four and see which works best via multiple proofs of concept, using dummy or proprietary data. That willingness to experiment with innovation and with partnerships is very positive for the overall ecosystem.

GTR: Where has bank-fintech collaboration not worked as well?

DiCaprio: One example in the trade space is what happened with we.trade, although the issue was not that there was anything wrong with the project, the banks or that relationship. The problem was that it was taking an operational process that didn’t make money, and just putting it on a different technology and wondering why it still wasn’t making money. There is often an assumption that there will be a dramatic improvement just because you’re engaging with a fintech and you’re using a new technology. But those things only give you more room to create a new operational flow; they don’t require it. If the process isn’t valuable or isn’t getting the results in the first place, then using a fintech doesn’t help that.

 GTR: 2022 was quite a year for announcements of failures in this space. Does that have a knock-on effect on how things progress? 

Wegner: There are good and bad aspects to these failures. We’re seeing consolidation in the market, and people are saying that we’ve become a market leader by being the one that’s still here continuing to grow and build. For us, this is a good learning experience. We looked at how we.trade built their platform and found that they had set it up in a friendly way for the banks but not the corporates, and if corporates aren’t adopting it, it’s not going to work.

However, the failures also make it harder. The question that many have raised for a while has been about the technology and whether blockchain works for trade. Well, that’s not the point. The point is, what is the value proposition? What is the business plan? When I was at R3, we said blockchain will succeed when no one talks about blockchain. Technology is just an enabler. It’s the product on top of it that matters.

Holmes: I think that blockchain has a lot of use cases across financial services and that it will really take off when, say, there’s an enterprise resource planning (ERP) that’s on blockchain. That’s like science fiction at the moment; you can’t do anything like that right now. For now, the banks creating blockchain solutions and making a sandbox out of it for the sake of doing it – that’s the tail wagging the dog.

GTR: What are the top technology investments and types of fintech engagement that banks are prioritising in the trade finance space?

Brady: New technologies could have an impact across the spectrum of trade, in credit scoring or sustainability, or by creating digital identifiers to establish corporate hierarchies. These could all benefit from innovation – whether collaborating with fintechs or other banks. There are some obvious non-competitive fields that every industry participant has an interest in improving and most banks would be willing to pool their resources to advance operations that make things simpler for our clients.

Dowse: I agree, but I think it’s also worthwhile appreciating the environment we operate in right now. Speculation is that there may be some form of a recession coming and that is going to have an immediate impact on how much innovation budget companies are going to be able to leverage. Then the next question is where do they look to allocate that budget? Is it on the internal efficiencies that are going to enhance the processing and the decision-making, or the execution, delivering the ultimate client experience? Or will they play in the sandbox to create something that doesn’t exist? Given the environment, it’s shifting a bit.

Arber: The regulators are starting to enable information sharing. The US Anti-Money Laundering Act of 2020 empowers banks to share suspicious activity report information with their sister legal entities across borders. It has a long way to go, but you’re starting to see many regulators moving in that direction. Creating invoice registries and databases of ultimate beneficial owners are also common examples. I think technology is driving that as well, in terms of banks wanting to compare potentially fraudulent transactions on an anonymous, secure, confidential basis, or to compare grey lists. Counterparty risk is a critical component of managing transactional risk and trade. If you can share on a completely confidential, secure, private basis, which transactions and customers you are concerned about in a given market with one or two peer banks, the results can be very valuable.

Elsewhere, I think there’s going to be a lot more activity in trade finance from a Big Tech perspective. For example, Amazon’s ambitions in helping suppliers globally. Plus, the cloud providers are clearly entering the KYC/AML, cross-border trade space with a real emphasis on vast amounts of data to transform the way that things are done.

Brady: We in trade finance are keenly aware of the US$1.7tn financing gap. In many ways, it’s at the heart of why and where we put our time and resources – to make a positive impact. To be successful, we need to be very tactical, which in my view centres on bringing together the buyers and sellers, the payables and receivables. When we can facilitate that connection digitally, we can layer in additional value through financing, discounting, risk mitigation among others. This is not just a technology story. It’s about connecting our clients to the broader ecosystem.

Wegner: From a fintech perspective, we have seen many banks prioritise digitisation efforts, especially in trade finance workflows, as they seek to bring more value to their corporate clients. Another area we’re seeing a lot of excitement in is in digital assets, and that’s an area we are focusing on as it provides an opportunity for the industry to increase the flow of capital and improve access to trade finance, especially for smaller players like SMEs.

GTR: What barriers do banks still face when it comes to embracing innovation, and how can these be overcome? How are banks ensuring that their internal processes enable innovation and adaptation?

Holmes: Fintech initiatives can get bogged down in a bank’s internal approval process, which can be really tough to get through. While it’s not entirely within the gift of the bank to streamline those, there are structural and educational changes that can be made to make the bank feel more comfortable. I think all of us fintechs would love the banks to move faster on those things, but we have to realise that there are reasons why the banks are where they are.

Lala: IBM has a rich legacy of working with banks and their existing processes. We do see sometimes that people try to think of what worked in the analogue world and try to recreate that in the digital world – that’s where some level of process improvements can be made.

Arber: Those onboarding questions exist to safeguard banks and depositors and rightly so. But procurement is also coming to the table in terms of being able to manage vendor onboarding in a much more streamlined way than in the past, and the industry across the board is trying to improve that without cutting corners.

Wegner: Life is very different now than it was five years ago and the banks have departments that oversee innovation. As a vendor, we now speak to dedicated innovation teams within banks – not just the person who’s been doing trade finance for decades and doesn’t necessarily want to change. Whole departments and divisions are looking at innovation. People are now more enabled than they were before to help move things forward.

GTR: How does the financing and tech community ensure that clients are on the same digitisation journey – especially with some companies moving more quickly to digitisation than others, for example, SMEs?

DiCaprio: Every entity has a risk management process that needs to adjust for digital documents. This may make some clients move more slowly than we’d expect. When we were writing a digitisation update for the International Chamber of Commerce during the Covid-19 pandemic, one question we asked was whether banks were having trouble switching to electronic documentation. One Nordic bank said they were having a lot of trouble getting clients to use eUCP even though most of the documents were already digital. The reason for the clients’ reluctance was that they preferred to use the process they were already familiar with. Even when the bank points out that nothing would really change, the clients say ‘no thanks’. Admittedly, this was a couple of years ago, but I think we’re making this big assumption that everybody wants digital documentation and maybe that is not the case.

Wegner: Fintechs have a unique opportunity to help make trade services cheaper and accessible for SMEs. How quickly companies adopt digitisation is going to come down to the educational process through working with the banks. The cost to serve for banks can be reduced dramatically.

GTR: What barriers do banks still face when it comes to embracing innovation, and how can these be overcome?

Lala: Security, compliance and controls are the biggest barriers that we see, along with answering the question of how can we help set up and elevate the fintechs so that they can move faster and can get the adoption with the banks.

Holmes: Even if we manage to get through the vendor onboarding process, being a small company, as most fintechs are, the banks are always thinking about the risk of entrusting a major function to us. Occasionally smaller fintechs can partner with larger consultancies or tech infrastructure partners to help the banks get over this reluctance. Having the big players in the room helps with these projects and helps to get people at the banks comfortable with the fact that there is sound oversight.

Brady: I’ve always believed the largest barrier to be what I call ‘mechanical friction’. We operate in a complex global structure with various and different regulations and business models. Within that world, we need to find ways of connecting more efficiently. We’re constantly bumping into things that are either slightly or a lot different in Asia versus South America or the Middle East. If we can make those connections with as little friction as possible, we’ll be able to accelerate innovation.

DiCaprio: Time to market, which is slowed by two barriers. The first is something that we didn’t expect when we were doing our earliest deployments, which is that most banks still wanted to deploy software on-premises. Of course, nobody is going to put their core systems fully in the cloud but certainly there are some areas where that can be expanded. Secondly, we’re seeing that banks are waiting for their big clients to say they want to do something with a fintech. But when that happens, banks can’t just spring into action without understanding the risks and the compliance implications, which takes time – especially as more regulation continues to enter the space. This is being mitigated somewhat as many banks today have done internal projects, which maps out these issues in advance.

Wegner: The biggest barrier we see is the expectation from corporates that embracing a new technology is like turning on a switch: it’s going to be new and perfect right away and have every bank in the world on it. The adoption of any new technology is a journey. There needs to be an understanding that we’re all going to be learning in this process and corporates will need to make decisions on how to use the technology. That’s one of the biggest challenges we have.

Dowse: It’s lack of standards. If you’re looking to digitise, you must speak a common language. Things such as API standards and the Key Trade Data Sets the ICC Digital Standards Initiative is set to publish early 2023 for eight of the most commonly used documents, including the commercial invoice, certificate of origin and the like. A common language enables interoperability, which is the other, bigger challenge.

GTR: What does the next frontier of trade finance bank and fintech collaboration look like? Where do we want to get to?

Dowse: Continue what we’re doing, playing in the sandbox, trying out all these different tools that are out there. Not everything’s going to be a fit for every bank. Banks should look to talk with each other more, especially when assessing fintech opportunities before they decide what’s best for them and focus on it. It’s a journey.

Wegner: I think the utopia is where we can find a customer nexus and a service that they need by collaborating with different companies. No one system, or one bank, is going to solve the world’s problems.

DiCaprio: I agree, I feel like the lack of standards is often an excuse for inaction. They’re important, obviously, but there is great value in exploration. What I want to see in the future is a set of trade finance products that work for everyone. Right now, we’re making existing products incrementally better, which is important, but we don’t have the right products for everybody. That’s where I want to see it go.

Arber: The return of globalisation has been written off repeatedly in the last few years with the post-financial crisis advance of protectionism and the rise of populism. But there is an opportunity for utilities to become embedded within a process from a trade finance perspective to help facilitate trade in spite of tariff barriers. This can be powered by information sharing, data sharing and regulation, plus the added advantage of cloud computing and the ability to process vast amounts of information for the benefit of managing risk and financing flows.

Brady: I think we’ll see fewer, not more, products in trade finance. Some of the more traditional products may not even need to exist. Stripped down to its most basic form, there is a receivable and a payable and we can start there. Wouldn’t it seem simpler to digitise the process by stripping trade finance down to its most basic form and then layering back in the risk and financing elements rather than trying to take the entire catalogue of trade products and find a digital version for each one of them?

Holmes: I think instead of a proliferation of products, you’ll see a proliferation of channels. As companies go digital, there are more and more ways to collect data that can lead to financing a physical flow, or inventory, where you previously didn’t have an easy way to do so. Banks and fintechs can then work together to provide financing opportunities using that data. Embedded finance is already here but these trends will continue to impact our industry.

Lala: For us, it’s the ecosystem; forming the ecosystem and that common platform or utility that the fintechs can ride on top of and that’s consumable both by the banks and corporate clients.

The post Roundtable: The next frontier of bank-fintech collaboration appeared first on Global Trade Review (GTR).

Ramachandran first joined the bank in 2015 as global head of product and proposition for GTRF, later becoming global head of growth and innovation, before leaving in 2019 to set up Serai, an HSBC-backed online B2B platform that was shut down in mid-2022 for commercial reasons.

In this exclusive interview, GTR sat down with him to discuss some of the recent changes to the GTRF structure, key focus areas for the business in 2023 and lessons learned from the shuttering of Serai.

GTR: There’s been a rejig of HSBC’s GTRF business since you were appointed global head earlier this year. What’s your ultimate objective for the business, and what drove these changes?

Ramachandran: HSBC is the world’s biggest trade bank; trade is in our heart. What’s clear is that the world of trade is moving faster than the world of banking. This is in terms of the types of companies who are buying and selling internationally, who they’re selling to or buying from, and where these transactions are happening. Our big emphasis is on market expansion. We already serve our existing clients incredibly well, and the business is growing very nicely. We’re also being more innovative with solutions and starting to move into new spaces, such as platforms and embedded financing. Going forward, we want to do even more – and with more clients.

In terms of the organisational changes, some of it has been a natural transition, while some has been to focus on new areas of development. As part of this, we created a chief growth officer construct, which Vinay Mendonca has taken over. That’s very focused on building sector expertise, capturing structured solutions and making sure we serve global clients across multiple geographies more effectively. We’ve also created a chief operating officer (COO) role, and an announcement on that will be made very soon. If we want to scale up and serve tens, if not hundreds, of thousands of more customers, we need a very different model and we need to be able to automate transactions from start to finish. That fulfilment is going to be a big focus for the COO.

The people agenda is of great importance for us. We’ve got centuries of expertise within HSBC’s trade community, and people are proud of what they do. A lot of my emphasis as we go into what is undoubtedly going to be a difficult economic environment will be to make sure people are excited by the changes that are happening.

A big part of my role is to make sure that we’ve got clarity as to where we are going and that everyone’s pointed in the right direction, while building a culture and environment which keeps them energised.

GTR: Since returning to the business after having been away for two years, what have been the most notable changes in the evolution of the trade finance market?

Ramachandran: Internally, the biggest development has been the importance of tech in trade.

Within transaction banking, cash and payments have always emphasised tech as being an integral part of the business. I have previously described trade as the last analogue frontier in banking. It hasn’t had the same wave of disruption. But that’s now changing. I’m incredibly energised following a recent trip to India, where the Reserve Bank of India’s TReDS initiative is one example of this new wave of disruption disaggregating sources of funds and creating specialism.

The next five years are going to look very different in terms of the kind of capabilities that will come to bear to provide financing – such as parametric credit decisioning. We’ll also see changes around the exchange of data and how that happens, as well as around the financial inclusion of SMEs, which is the ultimate aim, in particular with things like deep-tier financing and probably one step beyond.

GTR: GTR covered your move to Serai, a number of its partnerships and solutions, as well as its closure earlier this year. What were some of the lessons learned?

Ramachandran: The advent of Serai was the notion that the world today is inefficient, and that a platform that facilitates the exchange of information can make it more efficient. We were lucky to have the backing of HSBC, as well as the latitude to go out and try new things. It was a very nonlinear journey to try solving that problem.

We started with two things, helping companies find new suppliers, and financing. The idea was that the two would come together: companies would find suppliers, connect with them, and then get financing.

We launched it in Hong Kong, which is where we had a licence to lend, but the market fell away due to the protests and Covid-19. So we took a call to shut that down.

That’s a call a startup can make. It didn’t take away from the reason why we did it.

We learnt two things. One is there were big companies who wanted to use us – not to find new partners but to identify existing ones; the transparency point. So we built that out as a vertical, which was supply chain transparency. Secondly, with the smaller companies, what we found was they were finding partners on the network, but then they were taking the transactions off the network. So we had over 30,000 users on the platform but a lot of the transactions were happening off the platform. To remedy that would have required us to build a whole transactions module.

We were pivoting a lot, but at every point in time there was a logical step towards the partnerships we formed and what we were doing. I give a lot of credit to HSBC for giving us the freedom to pivot, and to the board, which challenged us but gave us their backing.

We took the tough call to shut down the business – it was a commercial call. To really build the platform to fruition would have required a level of investment which in this economic environment didn’t make sense. And it was personally difficult – a group of us had put a lot into it.

Still, as a bank, we’ve come out a lot richer in terms of our understanding of trade and how it works in ecosystems. Personally, that experience has been invaluable. I think I can do what I’m doing now with a very different set of skills than I had four years ago.

GTR: What’s your take on the current state of bank-fintech collaboration in the trade finance space, and how has this evolved? What are we likely to see going forward?

Ramachandran: There will be a lot more partnership – and you’ll definitely see that from us. We have got a few things that younger, smaller, less established companies would never have, and those are relationships, network, balance sheet and expertise. What they’ve got is the ability to focus on very specific problems, and try to challenge the status quo completely. Small problems are big opportunities for startups.

The answer will look like a lot of what we have, partnered with a lot of their focus. Now, will some of them compete with us? Absolutely. Will a lot of them partner with us? Absolutely, too. As long as we approach it with the mindset of if there are inefficiencies in the market, we need to facilitate solving them, we will get to the right outcome. If we approach it by saying ‘this is the business I have, how do I defend it?’ then you end up in a very confrontational world where anyone trying to disrupt it is a competitor. I’m very clear about where we stand: our view is to facilitate more trade.

When I first joined the bank, a big part of my push was to make sure we looked externally. So we started the first blockchain pilots, we established partnerships, we took equity stakes in Tradeshift and Kyriba, as it’s now known. I’ve come back two years later to a very different organisation. I don’t have any of those battles to fight now – it’s all about commercialising and scaling things.

GTR: Is there a particular fintech focus area for GTRF in 2023?

Ramachandran: Credit decisioning is the big piece for us. What makes HSBC unique is our footprint and the fact that we can go earlier in the supply chain, we can do pre-shipment financing. But we need new ways of doing that. So whether it’s parametric decisioning, or algorithmic lending, credit decisioning on new data sources is a key space. We’ve already built a lot of the backbone of this with our API gateway to plug us into different systems. We’re going to be seeing much more information coming in. I think this is an area where the industry has a lot to build.

GTR: As the world’s biggest trade finance bank, how do you believe HSBC can shape the future of the industry?

Ramachandran: We have a role to play in various respects. One is by making sure we encourage progress rather than slow it down. Sometimes evolution will not be in the interest of incumbents, and we have to be comfortable with that, as opposed to trying to defend the status quo. Likewise, because the world is full of smart people, progress will also happen outside HSBC, and we need to facilitate that and encourage them, and to whatever extent play a part in making sure that happens.

Secondly, our role is to make sure we drive transformation ourselves. The last genuinely transformative change in global trade was the shipping container. If we want to do things like reinvent and digitise the letter of credit, which is one of the big questions the trade community needs to solve, we are going to need a lot more collaboration than we’ve seen. A big part of our emphasis is tackling some of these really difficult problems that startups would not have the ambition, the scale, or the access to go after. But in doing so not attempt to do it all by ourselves.

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At the Treasury department, Ludvigson served in dual roles in the office of investment security, including as the acting deputy assistant secretary and as the founding director for monitoring and enforcement.

Before joining the department in 2019, Ludvigson served as the acting director of foreign investment risk management at the Department of Homeland Security. During his tenure, he guided the agency’s participation in both CFIUS and the committee formerly known as Team Telecom, which works in concert with the Federal Communications Commission.

In these roles, he oversaw the entire lifecycle of US national security reviews of in-bound investment, including pursuing non-notified transactions, negotiating and monitoring national security mitigation agreements, and leading the committee’s enforcement programme.

At King & Spalding, Ludvigson’s practice will focus on providing advice for clients seeking to identify and address potential CFIUS jurisdiction and risk-related concerns as they structure investments and other transactions, as well as guiding them through the filing process.

“Phil not only has unique expertise gained from his multiple roles at CFIUS, but he enhances our practice in the information, communications and technology sectors, particularly with his prior participation in the Team Telecom process, the interagency body that reviews investments in licensed telecommunications companies,” says Christine Savage, partner on the firm’s international trade team, who leads the firm’s practice in export controls, economic sanctions and national security aspects of international trade.

“As a senior official at Treasury and through several years of other government roles, Phil has developed extensive national security experience, particularly in the CFIUS regulatory, policy, and enforcement process, that will be incredibly valuable to our clients engaging in investments with foreign participation or in sensitive industry sectors,” says Zach Fardon, leader of King & Spalding’s government matters practice group, which includes the international trade team.

“He also has experience in a variety of emerging regulatory areas that have synergies with the work we do on supply chain initiatives, telecommunications, transportation, energy, critical infrastructure, and government contracts,” Fardon adds.

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A syndicated loan market veteran with over 25 years of experience, Bragg joined the forfaiting and trade finance provider as a senior manager in London in September 2021.

He previously worked in various roles at Credit Europe in Amsterdam, MarlinHouse Financial in Hong Kong, and Standard Chartered in both Hong Kong and London. He started his banking career at Royal Bank of Scotland in London in 1997.

Bragg reports to LFC chief executive Simon Lay.

“As a provider of global financial solutions to corporates, banks and sovereigns we are looking forward to continuing to serve our customers in key markets, of which Asia is an important focus,” says Lay. “Adding James to our office in Singapore will allow us to deploy more liquidity into the region by way of bilateral and syndicated lending, as well as financing trade by discounting receivables and letters of credit.”

LFC provides international trade finance and bilateral and syndicated loans, making use of its international network of offices in the UK, France, Germany, Malta, the US, Brazil and Singapore.

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Chiaramonte succeeds Price Lowenstein, who has led Sovereign since he helped create the company in 1997, and is planning to retire. He will assist with the transition in an advisory capacity until the end of the year.

Chiaramonte, who is based in Bermuda, has been serving as both Sovereign’s senior vice-president, since 2015, and chief operating officer, since 2020. She joined the underwriter in 2001 as a research analyst and quickly transitioned into underwriting with responsibility for a number of Sovereign’s client relationships.

Before Sovereign, she worked at the Bank of Bermuda (now HSBC) in Bermuda, Luxembourg and New York, where she managed client relationships for the global fund services division.

In her new role as president, Chiaramonte will have executive operating responsibility for the company, which provides political risk and sovereign credit insurance to commercial and investment banks, exporters, multinational corporations, export credit agencies, multilateral agencies and private equity investors.

She reports to John Lupica, vice-chairman of the Chubb Group and president of North America insurance, and Judy Gonsalves, division president of Chubb Bermuda.

“Natalie is an insightful and professional political risk underwriter with strong knowledge and following in the marketplace among brokers, clients and partners,” says Evan Greenberg, Chubb chairman and CEO. “As Sovereign celebrates its 25th anniversary, I am confident that with Natalie’s leadership we will continue to strengthen our market position in this highly specialised field.”

“Price was instrumental in the formation of Sovereign and, in fact, was the business’s very first employee,” adds Lupica. “I want to thank him for his 25 years of service and for building Sovereign into the company it is today. On behalf of Chubb, we wish Price the very best during his retirement.”

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Bouvier replaces Viktor Ivanov, who was recently named head of climate analytics and alignment within the BNP Paribas Corporate and Institutional Banking industry groups Emea.

Ivanov had served in the position for nearly three years.

Bouvier moves to the Paris-based role from his position as BNP Paribas’ head of supply chain management for Southeast Asia in Singapore. He has 16 years of experience in transaction banking across various geographies including Emea, the Americas and Asia Pacific. He first joined BNP Paribas as an energy and commodities credit analyst in 2006.

Bouvier’s expertise lies in “improving working capital, strengthening the physical supply chain and supporting the commercial activity of clients, among others”, a spokesperson for the bank tells GTR.

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