FCI Member, 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, product priorities, ESG and technology.
Key findings from the report
In turbulent times, demand for trade finance products has increased with 78% of respondents reporting asset sizes growing across the market in 2022 with 55% of trade finance professionals citing inflation as the key driver. 74% of respondents expect this to continue in 2023.
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 and just 5% say that it is presenting significant challenge when setting up payables transactions.
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, with 23% using ESG ratings in live transactions, compared with 15% in 2022, showing increased commitment to sustainability in supply chain finance. This year, 54% of respondents are looking to offer favourable rates in their programmes based on ESG scoring criteria.
Trade finance banks still operating on old tech, but we’re in a procurement super-cycle as most look to replace legacy platforms within 5 years. 45% of respondents are using platforms more than 10 years old and 61% are looking to replace their technology within the next five years.
Demica’s CEO Matt Wreford says “The release of Demica’s second annual benchmark report comes during a period of particularly high growth at Demica and the market as a whole. What is particularly interesting is to see such a large volume of last years’ report’s predictions have come to pass. With more responses from banks in more countries than we had in 2022, the findings this year are even more insightful and will, I believe, help market participants navigate the new environment of inflation, banking sector turmoil and economic uncertainty.”
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