The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Cash management: After the goldrush

Supply-chain finance has been the big hit of the crisis for transaction banks. The product was pushed over the past decade without any big success and has now taken off as working capital has become crucial to companies’ survival and buyers have recognized the fragility of their supply chains. Can market growth be sustained? Laurence Neville reports.

ALTHOUGH SUPPLY-CHAIN finance is not broken out in transaction banks’ results – and there are no independent data sources – growth is thought to be running at hundreds of percent a year. No one doubts that supply-chain finance is becoming a core product for banks but inevitably some are questioning whether or not the current pace of growth can be sustained as the global economy recovers and financial markets normalize.

In the supply-chain finance gold rush, most of the spoils are going to the world’s largest transaction banks – for international mandates only they have the necessary coverage for implementation. Given the relatively recent success of supply-chain finance it is perhaps unsurprising that banks have yet to effectively differentiate their products. Other than network reach and local market knowledge there is little to separate most of the big bank’s offerings.

The runaway success of supply-chain finance poses questions about the sustainability of its business model. By definition it requires banks to lend more, to a wider range of entities – many of which are relatively small and are often in emerging markets. New models for distributing and sharing risk might be necessary if global transaction banks are not to find themselves restricting supply-chain finance through lack of available balance sheet.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree