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Fintech Providers are Disrupting the Bank-Led Supply Chain Finance, Survey Shows

April 11, 2019, 09:10 AM
Filed Under: Fintech

In an ever-evolving supply chain finance (SCF) industry, financial technology providers continue to disrupt the bank-led status quo and garner an increasing market share. This is primarily due to their offering of flexible financing techniques and streamlined payables services that target companies of all sizes, a new survey by Strategic Treasurer and Kyriba has revealed.

"This second iteration of our SCF Survey, developed in partnership with Kyriba, sought to pinpoint the unique perspectives and strategies of organizations in the space, both from a provider and user standpoint," said Craig Jeffery, Founder and Managing Partner of Strategic Treasurer. "The data shows Fintechs continuing to drive change, with banks working hard to match the pace of innovation."

"Our banking partners find that by using Kyriba's supply chain finance technology they can deliver innovative liquidity and financing solutions to their customers quickly and effectively," said Bob Stark, Vice President of Strategy at Kyriba. "Partnering with Kyriba helps reduce IT expenses while also allowing for full integration between bank platforms and internal ERP systems."

Among the top findings of the 2019 Supply Chain Finance Survey:

Fintechs are Heavily Impacting the Bank-Led SCF Marketplace: Nearly half of banks are now using third-party SCF platforms to service clients and partnering with Fintechs has been labeled as the top focus for banks regarding annual spend in SCF. At the same time, maintaining a competitive edge against Fintechs was a top challenge for 50% of banks and data shows Fintechs now only slightly lag banks in terms of SCF market share (34% of corporates used a bank SCF solution, 29% used a Fintech solution).

KYC is Hindering Banks' Ability to Compete: KYC was listed as the top challenge for banks concerning their SCF line of business (77%). Suppliers registered KYC delays as the top challenge they anticipate during SCF onboarding (56%), and data shows that onboarding suppliers to a bank-led SCF solution takes longer than via a Fintech platform. As KYC requirements continue to beleaguer banks, Fintechs gain a competitive advantage by offering shortened onboarding and "go-live" timing.

Flexible Fintech Financing Options Draw in Corporates: 52% of corporates find themselves often or always in an excess cash position, and 32% indicate their position fluctuates between cash excess and cash deficit. This means that in times where corporates have excess cash, the ability to leverage dynamic discounting or other "self-funded" SCF options is a major advantage. With over half of corporate buyers (52%) and nearly half of suppliers (45%) willing to alter their SCF strategies as positions shift, vendors offering multiple finance options draw market appeal.

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