The current state of supply chain finance (SCF) adoption among banks operating in the Asia-Pacific is increasing, indicates research from Aite Group.
SCF business is now firmly on the agendas of major Thai banks and is seen as a business generator for major Indonesian banks, according to a new report based on surveys of financial institutions in Thailand, Indonesia, and Australia: Supply Chain Finance in the Asia-Pacific.
While SCF is certainly on the agendas of major Australian banks, technology is not yet perceived as offering the necessary support for SCF-related programs. Aite Group’s research suggests that SCF therefore is most likely to be used where business dynamics, such as growth of GDP and trade flows, are high.
In countries where banks have traditionally assisted their local corporate clients in import and export trade-related business, SCF solutions are accompanied by other services that emphasize the importance of collaboration between banks and their corporate client bases.
After reviewing current offerings and future plans across the three Asia-Pacific countries, it is apparent that the domestic market conditions, economic dynamism, and the level of maturity in SCF awareness influence the decision of what solutions should receive investment between SCF products and SCF services.
Collaboration is seen as an indispensable component for successful SCF implementations, and banks in emerging- and developing-economy countries must focus on supportive services and enablers rather than on building product-centric baskets of financial instruments.
Software for SCF enablers is currently in great demand from financial institutions in dynamic Asia-Pacific economies. Therefore, SCF software vendors must expect institutions to start requiring specific applications to build multibank collaborative platforms.
“Where domestic market conditions show signs of growth, trends of economic dynamism are positive, and the level of maturity in SCF awareness is high, Asia-Pacific banks should invest in SCF services," says says Enrico Camerinelli, senior analyst in wholesale banking at Aite Group.
"Where these factors show opposite signs and market dynamics are low, banks should invest in SCF products. Banks need to adopt SCF platforms with flexible and effective software functionalities based on robust sets of infrastructure applications.”