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Maria Bruno-Britz
Maria Bruno-Britz
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FSIs Starting to Embrace Concept of Financial Supply Chain Management

Globalization is driving firms to examine new ways to cater to corporate clients, including financial supply chain management.

Building Intimate Relationships

Such timely financing is made possible by the manner in which banks and corporates interact in this new process. Part of financial supply chain management involves banks more intimately linking their systems with the enterprise resource planning (ERP) systems of their corporate clients in order to provide certain just-in-time services, according to SWIFT's Conn. "First, we had just-in-time inventory management. Now we can have just-in-time financing arrangements," he says. "As banks become more attuned to what's going on in clients' supply chains, they can make better financing decisions for them. They can see the transaction flow around the merchandise that's being manufactured and sold. So instead of providing a general working capital loan, you can offer a transaction-by-transaction loan."

In other words, financial supply chain management will help banks "expand their reach within their corporate clients," says Jim Gahagan, global industry executive for financial services with Sterling Commerce (Columbus, Ohio), which specializes in multi-enterprise collaboration solutions. "You're broadening the processes and services you offer to them."

Annette Hazapis, SVP, director, product management, global treasury management, at Cleveland-based KeyBank ($95 billion in assets) adds that the closer bank-client interaction enabled by financial supply chain management is yet another relationship-building opportunity for financial institutions. "It offers an opportunity to connect more with your clients and to provide them with innovative solutions to make it easier for them to do their trade business," she says.

Those banks that are getting the picture early on already are making inroads on the international trade space for their clients and clients' partners. As one of the world's major global payments banks, Deutsche Bank, for example, is getting a head start on the competition in the space. Deutsche Bank's Sugirin explains that the bank takes a two-pronged approach to financial supply chain management -- supply chain financing, which delivers an automated financing solution using different supply chain event triggers; and supply chain services, which are delivered across the supply chain offering process optimization services such as reconciliation services.

According to Sugirin, Deutsche Bank approached the concept differently by trying to bring together its cash management and trade finance areas. "Customers defined their requirements based on ways to overcome breakages in the financial chain. These issues are best addressed through a solution that combines cash management, trade finance and best of breed technology," he says. "Therefore, we established an area sitting between these two divisions. Our offering includes program financing, information services, documentary guarantee, transaction services and risk management." Underlying these processes is a single-access platform.

From a technology and ease-of-use standpoint, this single global sign-on approach is an advantage for trading partners, according to Sugirin, since users need not log into multiple platforms and are provided with one view into their payable and receivable activities.

According to Accenture's Winston, Deutsche Bank has the right idea in attempting to provide clients with one view of all their transactions. This is the direction in which banks need to go in order to succeed in the financial supply chain management space, he contends. "There isn't a single technology solution for this," Winston says. "You need a comprehensive payment ingestion capability so corporates can see where their payments are. It's the concept of a payments hub. Today, clients can portal in and see which wires have cleared by going into an individual system, but they can't see all of the payments types at once. Things are just too siloed now."

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