TRADE FINANCE PAIN REVEALED Report shows a market ripe for disruption amid growing complexity and demand for greater digitisation TREASURY OPERATIONS Shutterstock A report from global consultancy firm Accenture shines a light on a possible gap emerging between what corporates are looking for from their trade finance partners, and what these partners currently offer. The firm surveyed 675 trade finance executives including importers, exporters, distributors, wholesalers and manufacturers in 15 countries to understand which trade finance partners they are working with, the finance challenges they are facing, their experiences with their trade finance partners, and what they are looking for in a partner. According to the report, the trade finance market is ripe with opportunity for banks and fintechs alike. However, with the needs of commercial clients growing in complexity, competition heating up, and clients ready to explore new partners and products, the report says finance providers will need to up their digital game to remain relevant and expand market share. The findings include: 62% of trade borrowers are being hit significantly by rising interest rates 67% are planning to change their roster of partners in the next 12 months 76% said they will change the number of partners with which they will work 90% of businesses are willing to receive new trade finance products and services In addition, trade finance executives say there is an underserved and growing need for products such as higher pre-shipment finance and purchase order financing, particularly among small and medium companies. The report adds that companies are singling out the complexity of trade finance and the resulting manual work as their greatest pain point. At the same time, they are investing in emerging technologies such as application programming interfaces (APIs) and artificial intelligence. According to the report: Companies are also looking to fintechs to help them reduce their credit risk, forecast cashflow, allocate working capital, and explore a broader customer and supply base. Nearly two-thirds (63%) worldwide are considering whether to shift their supply chain closer to their home market. The report also reveals that 79% of borrowers have environmental policies in place that apply across their supply chain and 68% believe that sustainable financing is very important to their business. Yet they report that a lack of experience in measuring sustainability is a barrier to incorporating sustainability across their supply chains. New data insights from digitisation will enable banks to work with clients to address this challenge, the report says. CUSTOMER SATISIFACTION The good news for banks is that the report shows that trade finance clients have relatively high levels of satisfaction with their finance partners. Only 18% of companies are dissatisfied with their overall dealings with their banks, while 54% say their expectations are being met and 28% say their expectations are being exceeded. Demand for trade finance is booming and rising interest rates are fuelling profitability, the report says. Yet this environment also creates opportunities for disruption, with many corporate clients seeking cheaper, more flexible access to trade finance. TOP ISSUES Borrowers worldwide are concurrently managing a number of pain points, led by the complexity of trade finance transactions. In order, they are: 1. Complexity of trade finance transactions that cause significant manual work 2. Difficulty in finding new clients and revenue sources 3. Regulations that differ across jurisdictions 4. Lack of access to overseas markets 5. Access to liquidity given the lack of necessary collateral 6. Inability to meet the risk-assessment criteria for leveraging trade finance services 7. Lack of appropriate fraud-related solutions and processes 8. Lack of standardised APIs employed for trade finance 9. Inability to provide banks with the appropriate enterpriserelated historical data to receive credit. 44 ISSUE 1 2023 treasurers.org/thetreasurer TT ISSUE 1 23 pp44 finance.indd 44 23/02/2023 13:24