Trade Finance Industry Trends
Six key trends have emerged in the Trade Finance space in recent years that continue to gain momentum:
- Competitive Playing Field & Scale – The industry is fragmenting and not consolidating. Emerging regional and local players are building up their Trade Finance capabilities and are acquiring new clients and serving existing clients with increased cross border activities to achieve scale economies.
- Scope – Successful players are expanding further into new client segments and industries and into their client’s treasury and working capital value chain.
- Identity – As the industry struggles with scale and economics, some banks are pursuing unique business models, target markets and functional capabilities tailored to their strategic goals and objectives and deploy multi-product client strategies.
- Balance Sheet & Capital optimization – with the BASEL III impact becoming clear and tangible, banks are employing analytical rigor to determine optimal balance sheet size and hurdles to add new assets and to build in programmatic asset distribution to achieve optimal returns.
- Product Positioning & Delivery – Leading banks are investing in enhanced end-to-end customer experience via various technologies, improved transparency through pro-active data management and distribution for all their customer facing activities leading to improved advice for their clients.
- Operating Model – Banks are forced to deploy much more stringent client engagement frameworks and build new check points and controls, escalation and reporting processes as part of a much more rigorous AML and Sanction governance.