Regionality and Trade Finance
19 June 2013
My latest research report -Thinking the Unthinkable: Banks Relinquishing Control of Their Payments Infrastructure
seems to have struck a chord for many banks, with some great press coverage, and sparking some very interesting and timely discussions. The opinion does seem to be varying region by region, which I did expect. But whilst turning the report into a presentation and adding in some support material, I did come across something quite curious which I hadn't expected. I used the survey on Global Transaction Banking
that my colleagues Axel Pierron and Dr Neil Katkoff ran late last year, to paint the picture of some of the drivers for change. The survey itself reflects the views of 30 of the largest transaction banks globally, with a more or less equal split of banks between Europe, Asia and North America. Not only are all the banks multi-national, they are equally multi-regional. I was therefore somewhat surprised to see the follow results:
(click on the chart for a larger version).
For certain activities - and in particular, supply chain finance and trade finance for imports and exports (bars 5,6 & 7 in the chart above) - it was almost exactly split between Europe seeking to do in next 12 months, Asia in the 18-24 month timescale and North America with longer term plans or no plans at all.
Bearing in mind that the this refers to the region of origin, but, being multi-regional, not necessarily where the solution is being implemented, this clear split is somewhat surprising. We believe that this may be as a result of more acute dynamics for European banks around liquidity management, particularly of their suppliers, through working capital optimization, and through enabling lower financing costs for suppliers. We're certainly digging deeper to better understand the nuances, but we'd love to hear your take on it!
Asia-Pacific, EMEA, LATAM, North America