Treasury Management Internation Logo

Commercial lending and supply chain finance growth under biggest threat from non-bank players, finds Misys survey

Published 
  • Banks cite SME lending (68%) and Supply Chain Finance (61%) facing the greatest pressure from non-bank players, while many see new opportunity in strategic partnerships

London – Banks believe that new digitally enabled supplier finance networks and alternative lenders now pose a significant threat to every part of the commercial lending business, according to a new survey conducted by Misys, the leading financial software company.

Key findings from the survey include:

  • 68% cited small business lending as being under high threat
  • 61% see competitive pressure in supply chain finance product lines, such as receivables finance and factoring
  • 84% see pressure on pricing of loan products as a challenge
  • 75% fear loss of market share to alternative lenders

The research took answers from 114 respondents from 77 banks across the US, EMEA and APAC, who were asked to share their views on the threats and opportunities created by digital disruption in commercial lending, trade and supply chain finance.

Banks have been under pressure since the financial crisis, as demand for credit from small and medium sized businesses has risen, but increased regulation and scrutiny of balance sheets has diminished lending capacity. The rise of alternative financiers, peer-to-peer lenders and new supplier networks in the market is leading banks to re-evaluate their operating models and embrace partnership, new technology and more agile approaches to lending and trade finance.

According to a report by Grant Thornton[1], in 2014, 60% of businesses in the mid-market were already using non-bank lending as a source of finance, showing that it is no longer a fringe activity, but one that is widely considered normal by corporates.

Despite these challenges, the Misys survey results show that banks also believe that a strategic partnership with non-bank players can be a strong driver in growing their trade finance business, with 68% citing that they see this as a big opportunity.

“The banking sector understands that it must now react to remain at the centre of corporate credit requirements,” said David Hennah, Head of Trade Finance at Misys. “Our survey respondents believe they can leverage emerging supplier networks and the financial technology vendors that can provide digital enablement and connectivity across trade and lending to grow and retain clients. We have seen an increasing focus on strategic technology partnership. Clients want to build trade and lending platforms that help overcome their technical debt in digitally enabled corporate banking and build a foundation to dictate future innovation.”

“The threat from non-banks on traditional banking models is clear and present and this has grown largely from the technological innovation in this space,” said David Gustin, Editor of Trade Financing Matters, a trade finance and working capital online site. “The challenge is lenders don’t know what they don’t know, meaning many clients will access alternative forms of finance without their knowledge. In order to compete, banks need to replace outdated delivery models and put customer interests at the core of their business strategy.”

“Innovation is outpacing the limitations of legacy bank frameworks. By thinking differently and embracing change banks, in partnership with their vendors, can define new value propositions along clients’ financial supply chains,” added Hennah.

Misys’ whitepaper entitled ‘The collision of new supplier networks and trade finance – how banks can respond’ is available here.

Most recent episodes

HSBC’s Sibos Spotlight: Investing in the Future – from Diversity to Green Deposits

In the final instalment of HSBC’s Sibos Spotlight, Eleanor Hill (TMI) invites Nadine Lagarmitte and Suraj Kalati (HSBC) to consider how corporates’ attitudes to...

25:12

HSBC’s Sibos Spotlight: The ESG Landscape – what every treasurer needs to know

In the third edition of HSBC’s Sibos Spotlight Podcast series, TMI’s Eleanor Hill invites Farnam Bidgoli (HSBC) to provide an in-depth overview of the current ESG...

16:24

The Path to Transformational Global Cash Visibility

Davina Bradley (CEVA Logistics) and Conor Deegan (CashAnalytics) join TMI’s Eleanor Hill to explore how treasurers can transform their cash visibility and forecasting within their business in a matter of weeks using a...

33:16

HSBC’s Sibos Spotlight: Embedding ESG in Trade and Supply Chains

In the second podcast from HSBC’s Sibos Spotlight series, TMI’s Eleanor Hill speaks to Surath Sengupta (HSBC) about embedding ESG into trade and supply chains....

20:58

Lost in Transaction: Overcoming Payments Pitfalls

From simple errors to duplicates, fraud and sanctions violations, there are a number of areas where payments can go wrong – especially in the real-time environment. In this podcast, TMI speaks to Andrew Ferrao...

34:25

HSBC's Sibos Spotlight: Central Bank Digital Currencies

The first edition of HSBC’s Sibos Spotlight series sees TMI’s Eleanor Hill joined by Mark Williamson and James Pomeroy (HSBC) to discuss the hot topic of Central Bank Digital Currencies (CBDCs). Our guests discuss...

25:48

Payments Vision 2025: The Inside Track

Wim Grosemans, Steven Lenaerts (BNP Paribas) and Wim Raymaekers (SWIFT) join TMI’s Eleanor Hill to outline their vision for the payments landscape in 2025. Our guests consider how recent developments such as instant...

28:21

Stepping Out from the Shadows

“Treasurers needs to step out of the shadows and into the sunshine in terms of their strategic contribution.” claims Zitah McMillan, Co-Founder and CEO, Predictive Black. In this podcast, hosted by TMI’s Eleanor Hill, our guest declares that the...

16:54

Why the ‘One Size Fits All’ Approach is Outdated - A Cash Segmentation Treasury Masterclass

With the ongoing low interest-rate environment and increasing regulatory change, it’s more important than ever for treasurers...

23:55

Instant Payments: Instant Rewards

TMI’s Eleanor Hill sits down in the virtual TreasuryCast studio with J.P. Morgan’s Global Head of Real-Time Payments, Cyrus Bhathawalla, to discuss how treasurers can capitalise on the evolving nature of real-time payments. Our guest contemplates the elements...

23:55