Business Models for Supply Chain Finance Services

July 8, 2008

Abstract

Milan, Italy 8 July 2008

Banks have a clear role in assisting corporate clients in making better supply chain decisions. Banks, however, need to understand the entire ecosystem of supply chain management as a set of processes interdependent with their financial services.

In a new report, , Celent examines how most banks are still tied to the legacy vision of trade finance in which buyer-centric financing services assist suppliers in improving their working capital ratios. What banks tout as supply chain finance (SCF) services, are, in reality, "supplier-finance" services, focused on providing finance services for payables (and, lesser, to receivables) on an electronic platform typically related to buyer-centric processes. This report focuses on the architecture of SCF solutions as a combination of technology (platform), services, applications, content, contractual agreements, and finance deployment.

The report begins with an overview of current offers from banks to prove the point that a true "supply chain" solution should encompass the entire spectrum of the processes that belong to supply chain management. It then identifies the basic components of a supply chain finance solution. The report continues with evaluating if there is any real business opportunity attached to an SCF offer. Existing B2B collaborative service platforms can provide the right perspective and inspiration.

Finally, the research scrutinizes current solutions marketed by farsighted players that are at the edge of what promises to be an evolutionary business stream for banks. That will happen once banks learn how to properly "read" a supply chain and identify the correct partners that will help them deploy the deliverables of a supply chain finance offer.

"Banks must find a business model that adds services to the base offer of digitized invoice-centric financial services," says Enrico Camerinelli, senior analyst with Celent's banking group and author of the report. "Celent expects that the next five years will see the dawn of a new generation of services for corporations involved in complex cross-border sourcing and trade."

The following vendors and banks are analyzed: GSCF, BNP, Standard Chartered, Lloyds TSB, Nordea, Bank of New York Mellon, Citi, Group Santander, Rabobank, RBS/ABN, Unicredit, and Deutsche Bank.

The report is 70 pages long and contains one table and 21 figures. A table of contents is available online.

 

Members of Celent's Wholesale Banking research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

 

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Milan, Italy 8 July 2008

Business Models for  Supply Chain Finance Services

 

Executive Summary 3
The Business Case for Supply Chain Finance 5
  Banks Must Establish a Clear Strategy Before Making Investments 6
Current State of Supply Chain Finance 13
What Does the End State Look Like? 17
  The Business Model 25
What Needs to Be Done? 32
  Make-Order and Sales-Order Services 37
Prescriptions/Caveats 46
  Banks Will Not Be One-Stop SCF Shops 48
Conclusions 55
Appendix 56
  Lloyds TSB 56
  Nordea -- Corporate Networks 58
  Bank of New York Mellon -- Trade Workstation System 60
  Citi 63
  Santander -- Global Confirming 63
  Rabobank -- Rabobank Financial Logistics Portal (RFLP) 65
  ABN AMRO -- MaxTrad 65
  Deutsche Bank -- de-eBills 66
  Unicredit 67

 

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