Insights
What does innovation look like in supply chain finance?
Finverity Team
Innovation is a term that's widely used and widely misunderstood. But actually understanding innovation, and crucially which bits matter to your organisation, puts you at a serious competitive advantage.
Key takeaways:
Automating data capture boosts revenue from existing customers (+27%) and reduces turnaround time to close to zero.
Only customisable products can properly account for the level of granularity required for most factoring & reverse factoring programmes.
Advanced analytics continue to give banks valuable insights on supplier performance, creditworthiness, and market trends.
According to Harvard Business School, the term is defined as any “product, service, business model, or strategy that's both novel and useful”. It doesn’t have to be a major breakthrough in technology or a new business model. Sometimes it’s as simple as upgrades to customer service or tweaks to an existing product.
Whatever your definition, real innovation is transformative.
Which brings us to supply chain finance, where big, blue sky initiatives and immediate, quick wins are benefitting banks & their clients. They can benefit you too. The challenge is, knowing where to look…
Innovation in data capture
We’ve seen with our own clients that automating data capture brings two big advantages:
It increases utilisation and boosts revenue from existing customers by as much as 27%.
It reduces turnaround time and the hours spent on data capture to close to zero.
Traditionally, banks will integrate with Enterprise Resource Planning (ERP) to automatically retrieve invoice data. This approach yields near instant access to real-time data and requires no manual intervention. Some of the largest SCF programmes in the world are run this way.
The problem is, regions like the Middle East are more conservative when it comes to data sharing, while the money and time needed to set up an ERP isn’t affordable to many organisations across the world. In fact, to almost all but the very largest.
Our solution at Finverity is an ERP agnostic mapping tool that lets corporates simply drag and drop an export from their accounting system or ERP directly into our system. It parses the file, learns the format, and extracts all the relevant data. It’s non-intrusive, free, and readily available, today!
Innovation in data processing
In data processing, it’s “the norm” to use a core banking solution to automatically calculate outputs like interest charges and fees based on inputs like tenor and interest rate. It’s functional, but is it enough?
The overwhelming majority of factoring and reverse factoring facilities will have multiple counterparties with completely different pricing requirements, even different underlying currencies and tenors. All of a sudden, the processing power of a traditional core banking solution is insufficient. Setting up the required level of granularity: simply impossible.
Our favourite “innovation” here is the “deal creation wizard” we’ve only just launched at Finverity. This tool lets you customise every aspect of a transaction, including granular pricing, with fixed and variable interest based charges, as well as individual counterparty settings. All this in minutes!
All captured data is then automatically mapped to the correct parameters and any calculations take your custom inputs into account.
Innovation in data reporting
For some banks, visualising key metrics across multiple products and clients in real-time is considered innovation. We believe this is only a fraction of the innovation potential within the reporting component.
By analysing large data sets, you gain valuable insights about supplier performance, creditworthiness, and market trends. This pool of data, with the assistance of AI through behavioural analysis, can focus Operations and Compliance teams on atypical trends.
Besides the front-end solution for banks, our own corporate client-facing portals, custom dashboards and analytics tools give clients better liquidity visibility and a seamless 3 click solution to upload and request financing against their invoices.
What’s next?
However you understand it, innovation is important to most executives. Over 80% say that innovation is among their top three priorities, yet less than 10% are satisfied with their organisation’s innovation performance.
Finverity is the digital frontend for your working capital and supply chain finance operation, and brings many critical innovations with it.
As a Finverity customer, you can expect to:
💡Enhance and expand your product offering for new & existing clients.
💰Increase revenue from existing facilities with flexible products & smoother processes.
⚡Streamline your operation by digitising processes and
automating repetitive tasks.
⭐Build custom products, workflows & dashboards for you & your clients.
