A new report from Aite Group, LLC summarizes top global trade banks’ views of open-account transactions in relation to their traditional trade finance business. Based on an Aite Group survey of senior trade finance and supply chain management representatives at 19 of the top 100 global trade banks, this report highlights the initiatives these banks are undertaking as a result of their experiences. The report also provides suggestions for banks to adapt to open-account transactions and expand their products and solutions to enhance client relationships.
Over the past several years, many industry insiders have declared the end of traditional trade finance as more and more companies move toward using open-account transactions. Aite Group’s data shows that this is simply not the case. While nearly half of surveyed banks see demand for traditional trade finance services decreasing as demand for open-account transactions rises, a similar number see demand for traditional trade finance holding steady. Open-account transactions are not leading to the demise of traditional trade finance, but they are creating new opportunities and challenges.
“Trade finance is evolving, and smart banks will plan accordingly,” says Nancy Atkinson, senior analyst with Aite Group and author of this report. “Fortunately, there is now time for banks to implement new products, services and technologies over a several-year period, and to spend capital iteratively to competitively position themselves. Banks that take these steps facilitate building client relationships through greater support of clients’ overall trade activity, and will maintain their leadership position as the global economy recovers and the pendulum swings toward less costly, effective trade financing.”
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