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Banks and fintechs: joining forces to remove friction

Over the last few years, fintechs have evolved the customer experience – prioritising 24/7 access and offering services via social media to connect with and empower customers with alternative finance. To keep up, increasing numbers of financial institutions are forming partnerships with fintechs to create products that streamline and improve the customer experience. In fact when questioned by PwC, 82 per cent of banks, insurers and asset managers said they expected to increase the number of fintech providers they work with over the next 3-5 years.

This trend is being driven by banks’ growing realisation that if they don’t participate in fintech developments, they will lose business and revenue.  In the past, there have been massive inefficiencies in the banks’ legacy systems and they have been slow to embrace new technology. However, banks are now seeing the opportunity to embrace the dynamic nature of fintechs and actively collaborate with them.

A perfect marriage

It is a very positive step forward as each party has something significant to offer the other. Fintechs require access to capital, and banks can easily provide this. Banks in contrast are looking for ways to innovate more quickly, provide a slicker customer experience and leverage data to mitigate risk. Collaboration with fintechs enables banks to outsource their research and development to them and bring new products to the market much more quickly and for less cost.

Ultimately, the partnerships between banks and fintechs are creating a unique opportunity for the expansion of finance solutions, and thereby adding real value for customers.

Leading by example

At Tungsten Network, we are part of this trend. We recently teamed up with BNP Paribas, a leading international bank to offer e-invoicing linked Receivables Purchase and e-invoicing linked Supply Chain Finance (e-SCF) to large corporates in the USA and Canada. Our customers can now obtain an attractive working capital solution through the same technology provider they use for e-invoicing and procurement activities. It is the first partnership of its type and a sign that commercial banks are following the lead of their retail counterparts in collaborating with fintechs.

By linking e-invoicing with supply chain and receivables purchase, customers are offered a one-stop solution that brings together process efficiency and working capital optimisation in a single portal. They are offered attractive rates in a straight-forward, hassle-free way. By getting their invoices paid early, they are receiving the working capital they need to grow their business. They are leveraging the financial strength of their buyer, giving the assurance that the invoice will be paid. For the buyer, the product means they can provide their suppliers with access to finance when it is required and support a healthy, reliable supply chain.

From the bank’s perspective, a lot of energy can be spent connecting clients and on the payables side, on-boarding suppliers onto the system. This creates friction in the relationship, and inhibits the supply chain. The advantage for BNP Paribas is that by partnering with a fintech like us, these trade flows are already on our platform. Therefore, both do not have to on-board suppliers twice and deal with complex technology integrations. Ultimately, the partnership helps to make the supply chain process smoother for all.

Symbiotic partnerships like this will be seen more and more. They have the potential to revolutionise the sector, enabling everyone to work more smartly and offer added value to customers. Speed to market is of the essence in our fast-paced, consumer-centric world and fintech providers are agile by nature and brilliantly placed to help financial institutions bring innovations to the masses.

Related articles:

Tungsten Network to collaborate with BNP Paribas in offering e-invoicing linked Receivables & Supply Chain financing solutions to large corporates



About the author

Prabhat Vira

Prabhat joined Tungsten in 2016 with responsibility for offering our clients game-changing and innovative supply chain financing alternatives that leverage our data and our technology. Prabhat brings Tungsten deep trade finance expertise and broad global business experience. He joined from HSBC, where he was Global Head of Strategic Transformation (Trade & Receivables Finance), and, earlier, Regional Head of Trade & Receivables Finance. Previously, he held leadership roles in structured finance, commodities finance and corporate banking for Royal Bank of Scotland and ABN AMRO.

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