Standard Chartered Bank has launched ‘Banking the ecosystem’, a global strategy that will connect business communities and facilitate increased trade, commerce and investments across Asia, Africa and the Middle East.

To support global trade effectively and foster greater sustainable economic growth, the banking industry will need to change the way they do business. Primarily, in the area of trade and commerce, banks will need to change the way they look at their clients’ supply chain relationships as they become more complex.

Standard Chartered envisions that the future of banking will be about “Banking the ecosystem.” This is a differentiated value proposition whereby Standard Chartered will deploy innovative and customised solutions that best suit its clients’ ‘ecosystems’ – the international and domestic network of suppliers, distributors and customers of all sizes that together drive global trade and commerce.

Alex Manson, Global Head of Transaction Banking at Standard Chartered, said: “At Standard Chartered, we create a new generation of banking solutions that integrate financial, informational and physical flows within clients’ ecosystems. We are aligned to deliver services to all client segments with a fully integrated offering, ranging from plain vanilla cash, trade and FX to complex supply chain and structured financing solutions. Standard Chartered continues to explore the applications of data analytics on generating client insights and has invested in leading distributed ledger technology as part of its digitisation agenda. Our role as a bank is to facilitate trade, commerce and investment and as we support our clients’ ecosystems, we connect business communities”.

In a recent white paper, Standard Chartered has drawn insights from a number of corporates in select industries and elaborate on how corporate supply chain landscapes are changing, what the implications are, and how to support the new era of global supply chain ecosystems. While the advances of technology enable numerous business opportunities, clients also acknowledge the importance of a sustainable supply chain and are taking steps to ensure theirs are fit for purpose and equipped for growth.

---

Banking the ecosystem

Business is done by communities – banks should recognise this, looking to serve beyond conventional single-client relationships

Typically, when a bank serves a large company, it focuses on that particular client, rather than how it can support the wider supply chain of businesses on which the company depends. The evolution in global trade, however, suggests this approach to banking may be missing a trick.

In recent years, corporate supply chains have become significantly more complex. Every connection in an industry supply chain – whether it’s a small or medium-sized supplier, a large international distributor or a local ‘mom and pop’ retailer – is critical. A delay or break at any point could interrupt production or result in a short term funding gap.

Consequently, corporates have begun to look beyond their organisational boundaries to assess whether their supply chain ecosystem is equipped to help them grow and compete in a challenging business environment.

What banks must do

Banks – if they truly want to support global trade – should do the same, adjusting their lens to focus on whole communities, rather than single clients.

A number of banks have introduced supply chain financing, but still focus on the needs of large corporate clients. Take supplier financing for example: banks’ engagement with suppliers is typically to onboard them to the programme, rather than working with them to understand their supply chain and financing needs – including how their growth is linked to that of their customer – and devising solutions accordingly.

But this will have to change. Treasurers and finance managers are now increasingly demanding solutions from their banks that integrate financing, automated processes, and efficient, data-rich transaction and information flows. They also need banks that have the footprint, capacity and appetite which matches the needs of their suppliers and buyers.

These supplier and buyers are typically small and medium-sized enterprises – a segment that is under-served. Why? Most global banks restrict their target customer base outside their home market to multinational corporations, while banks that support a wider spectrum of business customers, such as regional and local banks, typically lack the network to serve a global supply chain. Also, banks are often organised into silos to support different customer segments, blocking a more holistic approach.

Banking the ecosystem in practice

How does ecosystem banking work?

To take an example, a large manufacturer looking to expand production may be hindered by constraints in key suppliers’ capacity. It is more difficult and costly for some of these suppliers to access financing, than it is for the large corporate they supply to. As such, the solutions available to these suppliers are typically plain vanilla post shipment finance.

However, if the manufacturer’s bank took an ecosystem approach (not only to financing, but also to services such as payments and collections), it would overcome these obstacles and offer best fit rather than single-product solutions.

Positioning for growth

As each market, and industry, continue on their economic journeys, and commercial models evolve in line with new technologies and customer expectations, clients’ ecosystems will need to adapt. And for banks like Standard Chartered, this means delivering services to all customer segments in a client’s ecosystem and co-developing solutions for not just large corporates, but for their supply chains partners too, ultimately to facilitate trade and connect business communities.

The author, Alex Manson, is Global Head of Transaction Banking at Standard Chartered. This article originally appeared on the BeyondBorders blog.