The U.K.’s largest commercial lender Lloyds Bank and London-based working capital fintech Demica said Friday that they teamed up on a new supply chain finance platform for Britain’s businesses, as such projects pose increasing appeal during the COVID-19 pandemic.
Lloyds Banking’s commercial banking arm and Demica said their Open Account Platform, launching by the end of the year, will for the first time provide customers of the bank with a single online portal for supplier financial and receivables purchase.
Gwynne Master, managing director and global head of trade for Lloyds Bank global transaction banking, said the platform “will streamline the process for U.K. businesses and their suppliers, as well as help corporate treasurers and the vibrant community of [small and medium-sized enterprises] they work with to better manage and enhance their working capital.”
Supply chain finance programs help corporate buyers protect their supply chain relationships by connecting businesses with banks to let suppliers be paid early for an invoice, typically at a discount.
The platform builds on Lloyds Bank’s 13-year run of providing supplier finance and receivables purchase in support of international and domestic trade. It promises suppliers access to finance programs in “an industry-leading” 48 hours or less, as well as “simple and intuitive dashboards to access key information and straight-through-processing to automate transactions.”
“Our partnership with Demica is a perfect example of our commitment to deliver an exceptional experience and support the working capital needs of our customers and their supply chains at a time when supply chain resilience is more important than ever,” Master said.
Close to half of large U.K. manufacturers are focusing their supply chains more on Britain in response to the pandemic, according to data released by Lloyds Banking on Tuesday. One-third are rather globalizing their supply chains, the survey also found, including one-fifth that are adding international locations to better navigate pandemic-related lockdowns.
Demand for supply chain financing surged worldwide as the pandemic intensified and cash-strapped small and medium-sized businesses sought out much-needed liquidity, according to S&P Global. Although overall trade finance revenues slipped 1% in the first three months of 2020 as compared with a year before, supply chain finance income increased between 3% and 4%.
Revenues from supply chain finance in 2019 were between $50 billion and $75 billion, according to the International Chamber of Commerce.
Demica Chief Commercial Officer Maurice Benisty called the partnership “an important milestone” for the fintech. Demica’s platform has more than $16 billion of funded assets outstanding from a range of banks and institutional investors.
“We’ve worked closely with the solution development and innovation team at Lloyds Bank to deliver a solution that leverages our proven track record of deploying white-labeled solutions in an environment where digital transformation is now essential,” he said.
Other banks are similarly recognizing the opportunity.
Last week, Banco Bilbao Vizcaya Argentaria rolled out a new cloud-based supply chain platform for clients in the U.S., Europe, Peru and Mexico, arguing it would ease their capital management processes by centralizing program and supplier information. BBVA plans to bring the platform online in Colombia next year.
In June, Deutsche Bank revealed a significant investment in the fintech Traxpay, which provides banks and corporations with a supply chain financing platform and processes more than EUR 1 billion ($1.2 billion) annually.
And the following month, U.S. supply chain payments fintech Taulia declared the receipt of investments in its latest $60 million funding round from units of JPMorgan Chase and Ping An Insurance Group.