East & Partners Europe Private Markets Briefing - Trade in 2018
(21st June 2018 – Europe) Global and UK market insights on Trade Finance, Business FX and growth were the focus of East’s Markets’ Briefing in London on 19th June.
A global view of the increasing competitiveness among trade finance providers coupled with a more willing capacity to change among top corporates bodes for more aggressive selling in the coming years as global trade increases. Over 65 percent of top corporates across Asia and Australia are already receiving competitive pitches but the ability to provide knowledgeable advice and guidance will be a key area of improvement for providers as they look to re-establish trade finance as a relationship based product.
High revenue growth among smaller business is driving considerable latent volume for BFX providers. But, it is the changing behaviour towards an ever increasing use of FX risk management solutions that is providing clear opportunity as business moves towards the more valuable, less competitive part of the FX market. East forecasts that if current growth rates continue, over half of UK SMEs will using FX Forwards with two years.
As always, some providers’ risk policies may impede their ability to capture new business but this leaves the door open for those willing to work with small business and partner / facilitate their growth and ambition. As Spot FX declines in volume among Lower Corporates and hedging grows faster in volume among businesses engaged with FX risk management solutions, East’s research also asks the question; where to for Spot FX?
Cross sell within banks has become inefficient due to their complexity but, as competition continues to increase and pressure on cost reduction continues to be applied by the business, efficient, multi-product client relationships will provide much needed ROI. The overall opportunity is also there for providers to fill the need for a packaged solution of trade finance, supply chain finance and FX.
Attendees were present from many of the UK’s leading banks and their international peers along with non-bank providers and specialist financial services firms. Comments received from attendees included “Enjoyed the presentation, some very good insights in relation to what the SMEs in the UK are thinking”, and “the presentation was interesting and provided useful insight”.
Thanks to all our guests for joining us.
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