Total trade deficit in the UK widened by £3.0 billion to £9.5 billion in the September quarter, according to the UK Office for National Statistics. Between the three months to June and the three months to September, total trade (goods and services) exports decreased by 0.2 percent (£0.3 billion), while total trade imports increased by 1.6 percent (£2.6 billion).
As the UK advances towards its departure from the EU (European Union) in 2019 with the continuing uncertainty surrounding Brexit and what it will actually mean for the country, a critical issue for businesses, in both the UK and for those markets who trade with it, will be successfully enabling international trade. Banks, and other providers in this space, have a key role in supporting business customers to ensure they can continue to effectively trade internationally, minimising as best they can, any Brexit disruption but ideally enhancing the experience for those businesses.
Trade finance, supply chain funding and business FX payments are all key services that aid a business in international trade, but are also services that have mixed track records in how they are provided, especially by banks. Business size is often the main determinant of the level, quality and price of service that enterprises receive, with smaller companies traditionally getting the poorer and more expensive service.
East & Partners global insights research across business FX payments, trade finance and supply chain funding has clearly illustrated this phenomenon but has also highlighted the dissatisfaction that corporates of all sizes often report.
A Growing Dissatisfaction with Trade Finance
According to East’s global trade finance research around a third of large corporates are considering changing their current provider, this is further demonstrated by the decline in primary provider relationships and the growth in secondary relationships, as corporates look to spread their business around multiple providers to get the best deal and explore what else it out there.
UK businesses overall, and especially smaller enterprises, are clearly not getting the service they seek from their banks in accessing trade finance and supply chain funding. As Brexit looms ever closer, and the outcomes that result from it take effect, this lack of access can only serve to undermine UK business in its international trade efforts regardless of the UK government’s encouragement and campaigns to promote exports.
When asked what they look for in a trade finance provider the number one feature is a knowledgeable trade account officer with over a third citing this, while just 20 percent list improved trade loan facilities. However, while a knowledgeable account officer is a key selling point for business customers other East research shows this expertise is declining in banks resulting in a growing talent gap.
Supply Chain Funding – Unfulfilled Appetites
In the provision of supply chain funding there’s growing appetite for receivables financing and distribution / buyer financing solutions with business.
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