Anticipating unpredictable events is becoming an increasingly challenging yet crucial task for CFOs and Banks alike. If the COVID-19 pandemic has taught key decision makers anything, it is fostering greater flexibility, adaptability and resilience to weather uncertain periods of turbulence and prepare for the next crisis ahead.
The following exerts from East & Partners popular Anytime Question platform provide a detailed breakdown of the types of rapid “voice of the customer” insights available to financial services providers seeking to quantify complex scenarios with reliable forecasts and customised data based solutions.
Sustainability Must Permeate Financial Decision Making Faster
The push towards sustainable green finance continues to build momentum quickly. Despite a promising level of progress towards sustainability goals, experts maintain both the public and private sectors are failing to meet the global goal to avoid the worst impacts of climate change. What progress are Australian enterprises currently making?
"We must intensify efforts to move away from
fossil fuels this decade.
We're in trouble. I hope everyone understands that"
John Kerry, United States Special Envoy on Climate Change
Under one fifth of Australian business’ overall plant, equipment and vehicle assets are energy efficient electric and hybrids (17.8 percent). Demand is building strongly however given these same enterprises expect uptake to almost double to 27.9 percent in 2022.
Energy Efficient Assets
Average % Reported
Source: East & Partners Australian Asset Finance Program – December 2021 (N = 1,297)
"Our experience is telling us there’s more and more
appetite in both debt and equity markets
for project financing that’s sustainable in its application;
not so much reflected in pricing but
more volume and providers keen on a deal."
Group Treasurer, US$25Bn Australian Resources Corporate
Opaque “Size of the Pie” Calculations
Trade Finance and Foreign Exchange (FX) markets are being buffeted by crippling supply chain disruptions, freight costs and COVID border and staff isolation restrictions. How is this impacting export participation and the opaque “size of the pie” in terms of trade volumes and international markets engagement?
Based on initial screening for enterprises actively engaged in cross border payments for East’s global Trade Finance research, there has been a discernible increase in the proportion of firms with an active import, export or both import and export function noting significant variance by business size.
The smaller the business, the greater the incidence of vanilla import only trade need while larger corporates are naturally more likely to export to global markets. Of express interest to Banks however is where a “tipping point” is reached in terms of the level of sophistication and active FX and trade finance need arises for enterprises as they grow, an important consideration given the Asian Development Bank (ADB) estimates the global trade finance gap has surpassed a record high of US$1.7 trillion.
In the most populous Microbusiness segment (A$1-5 million turnover), less than five percent of firms actively import or export. Among SMEs (A$5 - 20 million turnover) this proportion is almost ten times higher. That figure doubles for the middle market (A$20 – 725 million turnover) and reaches universal international markets engagement among large corporates (A$725 million plus).
In 2018, East & Partners captured fascinating insight into Asian corporates experiences with overdue payments from export customers and bad debts that had to be written off. Almost three out of four large corporates in ten countries across Asia had experienced the former (72.9 percent) while only one in four had suffered the latter (26.4 percent).
Fast forward to 2022 and a repeat of this question will undoubtedly generate a powerful historical comparison and trending view into trade and supply chain management. The research also indicated less than half of these enterprises purchased trade credit insurance.
What Next? Informed 2022 Outlook
The following Anytime Question suggestions provide an excellent breakdown of where Banks are focusing their efforts for 2022, in particular generating “black and white” data based insights for arming their external thought leadership messaging and improving internal strategic decision making.
- What services do you require from your Bank that they do not currently provide?
- Would you be willing to use Central Bank Digital Currencies (CBDCs) for cross border payments?
- For what functions can the “Metaverse” help your business the most?
- Have you sourced new Trade Finance facilities to navigate supply chain disruptions?
- What does your secondary business bank need to do to become your primary bank?