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Banks and platforms

4 MIN READ
Oct 13, 2022

A short guide for banks on how to develop or expand supply chain finance programs without having to build or extend an in-house platform or on-board a vendor platform.

Over-promised and over-platformed

Banks have been working with platforms for a number of years. Whether this is capital markets, trade finance, supply chain finance, SME lending, underwriting, scoring etc.

A common complaint from bankers is that platforms have over-promised and that they are over-platformed.

How banks work with platforms

Working with platforms is difficult

So how has this come about, and how can banks move forward efficiently.

Why do banks work with platforms?

There is a well-known joke about a visitor asking the village idiot how to find the pub (apologies for the English references) only to be told that he knows the way but would not start from here.

This is the position that many banks find themselves in today when it comes to IT development, innovations and generally delivering up to date user experiences to their customers. Most bank systems were built decades ago, some even as far back as the 1960s. They work, they perform, and the cost of making mistakes when handling money is high.

Change is difficult.

One way to innovate is to out-source the problem to nimble fintechs and software vendors that can develop new systems in isolation. Banks let software companies develop new systems, then cherry-pick the best and incorporate them into their products and services.

Platform success (or not)

It has been a great plan with some notable successes, mainly behind the scenes and outside the core systems environment. For example, systems to score risk or to carry out identify check - but not systems that actually book exposures and carry out life or death internal functions. There are exceptions - for example, in payments (eg: Wise).

Generally, banks have found that product partnerships in their core business areas have under-delivered and over-promised. They have been difficult to integrate and complex to scale with a poor return on investment.

Platforms in supply chain finance

An area where platforms have proliferated is in supply chain finance. Such platforms are not hard to build - and operate within the core processing space that banks tend to occupy. The functions performed are broadly:

This limited set of functions has meant that banks have often decided to build their own solution rather than partner with a platform. Banks that have partnered with platforms invest a lot of time on-boarding the platform which can take up to a year - but then have found themselves in a crowded market with no distinct competitive edge except their own credit appetite.

All rather unsatisfying.

A solution to the SCF bank-platform issue

PrimaTrade (www.prima.trade) has a solution to this issue - largely due to the different approach that is taken.

By implementing a different journey, banks can avoid on-boarding the platform completely - whilst still offering a leading-edge supply chain finance solution to their customers.

The PrimaTrade platform can sit behind the buyer and not between the buyer and the bank. So the bank never sees or touches the platform.

Operational model for buyer-led SCF

Prima offers a choice of approaches

The PrimaTrade journey is different and starts much earlier with the supplier when it ships:

For banks wanting a platform solution, Prima can also sit between the buyer and the bank in the conventional way, although this would require the bank likely to have to on-board Prima as a platform.

Who needs this solution?

Our solution is relevant to all existing SCF banks and all banks who would like their own SCF offering as a lead.

Contact us at info@prima.trade to find out more. Sign up to our website here to access additional resources and technical details of our platform operation.

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