Next-generation working capital – the $ multi-trillion opportunity
The next generation of working capital is here, offering business borrowers better products that are quicker and easier to apply for. Our new report looks at some of the practical steps business lenders can take towards offering convenient, appropriate, on-demand working capital to business borrowers.Business borrowers are also consumers, and in their personal lives they’ve got used to buy-now-pay-later (BNPL) loans offered at website checkouts, pre-approved loan offers, and cash within minutes.But when they get to work, it’s not like that. Specialist products like invoice and receivables finance are not widely available, despite being relevant for businesses today. They are inherently complex, and the ability of lenders to deliver them in a timely way is exacerbated by the use of manual and resource-heavy processes.We set out a 4-step value framework for success in our new report, Next-generation working capital - the $ multi-trillion opportunity. Download your copy today – or read on for the highlights.
Value framework: 4 pillars for driving success
Our framework is designed to give lenders a structure that will enable them to identify easily where the biggest improvements can be made, drive value, and enhance the return on capital employed (ROCE), across the entire loan journey - for their customers and their bottom line.
1st pillar: Technology cost of ownership
It’s not cost effective to keep legacy systems going. Instead, consider:
- Composable banking
- Building your own systems vs buying from specialist providers
- Partnering and co-creating with software-as-a-service (SaaS) vendors
- Taking a step-by-step approach to digital transformation
2nd pillar: Operational efficiency
In a lending ecosystem that is digital-first, cloud-native, API driven and composable, data flows effortlessly between systems, in real time, enabling lenders to adopt data-driven lending.Lenders who embrace modern technology can expect to accelerate their application-to-cash time by 80%.As Jon Sutton, CEO of ScotPac (Australia and New Zealand’s largest non-bank SME lender) says, “Trade Ledger allows us to make nimble decisions to quickly understand each business and make an accurate call on funding.”
3rd pillar: Risk mitigation and compliance
After the upheaval of the pandemic, historical indicators of risk have become less useful; near-term and forward-looking indicators now provide far more sophisticated assessments of risk. The report discusses how modern lending platforms, supporting products such as invoice and receivables finance, enable better risk management.
4th pillar: Loan book growth
New products, markets and channels are all enabled by modern lending ecosystems, enabling attractive growth – as well as reducing the costs of abandoned applications. And a single customer view enables easy upselling and cross-selling.Roger Vincent, VP of Global Sales, Trade Ledger, challenges the industry to serve businesses better: “Banks should see it as a huge opportunity to expand the applicability of invoice finance, to tweak the proposition to make it more operationally friendly and more enjoyable by the customer.”
Why now?
The report lists 6 strong arguments for acting now. As Matthew Perry, Business Design Lead with Lloyds Banking Group, says, it’s essential for banks to achieve digital transformation. “It isn’t a case of can you or can’t you – it’s the case that you absolutely have to do it.”Download your copy today.