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In a rapidly evolving business environment, B2B commerce is undergoing significant transformations. 

Companies are increasingly leveraging platforms and e-commerce solutions to expand their distribution networks and diversify their supplier base. 

Vinay Mendonca, Chief Growth Officer, Global Trade and Receivables Finance at HSBC, sat down with Deepesh Patel at Sibos Toronto to discuss these shifts and how they are influencing trade finance.

This piece explores seven key takeaways on how HSBC is evolving to meet the changing needs of tomorrow’s corporate customers.

1. Shift from JIT to JIC

The pandemic has exposed the vulnerabilities of the just-in-time (JIT) supply chain model, which minimises inventory to reduce costs but is susceptible to disruptions. 

A study by Gartner found that 75% of organisations plan to increase their investment in supply chain resilience in the next two years.

HSBC is helping clients as they are transitioning towards a just-in-case (JIC) model that prioritises supply chain resilience. 

Mendonca said, “Inventory finance is a solution where it helps them optimise the best of JIT and JIC. This shift is not merely a reaction to recent disruptions but a proactive strategy to build more resilient global trade systems.”

2. Diverse suppliers, diverse risks

Globalisation has led to increasingly complex supply chains, bringing both opportunities and risks. 

HSBC is helping its clients navigate this complexity by offering solutions like pre-shipment finance.

“We’re making sure again, through products like pre-shipment finance, that our clients can improve the resiliency of their supply chains,” said Mendonca. 

These solutions provide liquidity to suppliers early in the working capital stage, enabling them to initiate the procurement and manufacturing processes and plan for contingencies.

3. Embedded finance solutions

HSBC is not just a financier but a strategic partner that embeds its solutions into clients’ business models. 

A recent survey by Deloitte found that 71% of CFOs believe that embedded finance will have a significant impact on their industry in the next three years. 

Mendonca said, “It’s more than just a financing solution and liquidity. It’s actually about being ingrained in the core business of our customers to enhance their products”. 

By offering solutions like receivable finance, HSBC helps its clients not only secure liquidity faster but also make their products more attractive to buyers by offering extended payment terms and enabling more sales.

4. Data-driven decision making

In an era where data is king, HSBC is leveraging analytics to offer more targeted solutions to its clients. 

According to Forbes, 90% of executives believe that data analytics is essential for making informed business decisions.

Mendonca said, “Underpinning all of those is the digitisation of trade that’s taking place,” 

The bank uses data analytics and digital decisioning scorecards to understand market trends, customer behaviour, supplier performance and other risk factors, thereby providing more effective and customised trade finance solutions.

5. APIs and the movement of data

The seamless movement of data is crucial in today’s interconnected world.

With 83% of organisations believing that APIs are essential for their digital transformation strategies, HSBC is focusing on APIs to ensure that data flows smoothly between different systems, which is particularly relevant to trade finance. 

This approach allows for real-time decision-making and offers clients a more streamlined and efficient experience.

6. Increased investment in partnerships

One of the most notable aspects of HSBC’s evolving strategy is its investment in fintech partnerships. 

HSBC has invested $35 million in Tradeshift, a global network for supply chain management and has announced the formation of a Joint Venture with Tradeshift. 

The investment is part of a funding round expected to raise at least $70 million. The JV aims to deploy a range of payment and fintech services embedded into trade and e-commerce platforms like Tradeshift. 

The partnership signifies HSBC’s commitment to digital transformation and its focus on unclogging the flow of working capital across supply chains.

7. Managing receivables better, thanks to fintech collaborations

HSBC has also launched a digital receivables finance capability co-created with Trade Ledger. 

This initiative enhances its service offerings by providing clients with more streamlined and efficient onboarding and decisoning solutions for managing their receivables. 

Ardent Partners found that 72% of businesses believe that accounts receivable automation is essential for their cash flow management strategies.

The partnership with Trade Ledger signifies HSBC’s commitment to digital transformation and its willingness to collaborate with fintech companies to offer innovative solutions.

Resilient, data-driven, customer-centric

HSBC’s evolving trade finance strategy reflects a broader shift in the industry towards more resilient, data-driven, and customer-centric solutions.

By focusing on supply chain resilience, data analytics, and strategic partnerships, HSBC is positioning itself to meet the challenges and opportunities of the new global trade landscape.

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