Three Ways Financial Institutions Can Leverage Trade Finance to Grow Revenue
By 5 minute read• Published February 18, 2021, Updated on June 9, 2022 •
Rising interest rates are usually good news for the banking industry – higher rates typically lead to higher lending profits. But, if we’ve learned anything these last few years, it’s that we’re not operating in a business-as-usual business climate. The Fed has initiated an aggressive schedule of rate hikes, which could backfire economically. At a certain point, the rising cost of liquidity can temper demand for consumer and commercial lending products.
Meanwhile, many companies are entering this next phase of the economy better prepared than expected. Most companies built a precautionary “war chest” of cash at the beginning of the pandemic. As a result, banks’ corporate clients are repaying loans and making larger or more frequent deposits, leaving many financial institutions sitting on massive piles of cash.
Idle cash is never ideal, especially when it’s millions or billions of dollars beyond minimum regulatory requirements. Naturally, financial institutions and lenders are looking for ways to put their excess capital to work and generate returns.
PrimeRevenue has strong relationships with our funding partners. Banks are an important contributor to our ecosystem that unlocks billions in cash for thousands of companies around the world. As the economic climate evolves, so does the symbiotic nature of our relationship with financial institutions. We are continually having conversations with banks about how we can work together to deliver more value to both clients and our funding partners.
#1: Join PrimeRevenue’s global multi-funder network
A hassle-free, uncommitted way to increase revenue is through funding supply chain finance (also known as approved payables finance) or accounts receivable finance programs. PrimeRevenue offers banks the option to join more than 100 global financial institutions in funding programs introduced through our proprietary origination channel. In simple terms, we bring the funding opportunities to you. It’s an easy way banks can diversify their portfolios with low-risk, high-quality assets, reach new customers, and drive ROI with short-term investments.
Financial institutions that join PrimeRevenue’s funder network have access to more than 400 programs with new suppliers onboarding every day – meaning there is virtually no limit to the funding opportunities. PrimeRevenue matches banks with programs based on the buyer’s needs and the funder’s unique requirements, which can include sustainability-linked criteria for “green investors” looking to put capital to use in a meaningful way. As an added bonus, banks in our funding network have direct engagement with buyers and suppliers, which can provide additional opportunities to grow the business relationship beyond supply chain finance.
#2: Co-market PrimeRevenue’s solutions to clients while outsourcing program management and support
Banks are always looking to offer more products to their clients and partnering with PrimeRevenue can be a simple way to immediately offer supply chain finance or accounts receivable finance to your corporate customers. It’s worth noting demand for these products are increasing amid rising interest rates and inflation. Many businesses are seeking ways to unlock the liquidity trapped in their supply chains rather than add debt to their balance sheets.
PrimeRevenue’s comprehensive co-marketing program allows banks to offer their customers world-class working capital solutions, powered by PrimeRevenue. Co-marketing with PrimeRevenue allows banks to act on their own origination channel opportunities to meet their customer’s changing cash needs and answer calls for alternative liquidity solutions.
Not only does this arrangement strengthen customer relationships, but it can also significantly improve competitive advantage. Historically, banks and FinTechs have competed for trade finance deals. Now, however, there is growing interest in mutually beneficial partnerships that allow both parties to leverage their expertise to best serve customers and drive revenue. FinTechs like PrimeRevenue can focus on the technology and industry knowledge, while banks can concentrate on funding opportunities and supporting corporate customers.
#3: License our technology to deliver trade finance capabilities
At a time when banks are seeking a fast track to trade finance innovation, many are hesitant to take on the cost and risk associated with homegrown R&D and program support. Banks can independently manage the sales and operations process by licensing PrimeRevenue’s working capital solutions technology. This approach gives banks full ownership of supply chain finance or accounts receivable finance program operations without dedicating the resources associated with developing and maintaining their own in-house technology.
Licensing programs can be up and running in as little as 60 days, mostly because banks can use their own legal framework and credit approval is often already complete to some degree. Banks always have access to PrimeRevenue’s new solutions and features, so they (and their customers) can rest assured their programs are being powered by technology that’s intuitive, agile, and innovative.
We always seek ways to deliver more value to our funding partners. As our technology and banking partnerships evolve, so do the ways we engage with banks to better serve the supply chain finance ecosystem. Our goals are well-aligned with those of our funding partners – to open supply chain finance up to more buyers and suppliers, and to strengthen customer relationships – and we’re committed to providing the technology and partnership opportunities to support our joint objectives.
Learn more about how you can participate in supply chain finance or accounts receivable finance.