During this year's RFIx20 event in London 10-11th March (download the full programme here), the theme ‘Shock of the new’ will bring together thought leaders and market disruptors to discuss new technology that is making a huge impact on the working capital finance sector. In advance of the meeting, four key opinion leaders share their thoughts on the factors likely to have the biggest impact.

In a fast moving world fintechs are quick to exploit gaps and see opportunities to meet customer needs, according to Kevin Day, CEO of HPD LendScape. In developed financial services ecosystems, this has always been about creating niche, alternative solutions to compete with deeply entrenched incumbent providers. In these environments, fintechs obtain footholds, but can struggle to grow and gain market share, many collaborating with the “old guard” to gain traction and market share.

However, in emerging markets Day explains that there is a hunger for new digital and mobile technology, with no legacy backdrop and an aspirational populace, building businesses, developing the economy and creating demand for financial services, ill supported by existing providers. In this environment, fintechs can quickly flourish to take up this demand and, in some cases, achieve meteoric growth.

Non-bank players are increasingly moving into working capital markets to fill unmet needs for clients of all sizes says Walter Gontarek, Chief Executive, Channel Capital Advisors. However, to what extent are investment funds providing opportunities for receivable finance in the corporate world?

Non-banks and investment funds are beginning to address the well reported funding gap. The ICC (2018) has identified a global funding gap of US$1.5tn for trade finance, including supply chain financing. Similarly, US$1.3tn of working capital could have been released from US listed firms alone if they followed more efficient working capital practices (PWC, 2018/19). The establishment of dedicated investment platforms to deliver this asset class to institutional investors is well-timed.

Technology now plays a key role in providing quicker faster and more scalable services to clients, including SMEs. At Channel, Gontarek says they increasingly rely on cloud-based hosting of receivables transactions, bank account scrapping in the context of open banking and cash flow modelling, and smart technology to trigger payments and insurance claims for trade credit policies. AI is not far behind to capture invoice data and predict unusual trading patterns.

The receivables finance industry is facing great challenges feels Robert Meters, Head of Marketing, Sales and Financial Services at SCHUMANN. The transformation of classic processes into efficient and secure digital processes such as cost-saving implementation of legal and regulatory requirement. Modern and trend-setting automatic straight through processes comprise onboarding, validation and analysis of data, risk and limit management, claims and collection handling and the related historicization of data and decisions, documentation, reporting and analytics. The ability of software solutions to transfer data to and from a bank or financial institution IT platform and customer channel in real-time is essential.

Therefore, it’s a fact that the technical interoperability of systems is required to work digitally. The security of a service should prevent unauthorised access to the service or its content and to detect inappropriate actions. Modern workflow management with automatic use of API technology and flexible decision engines (BPMN/DMN engines) are required to apply appropriate processes. Own databases of a bank or a financial service provider are being used i.e. for artificial neural networks; the goal is a specific adaptation of refined risk management systems.

4. Blockages in the blockchain?

According to Dror Shapira, CEO and Founder of INVIOU, there is no doubt that distributed ledger technology (DLT) is a preferable solution for many industries, suffering trust related matters. Also, its ability to reduce friction dramatically and consequently save significant funds that can be better utilised or directed in a better positioning in the market, efficiency etc.

Relevant industries are, trade, banking, supply chain and health among many more. Nonetheless, this technology is still in early adoption stages and thus endures many of the problems associated with such a stage, such as scalability, interoperability and generally the lack of appropriate infrastructure to support its operations. According to Shapira, all issues that are holding back the faster global development of the blockchain, as well as the fact the industry seems to fight over supremacy instead of moving forward, with the notion that being DLT agnostic should be leading them to find the right solutions. It is worthy to note though, that a lot of funds have been invested in exploring and experimenting with different projects and use cases and perhaps this is the only way forward towards mass adoption.

What are your thoughts on these issues and the wider implications that will be examined during the Shock of the New themed RFIx20 [link to blog landing page]? Join the debate London 10-11th March and be at the forefront of shaping the future of our growing receivables finance industry.