Best Bank for Supply Chain Finance: The Bank of New York Mellon

Runner-up: JPMorgan
Commended: HSBC
2007 Winner: JPMorgan

There aren’t many banks that can offer genuine supply-chain finance. After all, dealing with the requirements of just one client and managing the risks associated with them can be challenging enough, but incorporating any number of suppliers in the client’s financial supply chain requires experienced and knowledgeable professionals.

It also requires a secure computer system that can reach, pretty much, anywhere in the world, and one that is flexible and accommodating. In other words, it is a highly specialised and challenging offering that only the world’s leading banks are in a position to offer: one that is a challenge to do well.

The Bank of New York Mellon (BoNYM) has achieved the TFR Award for Best Bank for Supply Chain Finance, by offering all of this and more. A couple of big deals in the past year demonstrate the complexities involved. “One highlight has been our successful implementation of a new supply-chain solution for two major Nordic retailers. This involved integration of services both at the European buyer’s end and, through our Asian network, at the suppliers’ end,” says Dominic Broom, European head, Trade Business Development, BoNYM.

A key to the Bank’s approach is that it does not compete with local banks with whom it needs to work in the roll-out of its supply-chain service. “The Bank of New York Mellon’s key offering is predicated on a non-compete approach, stating to partner banks in local markets that we are not in competition for local corporate business,” says Broom.

“We are not a monolithic bank trying to impose proprietary solutions on all comers, big and small. We are a specialist provider of integrated supply-chain solutions. This forces us, to the benefit of all players, to tailor our solutions around the needs of our clients, bringing in third-party players, such as local and regional banks and logistics companies.

In supply-chain finance, more than any other area of banking, the credit crunch and its after-effects offer both a challenge and an opportunity, believes Broom. “Those involved in the international sale of goods and services are now more worried about both risk management – their buyer paying – and about liquidity.

“Indeed, access to capital, particularly for smaller organisations, has become more limited. Supply-chain solutions deal with both concerns neatly. Trade-services techniques attach the credit risk to the best credit in the chain and unlock financing possibilities that may now be the only liquidity on offer – especially in emerging markets, although this is by no means exclusively an emerging market need,” says Broom.

It will also become more pervasive. The automation of the supply chain, which is aiding the integration of the financial and physical supply chains, is now permeating down from the major corporates. “This is not simply a case of top down supply, but of bottom-up demand – more and more small and medium-sized businesses can adopt automated and integrated supply chain solutions,” says Broom.

However, like all areas of banking, it demands constant attention and development. “This is a specialist area for the bank. One particular recent focus has been on purchase-order automation. Another has been adapting our global platform to the needs of both sophisticated buyers and those beneficiaries that retain more labour-intensive processes,” says Broom.

The 2006 merger between The Bank of New York and Mellon Financial has also brought significant benefits, most notably with the integration of the domestic US Working Capital business of Mellon with the Treasury Services business of The Bank of New York under a Treasury Services umbrella. In Europe, this business – comprising BoNYM’s entire working capital product set – is headed by Alan Verschoyle-King, and has staff located in all of the key centres in the region.

“The Bank of New York Mellon’s key offering is predicated on a non-compete approach, stating to partner banks in local markets that we are not in competition for local corporate business.”

Dominic Broom, The Bank of New York Mellon