13 min 42 s

Episode 4: Iain MacLennan, Robert Downs and Mani Ganesan – Corporate Lending Outlook 2024

We invited Iain MacLennan, Head of Trade & Supply Chain Finance; Robert Downs, Head of Corporate & Syndicated Lending; and Manikandan Ganesan, Head of Cash Management & Corporate Channels, from Finastra’s Corporate Lending team to share their thoughts on the key trends we saw in 2023 and what will be of importance in 2024. Global markets and supply chains will remain volatile, and banks will face continued regulatory challenges to adjust their processes and infrastructure and stay ahead of their competitors. Iain, Rob and Mani also explore the areas where banks are most likely to invest their resources and some potential solutions for the anticipated headwinds.

Highlights and challenges of 2023

Navigating the uncertainty

2023 witnessed rising interest rates, inflation, and recession risks. In addition, geopolitical conflicts, such as the Israel-Gaza war and the Russia-Ukraine war, supply chain disruptions, and skills gaps also created challenges for trade and corporate lending. Our speakers share their perspectives on how banks can overcome these issues by partnering with technology providers, building scalable integrations, and leveraging fintech solutions for origination, ESG, and servicing automation. They also emphasize the need for better connectivity and collaboration in the banking sector.

Driving modernization by leveraging partnerships, the latest trends and technologies

Whether we think about modernization from a trade, corporate lending or cash management perspective, it’s clear that partnerships drive modernization and digitization. Iain outlines Finastra’s partnerships with Conpend and ClearEye, delivering value-added services on top of Finastra’s Trade Innovation solution, as well as how our partnerships with Microsoft and Neudesic will focus on the modernization of Trade Innovation, accelerating the move away from a monolith to a microservices architecture. Mani emphasizes the importance of personalization and empathy in customer engagement, sharing a success story from 2023 with Finastra and Kotak Mahindra Bank’s collaboration to build a one-stop solution for corporate customers with a seamless user experience and 20+ pre-configured workflows for cash management, trade finance, and more.

Success strategies for 2024

Customer design thinking

In 2024, customer-focused design will be crucial for banks to stay competitive and relevant in the lending sector. Banks will need to invest in digital channels, client lifecycle management, and advanced analytics to deliver faster, more seamless, and more personalized lending experiences. Customers increasingly expect a retail-like experience, where banks understand their needs, preferences, and behaviors, and offer them solutions that are tailored to their specific situations. Banks therefore need to put their customers at the center of their modernization journeys, adapting their products and solutions to create more personalized experiences.

Digitization of trade

The digitization of trade will continue to accelerate in 2024. More regions around the world will adopt the Model Law on Electronic Transferable Records (MLETR), which will enable the use of digital documents to support trade transactions - in the UK it came into force on 20 September 2023. The Law will reduce the reliance on paper, improve efficiency, and lower the environmental impact of trade - according to the World Economic Forum, it may reduce CO2 emissions by up to 12%.

ESG & fears of greenwashing

ESG is crucial for borrowers and lenders who want to align their lending activities with their sustainability goals, especially as sustainability-linked loans issuance rises in many countries. However, embedding ESG practices also has its challenges, including the lack of regulatory controls, the surge in declassification clauses, and the difficulty of measuring and verifying ESG performance. Banks need to be transparent, diligent, and accountable in their ESG lending practices and KPIs, and avoid mislabeling or misrepresenting their products.

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