Richard Yeoman, Head of Working Capital and Trade Franchise, and members of his team, explain how NatWest is changing the way it engages with customers and how understanding end-to-end supply chains helps a company face the challenges created by ever-changing external events that are out of their direct control.
The world of international trade is uncertain and complex, consisting of a network of parties and information which is susceptible to external shocks. Geopolitical developments such as Brexit and Trump tariffs are driving UK companies to focus on their supply chains to identify potential weak links. Nevertheless, the industry is faced with information deficiencies outside immediate upstream and downstream businesses. Over half of FTSE executives interviewed by KPMG stated that most disruptions to their supply chains originated from tier 2 and tier 3 suppliers. These suppliers reside in parts of the supply chain which are difficult to gain direct sight of, making it difficult to identify and plan against potential disruptions. This highlights the fragility of the supply chain ecosystem.
In a complex world of global supply chains, we believe that a full understanding and visibility of the supply chain is critical to the future success of our customers. Not only does it help our customers understand the financial impact of external events, it also helps them identify potential opportunities for growth. We’re, therefore, focusing on becoming trusted advisors to our customers by helping them identify potential disruptions and reinforce the robustness of their supply chains. “Visibility of supply chains is central to the future success of our customers,” says Richard Yeoman, Head of the Working Capital and Trade Franchise at NatWest. “NatWest is committed to helping customers manage and grow their business and we will deploy market-leading technology solutions to assist our customers in identifying the challenges and opportunities for growth.”
There are many real-life examples of the impact that unforeseen circumstances can create. In 2011, a number of Japanese car manufacturers were impacted by an earthquake and a tsunami which disrupted their business operations. Until that point, the fact seemed under-appreciated that the production of certain specific automotive parts was concentrated by a small number of suppliers along the same part of the Japanese coast. This consequently led to a significant change in working patterns for one of the companies’ UK plants as the shortage in parts decreased their car production capacity for a significant time, leading to increased costs. NatWest aims to provide customers with heightened visibility of their supply chains and guide them in strengthening or reshaping their business model to manage such disruptions.
Being smart about Smart Data
Data is at the centre of a corporate elevating its understanding and supply chain visibility. A lot of data! NatWest is continuously working with the best and brightest partners in the industry to help our customers improve this understanding and visibility of their supply chains by using the latest technologies. At NatWest, we recognise how information can empower our clients with the ability to make better decisions to run and grow their businesses. This is especially the case as technology continues to evolve as rapidly as the global economy.
Rebecca Harding, CEO of Coriolis Technologies, says: “It is hard to understate how technology is transforming trade. As we move into 2019, the reality of business is that trade is increasingly as much about electronic signals, payments and transfers as it is about moving goods from place to place. This creates a real data challenge because the size and scale of what is being traded digitally across borders is currently not fully understood. Financial services, and banks in particular, are moving as quickly into the digital space through AI, machine learning and blockchain. But perhaps most important of all, the biggest change we are seeing is that FinTech is no longer seen as a disrupter to banks: banks are working collaboratively with FinTech’s as enablers to create new, and tailored services that are more flexible and based on better understanding of the business’ risks.”
As a bank, we use a variety of data sources to create a comprehensive overview of a customer’s supply chain, including the risks and opportunities inherent in it. We also work collaboratively with our customers to establish the context of the environment in which they are operating. The customers themselves would be a significant contributor to the primary data stream on how their supply chain works and what they understand about it – after all they know their business the best. They can explain their contract terms, logistics processes, related downstream suppliers, and the intricacies of their own business. We then aim to leverage our own expertise built from our experience of dealing with a variety of businesses in many sectors to provide rich information about how supply chains work in various industries.
We wouldn’t use data to provide our customers with the facts alone. This is about helping our customers understand the challenges contained within their supply chains, identify potential opportunities for business growth and about how we as their bank could help them with the financial challenges this may create. We would like to use technology to leverage several sources of data which will add the most value in our advice to customers.
David Salter, Head of Funded Trade at NatWest, emphasises that “this is all about creating a new dialogue and relationship between the bank and our customers moving on from the traditional relationship to a more in-depth analysis of how the bank can equip its customers with the best solutions which can support their supply chain stability, growth and profitability, given the make-up of their whole supply chain”.
Creating an eco-system for supply chains
In a rapidly evolving marketplace, the main driver for NatWest is focusing on what is relevant for our customers. We are committed to meeting the needs of customers right now as well as pushing the boundaries on what we think will be relevant to our customers in the future. Trade finance has always been manual and process-heavy. However, our customers want convenience and simplicity at every stage of the business cycle and in particular in their interactions with their bank. In our complex and interconnected economy, we believe that creating an eco-system which facilitates our customers’ understanding of their whole supply chains will augment their ability to plan in advance for any eventualities.
NatWest is leading on and embracing Distributed Ledger Technology (DLT). We’re actively leading collaboration in the industry to develop solutions that our customers tell us they want and need. Jim Bidwell, Head of Trade at NatWest, comments: “We’re fully committed to making our customers’ interaction with the bank easier and simpler. We’re taking a leading role in the industry with the development of DLT-based apps for trade and open account finance being Voltron and Marco Polo respectively. We’ve also developed a simple in house digital application process for guarantees and letters of credit.”
We continue to emphasise that collaboration across all the parties in the supply chain is pivotal to adding value for our customers going forward. Technology can only manifest into its most valuable form if we leverage the expertise of our partners to create a network of networks which have the ability to grow and adapt. In this way, information can flow seamlessly across the network, consequently integrating our customers’ supply chain from the outset. Interoperability across networks is, therefore, vital to creating powerful network effects. DLT facilitates such interoperability which will simplify trading across supply chains going forward. We’re continuously planning and preparing for the future with such initiatives. For NatWest, it’s not about following what everyone else is doing but about investing and creating solutions that our customers tell us are relevant to them.
As a leading bank for trade and working capital solutions we are interlinked with our customers’ working capital strategies. We’re committed to working with our customers to help them take their businesses to new heights by facilitating their understanding of and by catalysing supply chain visibility.
Mirka Skrzypczak, Head of Working Capital and Trade at NatWest, comments: “In order to make this happen, we as a bank need to change the way we engage with our customers and also encourage them to change the way they think about their supply chains. We’re committed to making this change as simple as possible by leveraging new technologies such as DLT and artificial intelligence amongst others.”
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