In its 2024 Benchmark Report, leading fintech and supply chain finance platform Demica discovered that rising interest rates have had a negative impact on asset growth for 55% of global banks.

Furthermore, a study conducted on global banks revealed that 44% of them observed a negative impact of geopolitical risk on their organization's asset growth.

Demica claims that banks are diversifying their assets with an emphasis on risk distribution in an effort to buck the trend and spur growth.

Demica: Banks diversifying their assets to increase their value
In an effort to generate asset growth through unconventional means, the majority of global banks (52%) plan to enter new product lines in 2024, up from 41% the previous year, according to a Demica report that polled 169 supply chain finance professionals in 31 different countries.

For the first time since Demica's first annual Benchmark Report three years ago, Trade Receivables products have surpassed Payables products in the eyes of approximately 27% of international banks looking to expand their investment portfolios.

Furthermore, this year's survey of supply chain finance professionals revealed that, for the first time, the majority (62%) had personally participated in an ESG-focused transition, underscoring a developing trend at big banks as they update their transition plans in anticipation of a more sustainable post-pandemic future. Earlier this year, we listed the Top 10 most sustainable trends in banking, financial services, and fintech.

Global banks are, in fact, already deeply ingrained in asset lines related to trade receivables. As early as 2020, BNP Paribas and Tungsten Network started working together on e-invoicing associated Receivables.

A growing number of banking institutions are now attempting to participate in the expanding asset class known as trade receivables.

This may be the reason Demica finds that 81% of banks surveyed anticipate growth in their supply chain finance assets over the next 12 months, with 35% of report participants projecting asset size increases of more than 10%, despite the ongoing harsh market conditions.

Despite the unpredictability of the global economy, supply chain financing is showing strong growth, according to Demica Chief Executive Matt Wreford.

"High interest rates may have hurt payables financing, but banks are still seeing asset sizes grow and are concentrating on receivables products, which are more desirable in the current market conditions.

Our Benchmark Report demonstrates that because of their flexibility and wide range of offerings, non-documentary trade finance products are still the best choice for satisfying corporate financing needs, even in the face of rising interest rates.

"Over the next 12 months, banks have every reason to expect further asset growth."

In our collaborative report with Convera, you can learn more about the ways macroeconomic headwinds will impact the financial industries in 2024.