Misys

Misys: Banks See Threat from Alternative Lenders

August 26, 2024         By: Melanie Macinas

The recent financial crisis has left banks under pressure, as demand for credit from small- and medium-sized businesses (SMBs) has grown and increased regulation has affected banks’ lending capacity. This has also given birth to alternative form of lending, which is now widely being embraced by the corporate world as a source of funds.

According to a new study by financial software company Misys, banks now see alternative lenders and new digitally enabled supplier finance networks as a significant threat to commercial lending businesses.

Sixty-eight percent of the 114 respondents from 77 banks across the US, EMEA and APAC cited small business lending as being under high threat, while 61 percent see competitive pressure in supply chain finance product lines.

The survey also found that 84 percent see pressure on loan products pricing and 75 percent fear they might lose market share to alternative lenders.

With the rise of alternative financiers, new supplier networks and peer-to-peer lenders in the market, banks are being forced to re-evaluate their operating models and welcome new technologies, partnerships and more agile approaches to trade finance and lending.

Interestingly, the survey also found that banks believe a strategic partnership with non-bank players can significantly help grow their trade finance businesses, with 68 percent seeing this as a big opportunity.

David Hennah, Head of Trade Finance at Misys, commented, “The banking sector understands that it must now react to remain at the centre of corporate credit requirements. Our survey respondents believe they can leverage emerging supplier networks and the financial technology vendors that can provide digital enablement and connectivity across trade and lending to grow and retain clients. We have seen an increasing focus on strategic technology partnership. Clients want to build trade and lending platforms that help overcome their technical debt in digitally enabled corporate banking and build a foundation to dictate future innovation.”