Creating confidence in European supply chains
Ensuring regular cash flows through liquidity management
When China locked down its factories and ports early in 2020, the global flow of goods and components stuttered to a halt. The effect was temporary, but making supply chains more resilient and diversified has become a business priority.
It’s against this background that Intesa Sanpaolo has launched Confirming, a fully digital supply-chain finance platform. It was first introduced as a solution for Italian businesses. Now it is to be rolled out to the International Subsidiary Banks Division (ISBD), which includes banks across central and south-eastern Europe.
That process begins in June when CIB in Hungary becomes the first ISBD member to introduce the product.
Marco Rottigni, head of the ISBD, believes Confirming is exactly the right product at precisely the right time.
"Confirming responds exactly to this need. It is an integrated digital platform that allows branch managers to optimise working capital and help stabilise supply chains. It also allows suppliers to manage cash deficits through a smart digital financing process"
Marco Rotigni, Head of ISBD
Confirming is a digital factoring solution that puts buyers and sellers on the same platform, with Intesa Sanpaolo acting as payment guarantor. This optimises liquidity management for buyers and ensures sellers are paid quickly.
Costs related to late payments are reduced on both sides and the risk of non- payment eliminated. The bank becomes a partner in the chain, increasing confidence for buyers and sellers.
“Confirming allows our banks to financially support supply cycles, guaranteeing stability and thus supporting a network that generates important international trade flows,” adds Rottigni.
"The group’s support for supply chains is has been at the heart of Intesa Sanpaolo's strategy for years. We are partners of more than 700 Italian supply chains distributed throughout the country, involving a network of more than 16,000 supplier companies and a turnover of approximately €70 billion"
Stefano Barrese, Head of the domestic Banca dei Territori Division
A unique solution for customers in any country
But Confirming’s international rollout adds a new dimension, creating a single digital supply-chain finance solution for customers in any country covered by the Group.
Reasons why CIB's the testbed for digital factoring abroad
Hungary is strategic to the Intesa Sanpaolo Group as a gateway to central and south-eastern Europe. As a digital leader in the Hungarian market, CIB also plays a leading role in the Group’s wider digital innovation strategy.
With 15 years’ experience of using supply-chain factoring solutions, the bank was the obvious testbed for Confirming’s international potential.
Pál Simák, CIB’s CEO, believes digital factoring will help to stimulate the Hungarian economy after the Covid downturn.
"After the economic stagnation caused by the pandemic, a service that promotes business confidence provides very important advantages for Hungarian companies,” he says. “We expect the role of factoring to increase again as the coronavirus epidemic fades, because it makes the financial operation of companies more predictable"
Pál Simák, CIB’s CEO
Predictability will be key as economies emerge from the shadow of Covid. Taking uncertainty out of cross-border transactions speeds trade flows and improves confidence. Simák believes Confirming will give SMEs in particular a new confidence in cross-border trade, “because to some extent it means somebody else has done due diligence for them”.
How Confirming can help shaping European supply-chain finance market
Confirming also emphasises Intesa Sanpaolo’s commitment to simplifying the bank’s relationship with corporate customers through digital services. According to a recent study by consultancy Bain & Company, more than 60 per cent of European CFOs have undertaken digital transformation initiatives in the past three years to reduce costs and operational burdens. Confirming achieves those aims in the area of supply-chain finance.
The same research found that the European supply-chain finance market is expected to grow by 15 per cent per year between 2021 and 2023. Confirming gives Intesa Sanpaolo the opportunity to play a central part in that expansion. It also opens new business opportunities through the provision of additional banking services – such as foreign exchange – to customers’ wider supply chains.
“Once businesses are familiar with Confirming, we can seek to broaden the banking relationship with them,” Simák adds.
A beneficial side-effect of the project is in strengthening relationships between banks in the Intesa Sanpaolo Group. Sister banks have been working closely to align legal and regulatory frameworks in advance of the wider rollout, something that Barrese believes will stand the Group in good stead as it delivers the next generation of digital banking solutions.