Amid growing geopolitical uncertainties, prolonged higher interest rates and the climate crisis, global corporations are increasingly restructuring their value chain operations to enhance resilience. Keiji Matsunaga, head of the Asia Innovation Centre at Sumitomo Mitsui Banking Corp (SMBC), says corporations are now undergoing a comprehensive digital transformation in response to a more intricate operating environment. This involves leveraging the capabilities of data and analytics technology.

Recognising customers’ need to protect their businesses from headwinds as unprecedented events continue to disrupt demand, supply, transport and logistics networks, SMBC is ramping up its efforts in optimising industrial value chains to safeguard customers from sudden disruptions proactively. 

This comes after essential investments in technical capabilities, including real-time visibility. “Additionally, we have seen increased focus from our customers looking to minimise inflationary impact and improve their financial performance indicators such as cash flow and return on invested capital. At SMBC, we are confident in curating a competitive value proposition for customers by harmonising our financial capability as a global financial institution seamlessly with our digital transformation capabilities,” Matsunaga adds.

To do this, SMBC has successfully developed and introduced its embedded financial and digital solution in its customers’ operations by leveraging its Asia partners. The digital service connects multiple stakeholders in a value chain effortlessly, collecting and analysing data for better decision-making. Looking ahead, this data will also be the key to unlock advanced credit offerings from SMBC. 

To further present its commitment in contributing towards an advanced and inclusive digital future, SMBC is joining Singapore Fintech Festival 2023 as a platinum sponsor with the vision to deliver on its “SMBC X Tomorrow for Creating Social Value” tagline. This emphasises the bank’s resolute pursuit of achieving its mid-term management goal of creating social impact, economic value, as well as rebuilding corporate infrastructure.

See also: SFF 2023 spurs discussion on generative AI and the future of finance

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Image: Concept of SMBC’s embedded solution

Best-in-class offering 

Since early 2022, SMBC has been progressively launching its digital Supply Chain Finance (SCF) platform in Singapore and India. This best-in-class, direct-to-consumer platform is a key capability offered by SMBC to help its corporate customers better manage their financial priorities, aside from improving their operational efficiency and strengthening their supplier base. 

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Through a strategic partnership with Premium Technology, a US-based product development and information technology consulting firm, the end-to-end SCF platform provides real-time visibility, offering live straight-through processing of all supply finance transactions.

Hosted on a modernised cloud platform in partnership with Microsoft, the platform is scalable and enabled by application programming interfaces. This allows it to be integrated with third-party ecosystems such as Vayana Network, a provider to facilitate trade finance and of working capital, bringing greater access between customers and SMBC.  

“Customers have told us they appreciate the speed and efficiency the SCF platform provides. By significantly reducing the financing turnaround time, this allows them to focus on other important factors such as creating a more responsive supply and distribution base. Additionally, they expressed their satisfaction towards SMBC’s suite of holistic digital solutions, which include the analytics dashboard and customer process automation,” says Matsunaga.

The suite of value-added digital solutions helps key decision-makers manage their financial KPIs and enhance internal management systems among a wide variety of subsidiaries, banks and currencies, as well as dispersed internal systems. The data analytics dashboard includes KPIs such as cash conversion cycle and foreign exchange exposure, empowering their customers with access to data-driven insights, and providing them with the tools to optimise and enhance their financial outcomes.

Value of partnerships to build an ecosystem

As cutting-edge technologies such as artificial intelligence (AI) continue to advance and create new possibilities, SMBC is also exploring various emerging innovations that can be leveraged as digital tools for its stakeholders. 

As part of its multi-year digitalisation programme, SMBC has implemented an AI-enabled smart trade processing platform via a tie-up with fintech start-up TraydStream. This allows for automation of trade document processing using Optical Character Recognition and AI technologies, enabling experienced trade processing specialists to focus on key value-adding tasks.

With a built-in algorithm to constantly learn on the job, the AI-enabled digital tool has reduced the processing time of documents by more than 30% in key locations, thereby increasing the ability to manage high client volumes of trade finance transactions.

In the same vein to optimise efficiency, SMBC also collaborates with other fintech providers such as Serrala and Esker to develop AI-based process automation solutions of account receivable and payable reconciliation for corporate customers.

Partnership expansion

According to Masaki Adachi, vice president of SMBC’s Digital Strategy department, the bank’s partnership with fintech companies augments its customer engagement channel, increases the breadth of customer segments served, future-proofs its technology needs, as well as materialises its agile solutions development. “When facilitated meaningfully, targeted fintech expertise can holistically address customers’ digital needs and wants across SMBC Group,” Adachi adds.

SMBC has been working on various initiatives such as establishing new subsidiaries to provide non-financial digital solutions to customers. The firm also explores new business models in the cyber economics and digital assets domain, aside from running start-up incubation spaces and programmes.      

Earlier this year, SMBC launched the SMBC Asia Rising Fund, a US$200 million ($273.8 million) corporate venture capital fund, in partnership with Incubate Fund. The latter is a leading Japanese venture capital firm with a robust network in Asia, having invested more than JPY98.3 billion ($899 million) in over 450 start-ups.

With an investment period of 10 years, the fund targets promising start-ups in Southeast Asia that have the potential to contribute to SMBC Group’s business through collaborations in areas such as lending technology, payment, supply chain finance, banking-as-a-service and digital assets.

Adachi explains that the fund was launched as it is evident that the economic growth and government initiative on digital advances within the region are accelerating the fintech ecosystem. “Investments from the fund will capitalise the momentum in the market, to create new platforms for growth for SMBC Group, including the local financial institutions through our Asia Multi-Franchise Strategy and our customers,” he adds. 

SMBC’s Asia Multi-Franchise Strategy aims to open new growth opportunities over the medium to long term in Asia’s emerging markets. SMBC has been expanding its Asia businesses through investments and acquisitions of local financial institutions, aside from enhancing its existing businesses in the region.

This includes Indonesia’s Bank BTPN, India’s SMFG India Credit (formerly known as Fullerton India), the Philippines’ Rizal Commercial Banking Corp and Vietnam’s VPBank. Aligned to the newly-established fund’s goals, it will also pursue fintech start-ups with a potential to tie up with SMBC’s affiliated entities.

Thriving through strategic collaboration, SMBC remains committed to forming alliances as a key part of its innovation strategy. While once viewed as disruptive threats, fintechs have swiftly become the firm’s collaborators. SMBC is positioned to strengthen its presence in the Asian fintech market by partnering promising start-ups, addressing customer needs, tackling strategic challenges, and staying pertinent in an evolving world. Moreover, SMBC has expanded its partnerships to other major financial institutions, aiming to revolutionise banking and offer appealing propositions throughout the region.