RHB Bank: Facilitating the supply chain finance ecosystem holistically

By: The Digital Banker

As institutions transition to a post-pandemic operating environment, the economic headwinds and trade dislocation that occurred are likely to stubbornly persist. With a global recession in the offing, geo-political risks on the rise and a critical shortage of key commodities and resources on the horizon, market participants are bracing for further turbulence. Productivity strains are likely to challenge supply chains that are already under pressure as businesses seek alternative opportunities for enhanced efficiency and diversification.

More importantly, businesses are looking for stability and resiliency in their supply chain as processes and systems are being re-imagined to unlock new growth opportunities. Supply chain financing has demonstrated its efficacy in emerging as a critical source of liquidity as conventional funding mechanisms become increasingly untenable in a fast-rising interest rate environment. Malaysia-based RHB Bank has responded effectively to this evolving market dynamic with a view towards continually innovating and proactively designing solutions that address the operational and business challenges of the supply chain community. It’s the dedicated RHB Financial Supply Chain (FSC) solution that helps Bank clients in managing their respective chains in an efficient, effective and sustainable manner.

A fully integrated financial supply chain system fit for purpose

Indeed, the RHB FSC is a B2B platform that engages the buyer, supplier and the Bank, offering a range of diverse solutions that ultimately supports the Bank’s clients in terms of meeting key working capital objectives, managing cash flows and stabilising the supply chain. Importantly, both buyers and sellers are able to submit their financing drawdown through the RHB FSC platform contributing to the operational efficiencies of concerned businesses.

Remarkably, the Bank’s vision is to ensure that all stakeholders within the supply chain are able to realise the value creation the platform engenders. A case in point is the RHB Supplier Financing Program (SFP) that provides the requisite working capital to the buyer’s (anchor) suppliers by purchasing the supplier invoices that have been accepted and approved by the buyer digitally. In this instance, suppliers enjoy a seamless and simplified financing process at a competitive price that leverages on the buyer’s credit strength.

This is in line with international best practice similar to a Thai based lender’s settlement platform, which is designed to improve supply chain liquidity allowing businesses to make and receive payments instantly without waiting for credit terms. These initiatives will help strengthen the supply chain, while reducing funding costs and provide invoice visibility.

Another component of the RHB FSC solution is the RHB Receivables Financing Program (RFP) that helps the client in achieving lowered “Days

Sales Outstanding”, improved working capital liquidity, reduced risk of offload payment delays and a higher targeted sales volume. Likewise, the RHB Distributor Financing Program (DFP) also differentiates itself by enabling the client’s distributors access favourable financing courtesy of the client’s financial standing. The DFP program is credited with materially enhancing the client’s working capital cycle and sales turnover.

Strong digital experience that delivers on convenience for all stakeholders

A key competitive advantage of the RHB FSC platform is the visibility of transactions that it provides users accessing the system. Given how the FSC has a comprehensive view of the client’s entire supply chain ranging from invoicing to settlement, the secured platform provides added safeguards and risk mitigation needed to facilitate third-party management with appropriate oversight and controls before financing is disbursed.

Moreover, RHB Bank through the FSC is focused on ensuring that existing gaps in administration of digital supply chain finance solutions are meaningfully addressed as partners within the ecosystem can safely conduct transactions while avoiding lengthy visits to the branch and delivery costs of physical documents. Indeed, the RHB FSC has enhanced the Bank’s existing digital footprint while also contributing to the wider de-risking agenda.

Likewise, a UAE based transaction bank has introduced a supply chain solution that among its features includes a dashboard and reporting tools that include dynamic cash forecasting. Since its launch revenues from the receivable financing portfolio have grown 2x on a YoY basis with improved customer onboarding. Indeed, having a fully integrated and intelligent solution has become imperative to support all participants across the supply chain.

Expanding the supply chain community RHB Bank remains committed to collaborating and partnering with stakeholders across the supply chain ecosystem reinforcing its “Together We Progress” initiative. The Bank has effectively demonstrated its ability to provide clients and suppliers/distributors with an easy to use and convenient digital platform. More importantly, RHB Bank is well positioned as a principal player in facilitating trade and supply chain finance flows through the RHB FSC platform in Malaysia and beyond.

Certainly, as RHB Bank continues to enhance and deepen its RHB FSC solution set, it remains well placed to ensure continued resiliency and stability of the supply chain. Validating its institutional achievements over the past year, The Digital Banker awarded RHB for a Highly Acclaimed “Outstanding Supply Chain Finance Solution” recognition at the recently concluded Global Transaction Banking Innovation Awards 2022 program.