by Dr Greg Cline
While much attention has been placed on the disruption caused by FinTech on banking and insurance, the import sector is also feeling its impact.
Technology is evolving at a significant rate with boardroom discussions about the likes of artificial intelligence, predictive analytics, and blockchain becoming commonplace. Companies can leverage their increased access to data to draw more effective insights around trends, customer requirements, and the competitive environment.
For importers that rely heavily on efficient supply chains and performance monitoring (supplier lead times, sailings, customs stops etc), this analysis can prove to be crucial.
Importers are constantly exposed to currency risks because of changes in interest and inflation rates. Combining fresh insights, a better understanding of costs and the option of alternative funding that can release working capital that would normally be tied up in the import transaction, will be a game-changer for the industry.
This is not to say that ‘traditional’ offerings from banking institutions will become unnecessary. In fact, it’s just the opposite as it has shown us that companies need to examine viable ways in which they can quickly access lines of funding, which requires bespoke and collaborative services – something that the banking industry is actively exploring.
Uncertainty around global and local economic conditions, coupled with the upcoming South African elections next year, contribute to a volatile environment that is pressurising importers to do more with less.
Import businesses are waking up to new ways of looking at their funding. Thanks to the agility shown by FinTechs as well as the knock-on effects caused by innovative approaches that encompass blockchain and others, importers are realising there are different ways to not only access working capital but to understand cost implications better and model scenarios to save costs and create better working cash flow cycles.
Funding imports in the connected environment can be enhanced by solutions that give decision-makers access to capital and insights to help grow the business. As can be seen in other sectors, capital is a key instrument to unlocking growth opportunities and creating new ways to innovate in business.
And when the economy is restrained as it is now, every bit of advantage can help.
Importers can more easily compare pricing and availability of goods thanks to solutions that simplify this online process. It also means that when prices are right (whether through currency fluctuations or special discounts offered), the importer must have the working capital to make purchases instead of trying to go through a lengthy process of accessing it.
What’s more, bringing the physical and financial supply chains together provides a holistic view of costs, lead times, risk and most importantly where cost benefits will be realised.
This can especially be beneficial to smaller organisations that would not ordinarily be able to access additional funding required and needs to ensure that they have the optimum supply chain in place.
In fact, if FinTechs have shown us anything, then it is the benefits that digital transformation can provide an importer. This aids not only with reducing costs and optimising processes but can result in the creation of alternative solutions that combine data analysis with the freedom to be more innovative thanks to readily available funds.
Building on access to working capital, saving through container load consolidation, supplier performance levels and newer payment methods such as those offered through blockchain technology also make the import sector accessible to a range of organisations, irrespective of size.
The payment offerings of incumbents can be greatly enhanced by the likes of blockchain that not only cut out the middle-man, but provides real-time transactional power mitigating the challenges of fluctuating currencies, forward-buying, and the like. It is about empowering importers with the capabilities to move as quickly as they want without being encumbered by slower systems or traditional ways of thinking.
For importers to be successful, the barriers to global trade need to be removed. Whether that takes the form of accessibility of funds, data analysis on product availability and pricing, and improving international payments, FinTechs are showing the way for a change.
There needs to be a willingness to embrace these and other alternatives. Once the decision has been made at board level, the importer can become more effective and competitive against others in the local market.
- Dr Greg Cline is head of corporate accounts at Investec Import Solutions