11 Fearless Predictions impacting Business Finance for 2016

Crystalball

2015 was the year that many in the business world came to realize that the way companies have worked with their supplier ecosystem and dealer and distributor (customer) networks changed, brought on by everything from digitization to cloud solutions to new ways to tap into working capital and new alternative forms of B2B finance.

As usual, with the dizzying amount of change going on, the hype and confusion promoted by the media, analysts, consultants and others, reality can be distorted.

So what kind of year will 2016 be?  Before I give you a few crystal ball tid bits, bear in mind this caveat – at the start of 2015, no so called “experts” were forecasting $35 oil.

So here goes 11:

  1. Near-zero rates have created unicorns as investors chased yield. Rising rates will make it much more challenging to create unicorns as quickly in the B2B Fintech space.   Expect a unicorn (or two) to blow and go from a $1 billion valuation to the dog pound in 2016.
  2. Liquidity will be a major issue in 2016, following new SEC Money Market fund rules and recent redemption issues around corporate junk bond funds.  This will have implications on investing in supply chains.
  3. A lot of hype will continue to be built on the promises that the blockchain will do everything and valuations are reflecting that, but reality sets in later in 2016 as the challenges of making something commercial hit home.
  4. Supply Chain Finance will become the new Plastics! No not really, as future credit downgrades will impact supply chain finance programs.
  5. Regulation of Marketplace lenders will become a bigger issue in 2016 as the Feds try and control usury pricing practices and make it harder for marketplace lenders to tap Utah-based banks (there is no usury law in Utah that caps interest rates on loans).
  6. P2P Vendors will move to Subscription Free Models to try and gainshare transactional finance through the values running through their network.  Of course this already has been tried with the likes of Crossflow, attempting to give their EDI platform away for free and offer finance with private funds. So perhaps this one already has proven itself a non starter.
  7. The days of real time business to business cross border payments move closer, as SWIFT moves to react to Ripple, Cloud Currency and others to improve how B2B move money across borders. The big change is not technology, but getting banks to agree on Service level agreements and business practices.
  8. Many more unique middle market lending solutions will evolve with non bank private equity money at the core.
  9. Predictive data analytics around non approved invoices will start seeing traction – people like Infor (old GT Nexus), Nipendo, perhaps Basware and Arrowgrass? and a few others that do this well will start to see more growth.
  10. More innovative cross border receivable lending solutions develop by both bank-owned asset-based lenders and other lenders who adapt their credit policies to the fact that more and more companies have offshore receivables.  This has always been a challenge, given it is much easier to do due diligence and provide lenders with a level of comfort in your local market.
  11. 2016 may be the year we actually start to see robotics challenge the low-wage model while 3D printing could bring a shift to customized products, made locally. 3D Printing, which has potential to change how supply chains function, may actually start to have a minor impact on local versus offshore production, and some innovators will look to tie in finance

Disagree or agree with the above?  Happy to have a chat, feel free to reach out to me dgustin at tradefinancingmatters.com

p.s. Early wishes for a Happy New Year.  After going through an Earthquake last night off the coast of Victoria BC, I realize just being alive is a precious thing.  Peace!

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First Voice

  1. Magnus Lind:

    Earthquake, oh boy David. Hope all is fine and continue keeping fine for you and family. A wake-up call now and again is keeping perspectives right.

    This is a very good list, David. You even got 3D printing, which shouldn’t be underestimated. I certainly agree that much more of corporate cash will be used for supply chain finance. It’s not only MMF rules driving that trend, realization are growing that banks are too interlinked with over-indebted, risky and vulnerable governments. Paying suppliers early is risk free….

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