At TradeRocket, we remain as bullish about the future as we have since our inception in 2013. And as we prepare to look ahead with great anticipation to the new year, it’s worth thinking about some of the themes that are sure to shape our industry in 2017. Below are just a few worth considering:
Federal Interest Rate Increases
The Federal Reserve raised its benchmark interest rate this past Wednesday, which was widely expected. As we wrote about nearly a year ago after the last increase, it’s hard to tell what impact this will have on the middle market, or supply chain finance in general. That said, speculation is rampant on the impact it will have on many sectors of the economy, including home mortgages and the costs of U.S. exports abroad. Time will tell how many additional rate hikes may be in store for 2017, and how they may shape the near-term economic outlook.
The CFO’s Role is Rapidly Changing
As we’ve covered multiple times in our Twitter feed, it’s clear the role of the CFO as chief bean counter has become outdated. Today’s modern CFO is a true partner to the CEO, and has to balance a challenging range of responsibilities including technology, operational efficiency, team building, along with obviously the traditional financial leadership that has always accompanied the role. We are acutely aware of these changes, which drives much of our thinking in developing our platform to be the working capital marketplace of the future.
The Working Capital Needs of the Mid-Market and SMBs Are Being Heard
While awareness of a problem is never a guarantee of its solution, it’s at least a good place to start. And 2016 certainly sounded the alarm bells for SMBs needing more working capital, and being under-represented in trade finance deals overall. Late this year, the International Chamber of Commerce put some data behind these assertions, including a report that SMBs accounted for nearly 60% of all trade finance rejections. Other global issues were identified in this report, including major trade finance shortages in Africa, in particular. In the U.S., clearly there is a need to get more working capital in the hands of companies whose revenues fall between $50MM and $1B annually, a segment that we think about every day as we continue enhancing our platform.
Blockchain Looms as a Potential Game-Changer
While you could argue there’s still a great deal of hype surrounding blockchain, you also can’t argue there’s also a lot of promise there as well, particularly for supply chain finance at a global level. When companies like IBM are saying blockchain is poised to revolutionize business the way the Internet did, it’s time to stand-up and take notice. Trade finance has also been singled out as an application for blockchain by the likes of PwC, who see projects there moving from prototype to pilot. In the coming year we’ll be watching for evidence of blockchain moving past the promise phase, and how it can be leveraged in a successful working capital marketplace.