Geopolitical risk and efforts to reshape supply chains are driving demand for supply chain finance from banks, a dramatic turnaround over the last year, according to an industry survey by FIS. 

FIS Supply Chain Finance, formerly Demica, said in its annual industry benchmarking report that 60% of bank respondents expected geopolitical risk to have a positive impact on asset growth over the next year, compared to just 23% in 2025. 

Last year, geopolitical risk actually had a positive impact on asset growth for nearly half of respondents, said FIS, which surveyed around 100 supply chain finance professionals from 28 countries. Around a fifth said they were negatively impacted, and the same proportion expected that to continue for another year. 

FIS said the findings suggest that “supply chain reconfiguration, trade fragmentation and ongoing price inflation are increasing working capital requirements, translating macro uncertainty into higher demand for bank funded receivables and payables solutions”. 

Last year, geopolitical risk actually had a positive impact on asset growth for nearly half of respondents, said FIS, which surveyed around 100 supply chain finance professionals from 28 countries. Around a fifth said they were negatively impacted, and the same proportion expected that to continue for another year. 

FIS said the findings suggest that “supply chain reconfiguration, trade fragmentation and ongoing price inflation are increasing working capital requirements, translating macro uncertainty into higher demand for bank funded receivables and payables solutions”. 

“In this context, geopolitics is increasingly interpreted not as a tail risk, but as a persistent source of balance sheet opportunity,” it said. 

Singapore-based Jon Hodges, head of capital markets for FIS in the Asia-Pacific region, said this shift has been driven in part by buyers diversifying their sources of supply, resulting in supply chains becoming more regional. 

“For example, we’ve seen an expansion away from just China into some of the surrounding countries, like Vietnam and Malaysia,” he said.  

“There are also probably more people in the chain now for many companies. That’s meant companies are carrying more inventory, or that the cash cycle is longer, so the demand for working capital has increased even if the geopolitical situation is not necessarily positive for the economy at large.” 

As a result, supply chain finance “is becoming more strategic” as a tool for improving companies’ resilience and flexibility, Hodges added. 

He gave the example of a supplier that is now using Vietnam as well as China for production lines: “They have to fund raw materials, labour costs and so on before the payment comes in, while the end customers still expect pretty competitive terms.”  

“What we’re seeing is receivables financing can allow them to bridge that gap and support liquidity,” he said. 

US-based Steve Sabin, senior vice-president of lending at FIS, noted that in last year’s survey, more than 60% of respondents expected interest rates to boost asset growth. This year, however, that figure has fallen to just 20% as banks brace for a “higher-for-longer” environment.