Bond issuance is ballooning
Companies racing to raise money in the pandemic by issuing bonds also have to deal with glacial-paced, outdated processes to issue their bonds.
These firms deserve better. Technology has the answer.
Companies raising money during the pandemic have seen corporate bond issuance explode to over $6 trillion in June 2020, according to Bloomberg. That’s an unprecedented uptick on normal conditions and a sobering, objective measure of the impact of COVID-19 on business funding.
But the process of issuing bonds is unbelievably slow and largely manual.
But the process of issuing bonds is unbelievably slow and largely manual, it takes an average 30 stages with human intervention at each point and including physical paperwork and contact between multiple parties and intermediaries.
The fact that so many of these processes are not automated and still paper based is archaic and inefficient in normal market conditions.
During lockdown it looks positively stone age. And then there is the risk of data leakage and security which are horribly compromised by existing processes.
Two years ago, I visited Credit Suisse’s office on Madison Avenue where they told me that they send 20 to 30,000 faxes a day to carry out activities that could be very easily automated and digitised by MonetaGo: a scary thought from a data security perspective.
It seems odd that in a world where we are used to securely accessing our personal finances at the click of a button, that the same cannot be true for business finance as well.
This is a massive, liquid market. It needs modernising. Add to that the fact that volumes have ballooned as crisis hit firms work to raise working capital. That process should be entirely digitised and speeded up.
There is no question that technology is the key here. MonetaGo is working to digitise the entire process, allowing businesses to greatly reduce their time to market and their banks to provide a vastly improved service to their corporate customers.
Financial fraud and paper-based manual document workflow inefficiencies are persistent challenges faced by businesses across the globe – and it’s worse when normal ways of working are disrupted.
Any process which can be enhanced by digitisation should be. Board members have a duty to their shareholders and their organisations to explore and apply ways to do things better, faster and more securely. That applies even more so in challenging conditions where people are physically distanced.
