Innovative Trade Financing

The financial sector has seen many innovations over the years. There’s no denying that in the grand scheme of things, trade finance has influenced economic conditions, public policy, living standards, and the degree of financial inclusion of citizens for centuries. Trade finance has always been about global risk mitigation and funding availability for global transactions and vice versa. It is influenced by geopolitical events, compliance, and regulations. The purpose of trade finance by banks is to create financial instruments and products for organisations for facilitating international trade and commerce to eliminate the risk involved in payment and supply between the parties involved.

Trade finance offered by banks is still costly and time-consuming for banks and therefore represents a luxury or a necessary evil for bank customers. In spite of growing international trade figures, traditional trade finance volumes remain stagnant while open account trade arrangements and supply chain financing have grown strongly in the last years. Nevertheless, recent innovations and developments in technology may change this trend and significantly revive and modernise the trade finance business.