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  5. Breaking the Logjam: Trade Finance Technology Announcements at Sibos 2023

Breaking the Logjam: Trade Finance Technology Announcements at Sibos 2023

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5 October 2023
Patricia Hines

Trade Finance was once again a hot topic at this year's Sibos conference in Toronto, organized by Swift. The trade ecosystem has been working towards improving efficiency, reducing risk, lowering costs, and streamlining processes, but significant barriers remain. After attending sessions, talking to bankers, and listening to solution providers at Sibos, it feels like the logjam is beginning to loosen. For example, four leading global banks announced initiatives to increase automation, advance trade digitization, extend trade finance access, and replace trade transactions with tokenized smart contracts.

Bank of America has launched CashPro Supply Chain Solutions, a platform designed to digitize trade finance and offer participants in a supply chain improved process efficiency and working capital optimization. The first module of the platform, Open Account Automation, addresses invoice approval and payment, and speeds up the time to approve an invoice from days or weeks to a matter of minutes. The module collates data that exists within the supply chain ecosystem, providing greater visibility, speed, and automation, allowing quicker decision making. The platform will allow suppliers to select invoices for early payment.

Standard Chartered Americas has partnered with Truist Bank to create a seamless and efficient business environment for importers and exporters in the US. Truist's corporate and commercial clients will benefit from Standard Chartered's ability to fulfil their trade finance needs in emerging markets in Asia, Africa, and the Middle East. Truist will gain access to Standard Chartered's footprint and ability to monitor transactions in real-time for the entire value chain of documentary trade. In markets where Standard Chartered has a presence, Truist clients that want to purchase or sell goods and services will be able to confirm, advise, or discount letters of credit through the bank.

HSBC has launched a digital platform that revolutionizes trade finance. The platform, called HSBC Evolve Trade, is an end-to-end digital solution that streamlines the trade finance process for businesses of all sizes. Developed in partnership with CGI, the platform provides a seamless and secure platform for businesses to manage their trade finance transactions, from issuing and confirming letters of credit to managing trade loans and financing. HSBC Evolve Trade is designed to be easy to use and accessible to businesses of all sizes, providing them with the tools they need to manage their trade finance operations more efficiently and effectively.

Citi Treasury and Trade Solutions (TTS) has launched Citi Token Services, which uses blockchain and smart contract technologies to provide digital asset solutions for institutional clients. The service will integrate tokenized deposits and smart contracts into Citi's global network, upgrading core cash management and trade finance capabilities. Citi Token Services will provide cross-border payments, liquidity, and automated trade finance solutions on a 24/7 basis. Citi worked with Maersk and a canal authority to digitize a solution that serves the same purpose as bank guarantees and letters of credit in the trade finance ecosystem.

These Sibos announcements demonstrate how technology advancements can significantly benefit trade finance, but technology alone isn't enough. To truly transform the industry, the trade ecosystem must also address critical issues around regulation and interoperability. The regulatory environment also took a step forward during Sibos week, with the UK Electronic Trade Documents Act (ETDA) coming into force on September 20th. The Act makes it possible to create electronic bills of exchange, transform existing bills of exchange from paper to electronic, and replicate the legal structure underlying trade documents within an electronic system. The UK bill is especially significant, as English contract law underpins much of international trade. Next up is interoperability and standards for trade finance, as the ecosystem looks to expand beyond closed consortia and proprietary formats to enable global collaboration.