Innovation in Trade Finance
With the fallout from the global pandemic, geopolitical tensions, and soaring inflation and interest rates, the international trade and SCF ecosystem has faced a torrid few years. The good news is that certain new technologies and innovations from fintechs and banks, combined with legal progress, promise more efficient and cost-effective trade finance for corporates and their suppliers.
The Covid-19 pandemic caused enormous disruption to global supply chains as lockdowns and port closures rolled around the globe. Since then, there has also been an increasing impact on specific industries, particularly those that are technology-related, of nearshoring and ‘friendshoring’, with companies reformatting their supply chains to reflect macroeconomic pressures.
Dominic Broom, Senior Vice President, Working Capital Technology, Arqit, comments: “The mantra of 10 years ago for corporates to go and seek their goods from across as broad a supply chain as possible at the lowest possible cost has well and truly come to an end. The twin effect of political instability across certain trade corridors coupled with Covid has brought about a rethinking of supply chains, focusing on ensuring they are resilient.”
That resiliency extends into corporates making sure that they are working with trusted counterparties, instead of those providing materials at the lowest cost.