While many aspects of trade finance have remained unchanged for centuries, at the start of a new decade a variety of drivers are offering the tantalising possibility of redefining the sector. Eleanor Hill, Editor, recently caught up with Jean-François Denis, Global Head of Trade Solutions and Network Management at BNP Paribas, to explore the changes on the horizon and how they might benefit corporate treasurers.
Eleanor Hill (EH): What do you believe will be the key trends impacting trade finance in 2020?
Jean-François Denis (JFD): In my view, there are four key trends that will impact the sector – they might not be revolutionary, but they are extremely important to pay attention to. The first is the geopolitical environment. As a result of international trade tensions, we are already seeing shifts in terms of trade routes and risks. As a result, corporates are looking for risk mitigation instruments to ensure that their international trading activity remains secure.
A second, ongoing, trend is corporate centralisation. While this is a long-standing treasury trend from a cash management perspective, it is now filtering into the trade world. Some large corporates are already centralised and use a bidding platform for guarantees, for example. And an increasing number of our clients are equipping themselves to have better visibility and control over their trade activities, using technology.
Trend three, which is linked to the previous one, is the search to implement greater connectivity between corporates, banks and other stakeholders in the trade ecosystem. One of the main ways we are seeing this happen is through the use of SWIFTnet for Corporates for transmission of trade guarantees. We expect to see greater uptake in 2020 and beyond.