There are few areas of modern life which have not seen radical change over the past two decades. The way we shop and communicate, the way we do our jobs, what we eat, and where and how we travel continue to change inexorably. The way that both individuals and businesses consume banking services is no different. Across areas such as cash management, FX and lending, there has been significant innovation in recent years, with opportunities such as mobile payments and wallets and FX trading platforms facilitating new business models and prompting changes in user expectations. However, trade finance remains a key area where developments have been modest in comparison, despite its importance in facilitating international trade. Recently, the sleeping giant seems to have stirred, however, albeit slightly, with a notable number of press releases about proof of concept projects to digitise trade finance, frequently based on distributed ledger technology (DLT), often known as blockchain. Could we now be starting to see the start of a transformation in trade finance?
Innovation imperative in trade finance
Trade finance is often described as an area ripe for change, and Daniel Schmand, Managing Director and Head of Trade Finance and Cash Management, Corporates, EMEA, Deutsche Bank, and Chair of the ICC Banking Commission emphasises,