Singapore – To enhance lending practices and improve transparency in commodity trade, DBS and Standard Chartered jointly led a workgroup of 12 other banks to create and conduct a digital Trade Finance Registry (TFR) POC.
Supported by Enterprise Singapore (ESG) and endorsed by The Association Banks of Singapore (ABS), the TFR POC aims to be an industry utility by serving as a secure central database for the banking industry to access records of trade transactions financed across banks in Singapore. This mitigates against duplicate financing from different bank lenders for the same trade inventory, leading to greater trust and confidence among banks and traders alike.
Mr Sriram Muthukrishnan, Global Head of Trade Product Management, DBS Bank, said that the successful development of the POC within a few short months exemplifies the immense potential of an industry coming together to co-create solutions that enhances the transparency and security of lending practices, and mitigates against the risk of trade fraud. “Building greater resilience in the industry ecosystem is even more important today as businesses and economies continue to deal with the impact of prolonged trade disruptions. The Trade Finance Registry marks an important step towards fostering greater transparency through collaboration and strengthening lending practices in Singapore’s banking sector while ensuring a secure operating environment for the industry as we progress towards an increasingly digital trade future.”
Mr Sam Mathew, Global Head, Documentary Trade, Standard Chartered, said, “Driving sustainable trade finance growth and managing risks are core to our strategy. We are pleased to have co-led on this industry-first initiative with our industry peers and dltledgers, and together create a working proof of concept trade registry that can enable trade banks in detecting potential duplicate financing of the same cargoes. Having delivered this in record time from concept to testing, it is testament to the true collaboration between all parties and we hope to further develop the registry alongside ABS.”
Developed on a blockchain network supported by technology provider dltledgers, DBS and Standard Chartered scoped and developed the POC in the span of three months, with the support of 12 other banks. The participating banks were ABN AMRO, ANZ, CIMB, Deutsche Bank, ICICI, Lloyds, Maybank, Natixis, OCBC, Rabobank, SMBC and UOB.
Mr Satvinder Singh, Assistant Chief Executive Officer, Enterprise Singapore, said, “By working with dltledgers, a local company specialising in blockchain technology, the industry workgroup was able to accelerate the development of a neutral and secure platform to ease the flow of information between banks and prevent duplicate financing. The collaboration will strengthen banks’ risk management capabilities and enhance confidence in the finance and trade sectors. We welcome more industry participants to be part of this collaborative effort in developing innovative solutions for the industry to reaffirm Singapore’s status as a trade and finance hub.”
In today’s context, banks are able to conduct such validations only within a single customer entity or across their individual banking network, with no view of what other banks have financed or undertaken payment obligation against. This information asymmetry is a key gap that can only be addressed with a TFR that facilitates collaboration across industry players and government agencies.
Ms Ho Hern Shin, Assistant Managing Director (Banking and Insurance), Monetary Authority of Singapore, said, “A digital trade registry strengthens trade financing banks’ ability to avoid duplicate financing, and facilitates more sustained credit flow in trade financing. MAS is glad to see the banking industry coming together, collaborating with government agencies and technology partners, on this important initiative.”
Following the completion of the POC, DBS and Standard Chartered will work with ABS to implement the TFR as an industry utility to enhance trade financing practices within Singapore, before expanding it globally to cover major trade corridors at a later stage.
Going forward, ABS will manage the TFR, supported by a Standing Committee represented by the ABS Council member banks. Three Working Groups of banks will be set up to jointly lead the governance, technical development and business scope of the project. ABS will be inviting all banks to join the TFR as members.
Mrs Ong-Ang Ai Boon, Director, The Association of Banks in Singapore, said, “This will be the first digital Trade Finance Registry set up by ABS in Singapore. Having successfully established its associate company Credit Bureau Singapore in 2002, we welcome the opportunity to set up this industry utility to enhance the risk assessment and management capability of trade financing banks.”
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“CIMB has a strong foothold within ASEAN, servicing some of the largest corporates and value chains in the region. We subscribe to partnership and collaboration models with peers, ecosystems and regulators, in managing and mitigating the fraud risks in trade financing markets in Singapore and the region.”
|Commerzbank||“This collaborative initiative between banks enables us to reduce risk in terms of double invoicing and allows Commerzbank to continue financing the supply chains of its corporate clients. Given our DNA in trade finance and with Singapore being a key trade finance location, we view this as a positive step in helping to bring transparency to commodity trade and shorten financing lead time.”|
“At dltledgers we are indeed happy that our TradeDoc validation registry developed on a blockchain network sponsored by ESG is put to its best platform outcome, in support of real time fraud detection across the collaborative banking community and ABS. We will continue to innovate in our deeptech and deliver further innovation, so that liquidity is maintained and Trade finance can result in zero tolerance of fraudsters in the eco system. Collaboration is our key value prop and dltledgers blockchain technology platform is driving this across the banking networks and in support of apex banks we operate in.”
Ed Aldorino, Managing Director, Head of Global Transaction Banking, Asia
“Lloyds Bank is pleased to be part of this industry-wide initiative aimed at reducing risk in trade business. Trade will be instrumental to economic recovery in a post-COVID era, and this registry will help reduce risk and strengthen the financial ecosystem going forward. We look forward to continue this journey with further development of the registry”
Gregory Seow, Head of Global Banking Singapore and Global Head of Financial Institutions Group
“As a regional bank active in trade financing, Maybank is pleased to be part of this industry initiative, Trade Finance Registry, in support of Singapore’s Smart Nation vision. With the leverage of fintech, we view this as a positive step in helping to bring transparency to commodity trade and shorten financing lead time which will enhance Singapore’s unique standing as a key commodity trade finance hub.”
M. Pin Chua, Senior Country Manager of Natixis Singapore Branch
“Natixis is proud to take part in the industry workgroup aiming at reinforcing risk management through a Blockchain solution. We are looking forward to seeing greater geographic coverage and further development of the solution.”
Ng Chuey Peng, Head, Managing Director and Head of Global Commodities Finance
“Blockchain is an innovation that is especially relevant for commodities financing but its potential is maximised only when the industry can come together on one blockchain network. With the success of the POC and the launch of this pilot, we are moving in the right direction. We will continue to help drive this process which includes taking the lead on the legal aspects of the Trade Finance Registry.”
So Lay Hua, Head of Group Transaction Banking, Group Wholesale Banking
“UOB is pleased to be a key contributor to the industry effort to help mitigate risks in the trade financing. The new Trade Finance Registry, tapping on blockchain technology, provides an opportunity for all lenders to work together and to overcome the industry issue of fraud and duplicate financing more effectively. UOB firmly believes that the concerted and collective effort taken by Singapore’s banking industry will improve transparency, reduce risk and strengthen Singapore’s reputation as a leading trade and finance hub.”