Embracing Digital Networks will Improve Global Access to Trade Finance

Published 

Fineon Exchange has published the findings from its new global trade finance survey. The report reveals that digital networks can deliver benefits for all trade finance stakeholders and facilitate access to working capital financing, particularly for underserved small- and medium-sized enterprises. Of the industry participants surveyed, 100% believe that digital networks would improve current trade finance transaction processes.

The paper, “Trade Finance Optimisation: Connecting the Right People at the Right Time”, explores the key challenges experienced in executing successful trade finance deals and discusses the findings from Fineon’s survey of trade finance brokers – including the disparities in the accessibility of trade finance for SMEs, when compared with larger, multinational companies.

Notably, 50% of respondents stated that SMEs struggle to access trade finance because there is a shortage of well-structured deals in the market, yet 50% feel the reason is a shortage of funders to support good deals. This indicates that both funder appetite and quality deals do exist in the market. The issues SMEs face in securing funding could therefore instead be due to a lack of channels where compatible borrowers and funders can connect effectively.

Dominic Broom, CEO, Fineon Exchange, says: “Our survey suggests that access to trade finance could be significantly improved if the right counterparties are able to find each other. This problem can be addressed through cutting-edge digital networking platforms, which can use artificial intelligence to identify and connect borrowers and funders with those that match their borrowing or lending criteria.”

All of the survey participants acknowledged that a digital network connecting importers and exporters with corporates, funders and insurers could deliver significant benefits. Some of the benefits identified include: increased visibility of underling trade flows, improved access to funders willing to finance deals, and access to funders that have the appetite to do business in different regions – thereby reducing inefficiencies and ensuring a higher chance of successful transaction closure for all stakeholders.

Hussein Al Amine, Head of Business Development and Global Strategic Alliances, Fineon Exchange comments: “For trade finance brokers – the key participants in our survey – leveraging a digital matchmaking ecosystem means they can quickly assess the bankability of their clients’ transactions and access a wide and varied pool of investors from across the globe. We are essentially positioning our broker partners to digitise a major aspect of their business that will help them successfully source and carry out trade finance transactions for their clients more effectively and efficiently.”

By increasing access to finance, digital networks could be pivotal in helping to narrow the global trade finance gap, which represents the shortfall in funding for trade finance transactions and which affects SMEs in particular. Not only is the gap at a record level of US$1.7trillion, according to the

Asian Development Bank, the World Economic Forum (WEF) estimates it could reach US$2.5 trillion by 2025. Investing in robust, targeted solutions that address specific industry challenges and enhance trade finance processes are therefore particularly important for supporting those businesses whose growth and prospects are affected by the gap.