The International Chamber of Commerce (ICC) published its 2018 global trade report this week and, according to the research, global financial institutions (FIs) still have a significant way to digitization in their trade finance operations.
As covered by Global Trade Magazine in reports in Monday (June 11), the ICC’s 2018 “Global Trade: Securing Future Growth” report included a survey of 251 global banks — 8 percent of those respondents provide 90 percent of the world’s trade finance value. According to the ICC, more than 60 percent of banks are indeed progressing in their digitization efforts, yet only 9 percent said efficiency has improved as a result of technology adoption. Only 12 percent said they have successfully adopted and implemented technology to enhance their trade finance processes.
The ICC described these findings as a “reality check” as nearly a third of the banks surveyed noted they are two years away from implementing trade finance technologies — 7 percent admitted digitization is not in their plans whatsoever. Though nearly two-thirds of banks said they have taken measures to reduce reliance on physical paper in the issuance/advising and settlement/financing processes in their trade operations, more than half said paper hasn’t been removed in their document verification process.
According to Global Trade Magazine, ICC Secretary General John W.H. Denton AO said, “Digitization in the trade finance sector will boost economic growth and sustainable development. Digitalization will make trade more inclusive. The ICC Global Survey gives us invaluable insight into the practical experiences and real challenges of business as we seek to take advantage of game-changing technologies and advance these broader shared goals.”
Traditional trade finance remains the clear priority for banks this year when it comes to their trade finance operations, while 42 percent also pointed to supply chain finance as a focus for this year. That will shift, however, as in the coming three to five years, banks said they plan to focus more on the attraction of non-bank capital to augment trade financing, focus on emerging technologies like blockchain, and adjust their geographic coverage of trade financing products and services.