Banks Flock To Trade Finance FinTechs

The Asian Development Bank’s striking statistic — a $1.5 trillion gap in global trade finance — continues to be used as a driver of FinTech innovation as technology startups look for ways to address friction in global trade financing. That could mean digitizing documents, integrating data across business partners, or accelerating the movement of funds across borders.

The latest analysis from the ADB — its Trade Finance Gap, Growth, and Job Survey — reveals the continuing frustrations small businesses experience as a result of a lack of access to trade finance.

“Given the uncertain economic outlook, it is critical that more efficient, stable and sustainable trade finance channels are created to spur global growth and development,” the ADB’s Trade and Supply Chain Finance head Steven Beck said in a statement.

Traditional banks are increasingly interested in how to open up those trade finance channels, too, making this market among the most common target for bank-FinTech collaborations.

Standard Chartered And Traydstream

Standard Chartered is the latest bank to embrace FinTech collaboration to tackle the trade finance gap, having announced Tuesday (Sept. 3) a partnership with Traydstream. Together, the companies are targeting the particular trade finance pain point of paper documentation.

“After exploring various technology providers, we selected Traydstream based on their platform capabilities,” explained Standard Chartered’s Global Head of Documentary Trade Product Management Samuel Mathew in a statement. “The Traydstream offering fits well within our emerging markets footprint, which generates a significant amount of trade document flows. Our goal is to help our export clients expedite their receivables and export proceeds, and as a result, improve their working capital cycles.”

Traydstream will connect its document matching services to business clients of Standard Chartered, the companies said, with the first rollout coming to the Singapore market. Its solution automates trade document management and processing to promote compliance and mitigate any discrepancies across buyers, suppliers and other partners in global supply chains.

ADCB And dltledgers

Also Tuesday, United Arab Emirates-based Abu Dhabi Commercial Bank (ADCB) announced a collaboration with blockchain FinTech dltledgers, based in Singapore. The bank is piloting dltledger’s blockchain platform to facilitate trade finance transactions across borders for its corporate customers, having completed a trade for Western Red Spring Canadian Wheat from Canada to Bangladesh. The dltledgers platform enables full document automation and trade financing, signaling the bank’s focus on both data and finance in global trade.

“By joining the fastest growing dltledgers blockchain platform for cross-border trade,” said ADCB group head of Trade Finance Krishnakumar Duraiswamy in a statement, “the bank is able to reimagine trade finance for its customers. This private network allows ADCB to service corporate customers in real time, increasing transparency and building cross-border interconnectivity.”

The completed trade finance transaction also involved other partners in the supply chain including banks and logistics providers, with Islami Bank in Bangladesh, Richardson International Shipping Canada and SGS Surveyor among the participants.

Saudi British Bank and Demica 

Saudi British Bank (SABB) revealed last week a partnership with Demica, integrating the FinTech’s working capital solutions to launch SABB’s Supply Chain Finance platform. As the third-largest bank in Saudi Arabia, SABB focused on Demica’s Supplier Onboarding Tool, which automates KYC data collection, to accelerate access to supply chain finance for corporate customers.

In a statement, SABB Managing Director David Dew said the partnership “puts SABB at the cutting edge of trade innovation, giving our clients all the far-reaching advantages of transaction-speed and security that flow from … Demica’s Supply Chain Finance solutions.”

HSBC and we.trade

ADCB isn’t the only bank to have recently announced a blockchain collaboration for trade finance: last week HSBC in the U.K. said it became the first bank to have completed a trade finance transaction on the we.trade blockchain platform. We.trade’s solution targets smaller businesses and the friction of connecting to other partners in the supply chain: vendors can request trade finance via early payment discounts and other products from their banks.

HSBC revealed that client Beeswift and one of its Dutch corporate customers completed a trade finance transaction within a day using we.trade, with HSBC pointing to the platform’s ability to provide a “transparent and more intuitive” experience for trading partners.