FinTechs Muscle Into Banks’ Trade Finance Turf

Trade finance is stuck in a paradox. The world has plenty of goods to trade, but financing them safely keeps getting harder. That gap is now FinTechs’ opening to challenge banks.

As tariffs shift faster, shipping routes become less reliable and supply chains reorganize around geopolitical risk, financing the movement of goods is becoming inseparable from managing the uncertainty surrounding those goods. At the same time, the boundary between commercial trade finance and industrial policy is becoming less distinct.

Export credit agencies, historically associated with guarantees supporting national exporters, are being asked to finance economic resilience, critical minerals, defense and strategic infrastructure. Deutsche Bank said in July that the export credit agency-supported export finance market reached a record $192.9 billion across 549 transactions in 2025, while agencies increasingly stretch their mandates beyond traditional export support.

That reality is forcing trade finance and its legacy letters of credit, guarantees and working capital facilities into a rapid 21st-century upgrade as the institutions behind global commerce’s financial mechanisms compete across the ability to continuously reprice risk, verify documentation, connect fragmented data and keep transactions financeable when the assumptions under which they were originally approved suddenly change.

See also: FinCEN Deletes Ownership Data but Banks Keep the Risk

Trade Risk Is Outpacing the Credit Committees of Legacy Institutions

Traditional commercial lending is designed largely around the company. A bank reviews financial statements, establishes a credit facility and revisits the decision periodically. Cross-border commerce today requires something different.

A shipment can spend months moving from purchase order to final payment. During that period, tariffs can change, customs requirements can tighten, buyers can renegotiate prices and shipping routes can become uneconomic. A facility approved using last year’s financials may therefore say little about the risk embedded in a particular shipment today.

This mismatch favors transaction-level underwriting, where lenders assess the buyer, supplier, product, route, payment terms, tariffs and recent payment behavior surrounding an individual shipment, according to a Monday (Aug. 10) report by the World Economic Forum. Instead of treating a company as either financeable or unfinanceable, banks can theoretically distinguish between its good trades and its bad ones. A disruption affecting one route does not necessarily have to reduce financing across the entire enterprise.

“There are really three things that are driving this need,” AJ McCray, managing director and head of Global Payments Product at Bank of America, told PYMNTS in July. “You’ve got consumer expectations, new business models and more sophisticated corporate treasurers.”

“Tracking is critical,” McCray added.

Trade finance, as a result, now starts behaving less like a static credit product and more like a real-time risk management system. That positions more agile providers, such as FinTechs, at the potential forefront of the cross-border marketplace.

Findings in “The Cross-Border Opportunity: What Global Sourcing by US SMBs Means for Payment Providers,” a PYMNTS Intelligence and Mastercard report, found that 36% of internationally active small- to medium-sized businesses (SMBs) in the United States expect to use FinTechs or payment providers for cross-border purchases in 2026, up from 30% in 2025. Banks still hold the largest position, as 64% of internationally active SMBs used traditional banks for cross-border supplier payments in 2025, and 69% expect to use them in 2026.

Read also: Banks Make Their Move in Cross-Border Payments

Geopolitical Uncertainty Turns Geography Into a Financing Variable

The Strait of Hormuz offers an illustration of the problem facing finance and treasury teams. Conflict-driven rerouting, delayed voyages, alternative ports and banking interruptions can create discrepancies between bills of lading and letters of credit, potentially delaying payment even after goods have physically moved. Documentation that was accurate when a vessel departed may become problematic when the underlying voyage changes.

Trade finance is consequently absorbing risks that corporate treasury departments once treated as separate disciplines, including logistics, sanctions, insurance, liquidity and counterparty management.

“Globally, broader interoperability must be a key priority,” Emanuela Saccarola, Citi’s head of cross-border payments, services, told PYMNTS in November, adding that the race now is to provide access to these systems from a cross-border perspective so that payments providers can connect those domestic systems into a global grid, one that can operate around the clock.

That helps explain why banks are following the movement of supply chains themselves. JPMorganChase’s Asia-Pacific corporate banking revenue has risen more than 20% so far this year, while the bank has also been expanding its corporate banking workforce as investments and intra-Asian commerce increase, Reuters reported Monday. JPMorgan has specifically identified trade finance and working capital finance as areas of opportunity.

See also: How CFOs Are Turning B2B Payments Into a Strategic Weapon

Trade Finance’s Paper Problem Is Becoming a Bank Data Problem

All the same, banks cannot dynamically finance global trade if the underlying information remains trapped in disconnected documents and systems. That is why the long-running digitization of trade finance is beginning to look less like an efficiency project and more like prerequisite infrastructure. The goal is not simply eliminating paper but improving the visibility and interoperability needed for automated risk decisions.

The next generation of trade infrastructure will require something harder than converting PDFs into electronic records. Contracts, data standards, legal regimes and banking systems must describe transactions consistently enough that automated systems can reliably act on them.

This degree of proactive digitization allows banks to move from asking, “Is this borrower creditworthy?” toward asking, “Is this transaction still financeable under the conditions that exist right now?”

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