09/01/2018
We are fortunate to be in an era of ever-increasing change
that is now impacting upon the world of trade finance. As such, it is important
to maintain awareness of trend dynamics:
-
Monitor which technological changes may have an
impact upon your business in the short & medium term.
-
How might such changes influence your portfolio
of trade solutions?
-
Assess industry trends in various disciplines:
- Product
- Pricing
- Regulatory
/ Compliance
- Channels
- Competition
-
Prepare for potential change before
circumstances force you to do so.
-
Proactivity not reactionary.
Within this blog and the next, we will highlight a few of
the trends worth following.
ICC Digitalisation Working Group:
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Launched in June 2017 to anticipate and
accompany the digitalisation of Trade Finance
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The working group aims to help the trade finance
industry accelerate its progress towards greater digitalisation.
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Identify strategies to overcome the constraints
of digitalising trade finance - such as a reliance on paper-based practices, a
lack of recognition of the legal status of electronic documents, uncertainty
over standards, and a general lack of clear legal and regulatory frameworks.
-
A key focus for the working group's activities
will be in helping the trade finance industry realise the many benefits of
digitalisation - including transparency, time and cost savings, reduced errors,
and reduced compliance and operational risk.
Bank Payment Obligation (4-corner model):
-
At
this stage it should be noted that a BPO is a bank-to-bank arrangement
involving an undertaking given by a bank (often the Buyer's Bank) to the bank
of the seller (who will become known as the Recipient Bank).
-
Interaction
between each of these banks and its respective client is outside the scope of
the BPO & URBPO 745.
-
It
is expected that, over the coming months, work will commence on inclusion of
both the seller and buyer in the BPO rules (URBPO).
Multi-Banking (MT798)
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Difficult for corporates to manage advices of
export documentary credits received from multiple banks in paper format and via
different bank portals.
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Lack of visibility to credit facility allocation
for import credit issuance.
-
Many
leading trade banks are now extending SWIFT MT7xx standards to the corporate
world through the MT798.
-
‘Trade
Envelope' solution ensures improved automation and efficiency via access to
multiple banks.
-
Supports
STP via a single, standard process.
https://www.swift.com/our-solutions/corporates/drive-trade-digitisation/mt-798
www.tradefinance.training
