Trade finance gap narrows amid minimal fintech impact
The global trade finance gap has fallen from US$1.6tn to US$1.5tn, but the impact of fintech has been minimal to date.
The latest annual survey from the Asian Development Bank (ADB) finds that many of the perennial issues persist, such as funding gaps in emerging markets, hugely disproportionate rejection rates for small businesses and a rise in non-bank lending.
But despite the industry’s zeal for digitisation, just 20% of firms reporting have used digital finance platforms. In line with global trends, peer-to-peer lending is the most-used fintech model (23%).
And while 80% of banks surveyed said fintech will reduce compliance costs and 66% said that it will enhance their ability to assess SME risk, the rejection rate of SMEs continues to rise.
Jamii Bora bank introduces trade finance to support entrepreneurs
Jamii Bora provides trade finance that supports enterprises and entrepreneurs by providing practical and flexible financial services that are tailor made to customers’ needs. Trade finance offers insurance Premium Financing, Overdraft facility, Letters of Credit, Bora Customs Duty Facility, LPO Financing, Invoice Discounting, Bid Bond, Performance Bond, and Advance Payment Guarantee.
Trade finance targets contractors, Suppliers, Manufacturers, Retailers, Wholesalers, Distributors, Insurance brokers, Insurance companies, importers, and exporters.
Trade Finance Endures, And Overcomes, Banks’ Slow-Moving Innovation
A few years ago, Sameer Sehgal, the new CEO of trade finance firm Traydstream, said he probably wouldn’t have agreed that banks are playing a role in the innovation of the industry.
But trade finance is the target for massive disruption thanks to technologies like blockchain and robotics, Sehgal told PYMNTS, and banks are finally perking up to the need for progress.
Still, it’s not enough. Recent estimates from the Asian Development Bank pegged the global trade finance gap at $1.5 trillion in 2016, with SMBs bearing the brunt of that lack of financing for their global trade initiatives. Despite efforts from the FinTech community, the gap remains, and automation is far from ubiquitous, Sehgal said.
“Trade finance, in large part, hasn’t changed, even in centuries,” he explained. “The inefficiencies of processes are glaring — humongous.”
Global trade finance gap stands at $1.5tr in 2016: ADB
Businesses of all sizes continue to struggle to access sufficient credit, resulting in a global trade finance gap of $1.5 trillion in 2016, according to an Asian Development Bank (ADB) brief released on Tuesday.
Developing Asia’s share of the trade finance gap was 40% of the global total, the brief added. In its fifth annual study, 2017 Trade Finance Gaps, Growth, and Jobs Survey, ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 515 banks and 1,336 firms from 103 countries.
While the global trade finance gap stabilised in 2016 compared to the 2015 record high of $1.6 trillion, it still translated into missed growth opportunities and job creation.
Tunisia: UIB gets USD 10-million trade finance line from EBRD
In the framework of the implementation of its 2017-2020 development strategy supported by its activity and its offers for companies and SMEs, the “Union Internationale de banques” (UIB) announced the signing of a Trade Finance Partnership Agreement with the European Bank for Reconstruction and Development (EBRD).
This line, totaling $ 10 million (equivalent to 24.4 million dinars), is intended to cover issues of guarantees maturing up to 3 years and financing pre-export and post-import transactions.
This agreement consolidates and broadens the UIB’s partnership with EBRD inaugurated on the conclusion on June 22 of a credit line dedicated to the financing of SMEs and mid-size enterprises in the amount of € 40 million and a maturity of 7 years.
Bank of Georgia Signs $75 Million Trade Finance Facility with ADB, IFC, Citibank
Bank of Georgia has signed a $75 million one-year Club Trade Finance Facility (Club Trade Facility) arranged by Citi with the Asian Development Bank (ADB) and the International Finance Corporation (IFC), a member of the World Bank Group.
This is the fourth Club Trade Facility arranged by Citi for Bank of Georgia, which attracted several international investors during the syndication.
Bank of Georgia is a leading Georgian bank, based on total assets (33.8% market share), total loans (31.5% market share), and client deposits (31.5% market share) as of 30 June 2017.
Proceeds of this year’s Club Trade Facility will support import and export transactions for top corporate customers of Bank of Georgia, increasing the volume and value of trade transactions in Georgia’s key economic sectors, including agribusiness, transportation, and energy.
A view from the ICC: Changing times call for a collaborative approach
The International Chamber of Commerce (ICC) Banking Commission’s new head of policy, Olivier Paul, discusses how the Banking Commission’s role will be critical as the trade finance industry adapts to unprecedented change.
There are some fundamental challenges ahead for trade finance: involving the regulatory landscape, the technological evolution of our industry and the vital inclusion of new non-bank sources of liquidity. These changes will involve everyone, meaning we will all need to adapt, including the ICC Banking Commission, where I recently became head of policy.
Yet I remain optimistic. For trade finance as a discipline, I am convinced that its best years are ahead of it, as long as we can embrace the future and view change as part of an evolutionary process rather than an existential threat. In fact, I see the Banking Commission’s role as vital for preparing the industry for that future, as well as being an advocate and influencer of the changes underway.
Just 20 years ago the most important role for the Banking Commission was rule-making, with advocacy a second, though still important, function. Since the 2008 financial crisis, however, these roles have been reversed, with advocacy of trade finance now the Banking Commission’s most critical function
White Oak Commercial Finance Provides $20MM Factoring Facility to Luxury Goods Distributor
White Oak Commercial Finance, LLC (WOCF), one of the nation’s leading financiers serving the middle market, announced today that it has provided a $20 million dollarfactoring facility to a distributor of luxury and branded apparel, accessories, handbags and watches. The proceeds will provide working capital to purchase inventory, manage account payables, and repay existing debt.
“White Oak Commercial Finance has a deep history in retail financing, having provided designers, importers and manufacturers of retail goods with access to growth and working capital for nearly 30 years,” said Robert Grbic, President and Chief Executive Officer, WOCF. “With strong historical profits and seasoned management team, this luxury goods distributor is an ideal company to finance.”
Blockchain and invoice finance: an early benefit analysis
Blockchain technology is generating huge amounts of hype across a number of industries – perhaps none more so than financial services. One area of finance that has received less attention to date is invoice financing. However, as we explain in this article, blockchain has the potential to revolutionise invoice financing, for the benefit of suppliers, debtors and financial institutions alike.
To start with it will be useful to briefly summarise what blockchain actually is. For a more detailed explanation of the Blockchain technology and some of the legal considerations with its adoption, see our introduction to blockchain.
Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits