Standard Chartered has completed the first bank payment obligation (BPO) in the Middle Eastern automotive industry for Mohammed Naser Al-Sayer and Sons.

The transaction, the size of which the bank was unwilling to share with GTR, facilitates a shipment of vehicles to Kuwait.

Al-Sayer, one of the region’s largest automotive dealers, used the BPO to replace traditional letters of credit as it sought “more efficient methods to reduce the reliance on paper documentation as well as optimise [its] transaction processing”, says a statement issued by the bank.

“Standard Chartered’s BPO solution, fully automated through the Bank’s Straight2Bank electronic platform, enabled Al-Sayer to facilitate payment and receive the shipment on time from their trading partner while maintaining full visibility of the transaction at every stage,” reads the statement.

Al-Sayer CEO Mubarak Naser Al Sayer, comments on the transaction: “We are pleased to pioneer this trade innovation in our industry and markets. Delays in receiving title documents, which affect the timely receipt of goods, have always been a significant challenge for us. With the help of Standard Chartered, we can now enjoy much faster turnaround times by utilising the BPO for trade settlement, and in the process, avoid additional costs such as commission and demurrage charges.”

The bank’s spokesperson agreed with GTR that while take-up of the product has been lagging, it’s still “early days” and “there is a need to build awareness among corporates”.

“While we are enthusiastic about the opportunities presented by BPOs, we also recognise that there challenges that must be overcome if it is to succeed and volumes are to grow. If the banking industry believes in BPOs – and is prepared to address the challenges associated with them – then it must also change its pitch to clients,” says the spokesperson.