Every year, GTR gathers some of the most influential names in Asian trade finance to discuss the challenges and opportunities the market faces. For the second year running, the meeting was held virtually as part of GTR Asia 2021, and while the previous year’s remote discussion was dominated by Covid-19 and its impact on trade, this time around the conversation featured a heavy focus on building resilience and sustainability into supply chains to weather future shocks. Roundtable participants also discussed what needs to be done to close the trade finance gap, the demand for greater collaboration within the trade ecosystem, and the progress made so far on trade digitisation.


Roundtable participants:

  • Ed Aldorino, head of global transactional banking Asia, Lloyds Bank
  • Nicolas Cotoner, head of global transactional banking, Asia Pacific, Banco Santander
  • Kai Fehr, global head of trade and working capital, Standard Chartered Bank (moderator)
  • Atul Jain, regional head of trade finance and lending, Asia Pacific, Deutsche Bank
  • Peter Jameson, head of trade and supply chain finance, Asia Pacific, Bank of America
  • Sriram Muthukrishnan, group head of product management, global transaction services, DBS
  • Ajay Sharma, regional head of global trade and receivables finance, HSBC
  • Kanika Thakur, head of Asia trade, Citi
  • Azim Walli, head of product, transaction banking Asia, MUFG Bank
  • Eleanor Wragg, senior reporter, GTR (host)


Fehr: Let’s begin with a quick pulse check. How would you assess your performance in 2021? Asia has been leading the trade recovery, however there are indicators that the region may now be slowing down. What is your take on this?

Walli: We’re halfway through our fiscal year and performance has been very good. However, the geopolitical landscape is so dynamic and changing quickly. Over the last 18 months or so we have seen how clients and supply chain intermediaries such as banks have been forced to re-evaluate all aspects of trade flows under the new normal. Financial institutions have a key role to play in both advisory and enablement, especially when it comes to paperless trade and other forms of digitalisation, as well as funding and risk management requirements through clients’ supply chains. In transaction banking, we tend to be very good at being agile and responding to changes, and I believe we will have to be even more proactive in addressing the new landscape. Agility has been important and will continue to be so.

Sharma: The Asia production machinery continues to be very strong. Obviously, there have been lockdowns, but these are temporary. We don’t see any structural issues.

We see three key trends driving trade flows and trade finance business in Asia. We see exceptionally strong demand coming from the US and Western Europe, and we expect to see Asia come back from a consumer demand perspective in 2022. Secondly, when we talk about shortages of semiconductors, and commodities in the broadest sense, prices are up, crude oil is making new highs, and that is flowing through at an invoice level in terms of deal sizes. Third, when we talk about the supply chain and logistics issue and the lack of containers, that has created much more demand for working capital.

All of these trends are generating far more flows than what we would otherwise see at this time of the cycle. As a result, we look at where we are today and where we will probably be during 2022 with an extremely high level of positivity.

Jain: 2021 marked Deutsche Bank’s fourth consecutive year of positive revenue growth in our regional trade business. We feel really good about that because it reaffirms the strategic decisions we made a few years back. And, with this tailwind, we are feeling very strong about where we are going in 2022, despite the fact markets will be choppy.

From a macroeconomic perspective Asia looks wobbly – as does the world. I expect to see stagflation capping trade growth for the better part of the next 12 months, irrespective of the speed at which individual countries or regions come out of Covid. Global corporates are dealing with higher costs across the board – from transportation to labour to manufacturing – and these supply side challenges are impacting clients in a significant way. What’s more, these increased costs are not being absorbed by the global corporates. They’re fighting to protect their own margins coming out of Covid, and so they’re passing these higher costs directly on to their end customers. This will, from my perspective, constrain what might otherwise have been more robust post-pandemic global trade growth, given the amount of pent-up demand in the system.

Thakur: There is a bit of wobbliness but I don’t think we’re going to see it immediately. There’s going to be a bit of a lag effect before it really impacts trade flows. From our perspective, we are looking at a serious increase in demand in working capital solutions, given the situation clients find themselves in post Covid and with the supply chain stresses. As a bank we’re really optimistic about receivables and payables solutions, because just from a client need perspective, regardless of the nature of flows, these solutions are increasingly important for resilience.

Jameson: It has been a very strong year, and as trade flows have improved we have certainly seen that reflected in our business. As the economy comes out of this cycle, we are going to see a lot of investment-driven trade growth, particularly around green energy, electric vehicles, aircraft, and so forth, so I remain optimistic about the year ahead.


Fehr: We’re seeing supply chain disruption and interruption, and the two key elements to address this are resilience and prioritisation. How are you addressing this? How do you help your client to be prioritised in the supply chain? How do you ensure your client is paid first? And how do you help secure these supply chains, making them more resilient with the inherent risks we’ve just talked about?

Muthukrishnan: I see the supply chain question through a few different prisms. The first one is that, of course, we immediately think about disruptions and geopolitical shifts. But clearly what we have seen, despite the talk almost two years back about this, is that it actually takes much more to shift entire supply chains. It might happen over the longer term.

The second aspect is around Asia as a whole. Specific countries have certain inherent benefits that continue to be valid in the post-pandemic era. I believe that Asia’s predominant position at the centre of global supply chains is safe. Within Asia, yes, there might be certain shifts, but again, I don’t see it as a revolution but more of an evolution, which means that one might talk about moving to lower cost locations for low value-added manufacturing, such as from China to Bangladesh or Vietnam or India. But overall, I don’t think an immediate reaction is going to happen on a wider basis.

Another aspect is from a resilience perspective, and this comes amid the supply chain disruptions because of Covid, logistics issues, energy costs and shipping. I think the main problem to address here is actually about digitisation, because today supply chains are so badly fragmented and we still think in silos. We’re still trying to solve this problem using 60-year-old technology.

There’s a lot of great work happening in Asia; whether it’s Singapore or India or China. You can see that regulators, ports authorities, customs authorities, banks and logistics providers are all starting to work together to try and sort out this problem.

We won’t see uniform progress across the region, but I expect there will be significant progress in the short to medium term.

The final piece is around data. We have never seen the use of data in the way it is happening now. In the past, it would have been left to each individual cog in the wheel to figure out the way forward, whereas now data is being used to orchestrate supply chain resilience at a better level. That includes financing the smaller players, such as SMEs. There has been a big change in the way financiers look at the smallest SMEs who also need financing support. We’re seeing a move away from asking the biggest anchor to provide all the data, all the support, and almost a virtual guarantee, and a move towards more predictive analysis around user data, user flows, transactional lending, peer to peer and decentralised finance. There are so many changes happening in the way we finance the smallest entities, and I think it bodes well for the democratisation of supply chains.

Thakur: Just to add a customer lens to what Sriram mentioned, we commissioned a study with the Economist Intelligence Unit in the first quarter of 2021, interviewing 175 global supply chain managers. Of them, 77% of respondents indicated changes in their supply chain strategy. When asked where they have invested in over the past 12 months or are planning to in the next year, we saw some interesting responses. In addition to the usual suspects of India and Vietnam, we saw Malaysia, Australia, Myanmar and South Korea mentioned. While we don’t expect see significant shifts to happen overnight, we do expect this to materialise in the future.

Jameson: Adding to Kanika’s point, when we were talking two years ago, it was a case of where else in Asia might you be moving your supply chains. What we’ve seen in the last 12 months as we think about resilience is a huge shift towards reshoring. We did a recent survey of about 800 US clients, and 70% of them were considering moving their operations back to the US. That is a result of the disruption that we’ve seen recently, but you could argue that the environmental and sustainability element is playing into that too. A lot of companies are not just chasing the next dollar of cost save but also thinking about resilience, and hence bringing manufacturing much closer to the end destination of the goods. This is something that’s certainly shifted in the last 12 months.

Aldorino: A few things have happened: the rise of nationalism in a number of developing countries, the ongoing dispute between the US and China and the uncertainty there, the cost of shipping goods, the cost of manufacturing in some of these locations, and also the fact that particularly Southeast Asia seems to be moving quite slowly out of Covid – some countries are still in lockdown and are still relatively limited in terms of capacity. Reshoring does make a lot of sense, but I don’t expect this to be an entire shift. Companies will look at this as a percentage: how much can you make onshore close to your home market location versus how much you should offshore, and I think it’s that split in production that a lot of companies are considering now.


Fehr: The latest Asian Development Bank trade finance gap study puts the figure at an unbelievably high US$1.7tn. As Sriram just mentioned, data is a key element when it comes to getting financing to where it is needed, but how do we make tangible progress towards bridging the trade finance gap?

Sharma: First of all it depends on the customer segments. At HSBC, we deal with SMEs and mid-market clients quite extensively, and part of the answer does indeed lie in data. We’ve now started using digital decisioning, so we don’t look at balance sheet and financials but instead look at the ecosystem in which these clients are operating. This is a big gap, and we are just scratching the surface. We need the multilateral financial institutions to get cash to where it’s needed, and there is also work to be done on the regulatory front, as well as around the availability of insurance to mitigate some of the risks.

Aldorino: The problem today is the same as it was two, five and 10 years ago. Banks are all comfortable lending to large companies, and it is much more difficult for us to go down to the SME level, particularly in countries that are not our home markets, or segments that we may be less familiar with. The high-profile fraud cases of recent months have also created a greater focus on the way we think about credit risk. Digitalisation can certainly help to reduce friction, but we need the whole ecosystem pulling together. We need partnerships with multilaterals, and we need some relaxation around what risk weighted assets we have to hold against these credit risks.

Cotoner: In order to narrow the trade finance gap, we really need to go down to the lower segments to know what clients are doing and who they are trading with, but in order to make that viable you need to have a large market share in those markets, as well as government support. I think we are still some way away from this, but digitalisation is helping, and governments are becoming increasingly aware of the need to support trade finance for small companies.


Fehr: Trade digitalisation is a perennial topic at this forum, and I’d like to check in on where we are making tangible progress.

Jameson: There are two main parts to this conversation: There’s the bank and client relationship and then there is the interbank or the industry part, and they’re very different. I really do think the pandemic has had a hugely positive impact on digitalisation, because regulators are now looking at it very closely. I think it’s fair to say that previously we were all focused on digitalisation but we didn’t have the support to drive the legislative agenda that would underpin a lot of the digital tools that we are all striving for. That has now changed.

On the interbank aspect, I think there’s a long way to go. A lot of the industry consortia in which many of us are collaborating are going to take us in the right direction, but that will take time. This is a very complex ecosystem. Banks aren’t the only ones that are part of it.

On the client-to-bank side, we have been trying to fully digitalise that experience, and it’s still back to basics stuff like moving to electronic platforms, digital onboarding and servicing, and e-signatures. These don’t sound like very exciting things and they’re certainly not new, but in the last 12 months they have gained the kind of traction that I have never seen before in my career and I think that’s positive.

Thakur: Just to augment what Peter was saying, it does take a village to digitise. In our own little homes we’ve already done the best we can and I’m sure every bank here has impressive statistics around how much more their clients are using their platform, or how much paper they’ve saved and eliminated. However, the real benefit and time-saving efficiency comes in with interoperability, and that requires the involvement of the governments, shipping agents and insurance companies; it requires data standards, acceptability of electronic signatures and legal frameworks. The journey is a long one and I still think there’s a long way to go. The pandemic has brought this topic to the forefront, and I hope that the ecosystem will make a collaborative effort.

Walli: A major challenge is the absence of global data standards, which are a requisite to build scale and make interoperability successful. I know that work is being done on the creation of digital standards, but until there is mass adoption of them, this will continue to be an obstacle.

Cotoner: Digitalisation of open account trade is moving forward very quickly, chiefly because there are fewer people involved in the transactions, whereas for documentary trade there are many more intermediaries involved. We see open account trade as a low hanging fruit for digitalisation.

Sharma: Open account trade is a relatively easy piece. Where the challenge lies is in traditional trade and getting rid of paper there. Kanika talked about interoperability, and we are beginning to see some of that take place, with transactions on ETradeConnect and the People’s Bank of China’s trade finance platform. There’s traction, but it’s still not where it needs to be. It takes time and it requires connectivity at both ends, whereby buyers and sellers come together and find benefits. Frankly, I think that digitising the back office is where the prize lies. Our clients will get there in their own time.


Fehr: To what extent is everyone here investing into back-office digitisation?

Jain: We’re absolutely investing in back-office digitisation. In fact that’s where the majority of our investment has gone to date. However, while all of us can come up with really cool soundbites for things we have done, I actually don’t believe global banks have either the willingness or competence or even the mandate from their shareholders to truly disrupt themselves without some form of really established competitive threat.

Everything we are talking about is large-scale innovation, but it’s on an existing business model. However, what’s being financed and the way it’s being financed are fundamentally changing. And I think that we’re very ill-equipped to handle that because the way that we do business – even if it’s more digital and more efficient – has remained largely the same for decades, and so a lot of the benefits of transparency, flexibility, speed, inclusion are simply not materialising.

I know this is highly controversial but I feel the shot in the arm that we as global banks need in order to be more bold will really come when large non-traditional players step in to provide trade finance. We have already seen this happen in payments, and I think there is a real possibility of this happening in trade in the next five years, given the mass adoption of e-commerce and the large seller and customer datasets these platforms are sitting on – as well as the very large balance sheets they have to play with. Trade finance globally is a US$50bn revenue pool and is ripe for disruption.

That’s the long answer. The short answer is that, yes, we are absolutely investing and we are very serious about doing things smarter, cheaper and faster. But as an industry, I feel like we’re just innovating at the margins.


Fehr: Let us move on to a subject that is very important, particularly in light of Cop26: the environment and sustainability. What does it mean for your business? What exactly are you doing in the sustainability space with your clients? From my perspective, I’ve seen that our clients are quite often at the forefront in terms of their thinking and execution. Their physical supply chains are quite often already sustainable, so we as banks are catching up here on providing solutions to the financial supply chain.

Aldorino: From the Lloyds Bank perspective, we have seen ESG demand from all over the world grow tenfold in the last 24 months or so, and that’s steadily increasing as governments make more funding available. What we have done is not only increase limits on the facilities we can provide but also introduce clients to export credit agencies in various countries to support them to export more wind turbines, for example. Many banks have made commitments now to ESG, however what concerns me is we are seeing in the market exactly the same transactions that would have been done four years ago, but they are now being called green or sustainable, and this exposes the industry to accusations of greenwashing. What we need is on a regulatory level something that holds everybody to account. We need clarity over what is truly a green deal.

Jain: There’s a lot of genuine intent to make trade sustainable, and I love Ed’s response because I’m equally concerned about being pushed as banks to move too fast without first having clear standards, without which we run a very real risk of mixing genuine sustainable trade finance activity with greenwashing.

Our clients are seeking our advice and support on how to finance their transition to sustainable trade. They’re already operating very large, complex global businesses, and they need our help. When it comes to assessing the timeliness and the quality and the impact of that transition, this should ideally fall into some sort of independent and recognised framework. However, without clear leadership on this framework, banks will continue to have to muddle through and rely on their own best judgment to help global corporates navigate the change we all believe is necessary and right.

Fehr: I agree. We’ve done a lot of homework at Standard Chartered to come up with our sustainable trade finance framework. As bankers, we are not the best qualified to judge whether something is sustainable, and this is where other partners come in, such as certification bodies. A reliable sustainable trade finance framework is absolutely critical, and the industry needs to come up with standards which are rolled out as a universal practise – only then we will get scale.

Cotoner: Santander has committed to sustainability across the board, and our responsible banking plan includes financial inclusion, which is really about addressing the trade finance gap. When it comes to renewable energy, we are fairly ahead in terms of our commitments to finance new projects, and we are also pulling out of financing fossil fuels and coal assets. We are trying to live up to our responsible banking standards.

We see the current focus on ESG as an opportunity that our clients are giving to us to participate with them in their efforts to transform their businesses, be that around the energy transition or sustainable supply chains.

Jameson: I would add two things: number one, clients used to be more focused on making their own businesses sustainable. What they’re now realising is that in many sectors, 80-90% of their environmental footprint is in the supply chain, and that’s where trade and supply chain finance come in. We have been working on a number of solutions that are actually helping clients drive that environmental discipline into that 80-90% of their supply chain that is outside of their own operations.

Second, when we talked about sustainability in the past, we focused a lot on the environment. But increasingly many companies and their stakeholders are looking at all three aspects of ESG: environmental, social, and governance. Again, this is where we as trade financiers can come in because for clients, it’s not just about understanding the environmental impact of their supply chain, but it’s about providing them with insights and data that help them see who they are dealing with in their supply chain, and whether those participants have the right standards around employment or sourcing, for example.


Wragg: As a closing statement, what is your outlook for the coming months, and what needs to happen so that we aren’t having the same conversations again next time we meet?

Sharma: We at HSBC are very positive in terms of the outlook. Our view is that there is a significant growth opportunity, especially as Asian consumer demand recovers. Digitisation is a given, and the question is therefore, how do you use the data that we all have coming into our banks every day to develop new solutions for our customers? We need to look at how we engage with clients differently, because with digitisation every customer will be on a digital channel with us. Are there different ways of connecting with clients, finding opportunities, and solving the problems?

The other thing which the bank is really excited about is everything around the transition to a low carbon economy, and I would argue that this is where things will move really quickly. Again, it’s about not just offering products into our clients but also helping them make the transition. This is very exciting, but there is lots to do.

Thakur: For me, it’s all the Ds: data, digitisation, deepening the footprint and developing ESG solutions. What we are very excited about is the time we’ve spent in approaching our clients from a holistic ecosystem perspective as opposed to solving just the bare individual balance sheet of their individual manufacturing operations, and we think that will continue as a trend.

In terms of ensuring that when we gather again, we are not having the same conversations, I think leveraging data more effectively is something all of us will have to do. Hopefully when we connect next, data will be a far more integral decision-making tool than it is today, especially transactional data, because as transaction banks, we are a goldmine of information that can be used to spearhead change and innovation.

The other area that will be spoken about differently is the sustainability piece. The regulators are clearly listening. For example, the Monetary Authority of Singapore has announced Project Greenprint, and setting up ESG standards and a registry. This provides opportunities for us as banks to provide information and be change agents.

Finally, on digitisation, I believe that when we connect next time, we’ll have a little more concrete action to be able to continue to add value to global trade.

Walli: I’m very bullish on ESG and I’m optimistic about further growth in the next 12 months in the demand and delivery of existing structures by banks as clients continue to demand higher ESG performance. In my experience, in the last 12 months what I’ve seen is that clients are actually coming to us and telling us what they need from a supply chain perspective, and our very immediate ability to provide these new structures is very exciting for us.

Aldorino: In terms of making sure that we’re not back here in a year’s time having the same discussions, I think first there has to be an acceptance that it can’t just be the banks alone. Many of the issues we’ve discussed, from the trade finance gap to ESG, will have to be resolved at the government-to-government level.

On the topic of ESG, that’s where I expect to see the greatest amount of change. Every bank wants to put an ESG lens on trade, and we’ll find ourselves in the position where we’ll be fighting over the same deal and reducing the price on some of these larger ESG transactions. In the long term, this will be a positive: if lots of banks are piling into ESG then more deals will get done at good prices.

Jain: If there’s something for me to be positive about, it’s certainly at the institutional level. I’m positive about Deutsche Bank and our ability to grow our revenue, delight our clients with new solutions and outstanding service, and challenge our amazing people. But if I take the context of this forum and talking about the industry, and I think I probably hinted at it in this session, I’m definitely tipping towards pessimistic. I think we still have a lot of work to do in a lot of areas, from inclusive financing to scaling up on digitalisation and sustainability – as well as gender diversity, which this panel itself is a stark reflection of. As an industry, we need to get better at driving change rather than being driven by it, and one tangible takeaway is perhaps this group, as the senior leaders of the trade finance industry in the region, speaking more frequently than once a year at this forum.

Muthukrishnan: I’m usually optimistic by nature, and what I’m really positive about is that the pace of change is quickening. I feel that we will start making faster progress toward some of the goals that we’ve been talking about, because technology is an enabler.

There are disruptors on the horizon. If we don’t get there, there’ll be other industry players who will get there ahead of us and that will drive us to pick up our pace.

There is greater impetus on the regulators to work together. I’m really heartened that regulators in multiple locations such as Singapore, China and India are starting to come together on a government-to-government basis within their own respective domains. For example, the formation of SGTradex in Singapore is a great step in the right direction.

All in all, there are bits and pieces moving in the right direction, but the question remains as to whether they will all move in tandem when we want them to. It’s up to us as banks, both individually as well as in collaboration with each other, to be the voice of change with the regulators from an advocacy perspective. We need a common set of standards and goals to work towards. We are in enough industry groups, and I fear we are not using them well enough to make change happen.

Cotoner: We had a good 2021. Prices are up, commodities are flowing, and we think the supply chain disruption will be a short-term issue. Going into 2022 we expect to see more focus on how to support our clients through disruption, and also support the capex that will have to be used to reshape their supply chains.

I expect that 2022 will see us talk about ESG in a slightly different way, with a bit more clarity on how to address different products, clients and segments, and hopefully with a clear framework on how to approach this and deploy our resources.

Fehr: Clients want trade-as-a-service solutions, and we need to listen to them. We’ve listened to our corporate clients who said sustainability is front and centre, and we put a framework into play earlier this year. On the digital aspect, we’re listening to our clients again, and they’re telling us that they are tired of having to have a fishbowl full of tokens to log into all of their different bank channels. The platform strategy is becoming more important, and we’re investing quite substantially into many platforms, from procurement to distribution.

Jameson: I’m generally optimistic, given the way that the markets in Asia are opening up despite the wobbles that Kai referred to. Risk and uncertainty aren’t going away and that’s actually good for trade. That’s where we can help our clients with relevant and compelling and hopefully digital solutions. I am also optimistic that a lot of the phenomena that have been accelerated by this terrible pandemic will reach a critical mass, and I would never want to look back on the pandemic as having been a positive thing, but there are areas of our business where it has and will act as a positive catalyst for the future in terms of what we will do differently.

As I look back a year, the dialogue has advanced, and that’s a sign of progress. I think we need to see less talk and more execution, but at the same time I think we will and should be having the same conversations in the next year. Rome was not built in a day, and trade faces major complex challenges that require diverse, multiyear solutions, so this is an ongoing endeavour.