As the digital transformation of trade accelerates, the seamless integration of the financial and physical supply chains has become a very real possibility. Leveraging their position at the centre of the ecosystem, banks can play a leading role in making this happen – if they take the right approach.


As technological advances bring new opportunities to drive efficiency and economies of scale, the global trade finance ecosystem is on track to become much faster and simpler.

Thanks to the successful adoption of new technology such as artificial intelligence, machine learning and blockchain, great strides have already been made in digitising the processes that underpin trade finance. But to truly bring forth the seamless, interconnected future of trade, the next step is to make them invisible, says Eugenio Cavenaghi, European head of working capital advisory and structured trade at Santander Corporate & Investment Banking (Santander CIB).

“The separation of financing from physical trade flows creates inefficiencies and bottlenecks,” he says. “Integrating finance into operational workflows and digital platforms where corporates already operate enables them to focus on growth while we, as their partners, execute transactions behind the scenes.”

This embedded finance concept has already revolutionised consumer banking. From digital wallets to in-app payments on ride-sharing platforms, a multitude of point solutions have emerged that reduce the time and effort associated with accessing financial services.

However, while progress in the consumer banking sphere was initially led by tech firms, achieving a similar feat in the world of trade finance requires banks to step up as platform facilitators.

“A key challenge is the complexity of global trade,” says Mencia Bobo, global head of trade and working capital solutions at Santander CIB. “With numerous stakeholders in various locations, point solutions cannot achieve the necessary scale to drive change. Banks, with their strength and reach, can position themselves at the origin of transactions, and act as corporates’ financial anchor across the entire ecosystem.”


A stable transformation

In recent years, the innovative and disruptive power of fintechs has catalysed technological transformation in some of the most challenging and paper-heavy corners of trade finance. However, their capacity to effect comprehensive global change on their own remains limited.

“Fintechs bring specific problem-solving capabilities to the table, but the major channels for financial transactions still lie within the domain of banks,” says Bobo. “Regulatory measures are also a challenge: Various technology companies have ventured into offering services, but find it challenging to scale in many markets where the regulatory threshold is steep. In the current economic environment, the need for stability and reliability in financial partners is vital.”

Here, she adds, is where banks, with their extensive experience and robust regulatory compliance, can act as linchpins of the digitally enabled trade ecosystem of the future.

“Banks have well-established infrastructures, as well as strong capital and risk management capabilities. This continues to position them at the heart of the financial ecosystem,” says Bobo. “Banks provide the critical stability that ensures smooth and reliable operations, especially for large-scale transactions and services.”

Far from being disrupted by tech startups, banks have an opportunity to adopt fintech-like agility, while also providing the fundamental structure within which innovative solutions can be deployed – a philosophy that Santander has adopted as part of its strategy to bring trade and supply chain finance directly to the point of need.

“We have the core platform – the established bank with the infrastructure, stability, and regulatory compliance – and we can enhance our offering by delivering unique solutions while assuring that they align with our standards,” says Bobo.


Choosing partners to finance the digital economy

In today’s rapidly advancing digital age, commerce is being reshaped and new avenues for businesses to enter global value chains are continually emerging.

For this revolution to be truly effective, trade finance must evolve into an integrated service within the platforms and marketplaces where transactions occur.

Among developments, platforms such as cross-border e-commerce marketplaces are creating new opportunities for businesses to reach international markets. By 2025, online B2B transaction volumes are expected to increase by 37%, according to research from trade credit insurer Allianz Trade.

Meanwhile, the advent of digital technologies is also bringing improved supply chain efficiency and transparency to businesses. Through enterprise resource planning systems and supplier networks, corporates gain a holistic, real-time picture of performance so they can quickly make informed decisions and respond to challenges.

With this growth comes a surge of new financing needs as businesses seek to stabilise supply chains, free up trapped cash and accelerate access to capital in an online environment – and the traditional paper-based trade finance channels are no longer sufficient. To provide an enabling environment for businesses to grow and prosper, trade and supply chain financing solutions must be embedded at the point of need, in a streamlined and frictionless process.

Santander CIB’s alliance with SAP serves as an exemplar of this strategy. By integrating directly with SAP’s ERP system, Santander brings its services directly to the point of need, without unnecessary complications, enabling companies to arrange payables and receivables financing in the same system they make and receive orders.

Meanwhile, Santander CIB’s recent equity investment in Komgo, the world’s largest multi-bank trade finance network, aims at improving client-to-bank communication and customer experience while reducing operational risks and manual errors. This pragmatic use of technology proves that digitisation can genuinely improve access to trade finance, as well as providing additional value for clients seeking to navigate supply chain disruptions.

“A key friction point for corporates operating in a digital environment is the need to divert attention from their primary activities to engage with a separate banking platform,” says Ignacio Frutos, global head of receivables at Santander CIB.

“Co-operating with partners makes sense for us if that partner provides unique technology or a unique ecosystem. In such cases, we can leverage these attributes to plug our banking services into existing ecosystems that work, resulting in a win-win situation,” he adds, pointing to the bank’s recent tie-up in the area of B2B buy now pay later with e-commerce payments platform Two and trade credit insurer Allianz Trade as an example.

The solution, launched in January this year, harnesses the expertise of each party: Two takes care of the payment technology, Santander CIB finances the upfront payment to sellers and the credit to buyers, and Allianz Trade protects the whole value chain against non-payment risk. Everything happens in a fraction of a second, enabling businesses to grow safely in the e-commerce environment.

“This agreement enables us to provide the first global B2B buy now pay later solution for large multinational corporates. This is where we believe fintechs can thrive: when they genuinely have something special to offer,” says Frutos. “Importantly, though, we plug in the fintechs where it makes sense, but our core remains with us, which we develop and control. This is our guarantee of quality to our clients that we will always give them the best we can, with the utmost reliability and consistency.”


Steering innovation

This model, which has been the hallmark of Santander’s trade transformation strategy over the last three decades, places the bank at the heart of innovation. The digitisation of trade is not a battle between fintechs and banks – each have essential and complementary roles to play. But to deliver a coherent, effective and robust ecosystem rather than a series of disjointed initiatives, a symbiotic relationship must be forged.

“To effect real change, scale is key. Global banks such as Santander have the opportunity – and responsibility – to leverage their product capabilities, size and footprint to position themselves at the core of the ecosystem,” says Bobo.

By bringing innovative technologies into mainstream usage, banks can not only facilitate the future of trade, but ensure it’s built on a solid foundation that meets the needs of the fast-paced, interconnected global economy.