Each year GTR’s magazine feature articles tackle the major shifts in the trade finance arena, offering readers in-depth analysis on the sector’s major events and developments.
After tallying up the total number of online page views for each long-read article published in 2019, this top 10 list reveals the topics that engaged readers most last year.
While fintech developments such as komgo and electronic bills of lading continue to prove popular, social and ethical issues such as sustainability and gender diversity in trade finance also caught readers’ attentions last year.
Having been voted as the most read topic on the GTR news site in 2019, fintech has proven popular with readers of the magazine articles as well.
In this A-Z listicle, the key ideas in the trade finance fintech sector are outlined, with terms such as artificial intelligence (AI), regtech and the internet of things (IoT) broken down and explained.
Given the frequent announcements of new blockchain trials and pilots, and the constant promise that they will change the industry, this feature also gives a brief summary of the major platforms and initiatives.
These include komgo, the commodity trade finance platform that went live in December 2018, and which has since released four different trade finance products, as well as Marco Polo, another open account trade finance project, which has announced it is set to go fully live in the second quarter of 2020.
Voltron is one entry on the list that needs updating, with its backers announcing this week that it has changed the name of the platform to Contour, having gone into full commercial production.
In this feature GTR charts the rise of the blockchain platform komgo, from its launch in August 2018, to going live in January 2019.
In theory, the technology will change the “age-old industry” of commodity finance, speeding up the trade process by allowing “real-time monitoring by multiple parties, and the exchange of documents in a digital, secure and decentralised manner”.
CEO Souleïma Baddi, who spoke exclusively to GTR for the piece, further explains how the project was set up, what drove their decision to choose the Ethereum network over Corda and Hyperledger Fabric, and why they chose to provide a know your customer (KYC) solution and a digital letter of credit product.
At GTR’s annual Asia roundtable in Singapore, representatives from major banks got together to consider the issues affecting trade finance players in the region.
Participants debated whether US-China tensions are the main cause for shifts in trade flows in Asia, or whether agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have been more of an influence.
Attendees also discussed how banks can help firms in emerging nations by closing the global trade finance gap, which the Asian Development Bank estimates to be in the region of US$1.5tn
For some, banks need to be doing more with data, with one roundtable participant saying that “fintechs are the solution”.
But another felt somewhat differently, saying: “We are still far away from any meaningful step towards commercialisation of the technology… I don’t believe that big data, the token concept or the distributed ledger will close the trade gap.”
Banks and other players in trade finance are having to increasingly think about sustainability. As one HSBC global head told GTR in November, promoting sustainability is no longer a “PR exercise”.
In GTR’s most-read feature on the subject in 2019, we outline the key sustainability products on offer today, and analyse how prevalent they are in the world of trade.
One such example is green loans, which are being used increasingly in trade finance. In late 2018, for example, BBVA granted a five-year €16.5mn loan to a hydroelectric project in Colombia with backing from Cesce, Spain’s export credit agency.
Many other banks have since stepped up to the plate on similar facilities.
Electronic bills of lading (eBLs) are promising to do away with the paper-based system. Proponents say they will bring about significantly faster document transfers and a shorter payment cycle, while also reducing the risk of forgery, fraud, loss or other forms of human error.
But, as one of the most-read features of 2019 explains, “the transition to digital has faced myriad challenges, not least the construction of a sound legal framework that effectively mirrors existing rights and obligations under traditional bills”.
Speaking at length with essDocs’ co-CEO and COO Marina Comninos, GTR finds out what this framework might look.
In recent news, the International Group of P&A Clubs (IGP&I) approved its fifth eBL system for its members, giving the go ahead to Wave’s electronic bill of lading solution earlier this month.
In the wake of a merger between blockchain platforms we.trade and Batavia in late 2018, GTR sought to find out whether the sector should expect further consolidation.
At the time of writing, there were over 20 trade finance consortia and industry initiatives, with major projects such as Marco Polo, komgo and Voltron – which has since changed its name to Contour – all seeking to digitise trade finance processes.
But some feel that there needs to be a level of consolidation in the sector, arguing that it has become “impossible for corporates as well as banks to differentiate and choose between” these various platforms.
The feature also looks at how these trade finance blockchain platforms could collaborate with the plethora of initiatives that have sprung up in other parts of the trade ecosystem.
Tech giant IBM has, for instance, been working on connecting logistics blockchain initiative TradeLens with the trade finance platform we.trade.
When UK construction firm Carillion fell apart in 2018, leaving thousands laid off, fingers were soon pointed at supply chain financing.
SCF generally involves a supplier selling their receivables to a bank or another intermediary in order to get faster access to the money they’re owed.
This in turn allows them to use it for working capital, while the buyer is typically granted extended payment terms.
For those in the industry SCF is, for the most part, beneficial, helping big companies unlock capital while letting smaller suppliers get immediate access to capital at desirable rates.
But critics of such schemes suggest that they let struggling firms hide their financial problems, and in the aftermath of the Carillion scandal, ratings agencies such as Fitch Ratings began calling for supply chain finance to be reclassified as debt.
In this well-read feature, GTR assesses the reasons for Carillion’s demise, before looking at how players in the SCF sector are trying to restore the products reputation.
Heads from global and regional banks came together at GTR’s annual export finance roundtable to speak about the major developments in the sector.
Discussing the reopening of US Exim Bank, the participants debated what sort of impact it might have on the export finance market, with one member admitting that he harboured concerns that it had “lost a lot of expertise” during the years it was shuttered.
The roundtable participants also gave their thoughts on potential reforms to the OECD Consensus and whether the CIRR regime is too “politically complicated” to change.
With a lack of gender diversity persisting in the trade finance sector, this feature presents the top takeaways from GTR’s Women in Trade Finance event, held in November 2018.
Attendees heard how women are generally discouraged from choosing a career in the industry, and how those who do generally have worse outcomes.
A range of remedies for the current gender imbalance were discussed, with one panellist saying that at Santander they try to do interview rounds with equal numbers of men and women.
But a senior lecturer at the University of Manchester’s politics department, Adrienne Roberts, said she believes there needs to be a top-down approach.
Discussing the constraints women typically face when it comes to caring for children or the elderly, she suggested that the UK government needs to make improvements to childcare and healthcare policies.
Recent struggles for cashew nut farmers in Tanzania have served to highlight the continent’s commodity trader’s reliance on processors abroad.
The fact that 45% of the world’s cashew nuts are grown in Africa, but 90% of the crop is exported for processing overseas, for instance, demonstrates that the continent has so far failed to value add at home.
But, as this popular feature explains, “accessing the finance to add value at home is one of the biggest challenges for Africa’s agri-processors”, which in turn “mirrors the scarcity of trade finance for Africa’s SMEs”.
The feature assesses how export credit agencies (ECAs) may offer one solution and looks at the work UK Export Finance has been doing to help build opportunities in Africa’s agricultural sector.
But for one interviewee, OECD rules currently mean that they’re not a viable option for such funding, as ECAs have a mandate to promote their own domestic exports.