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Help unveil growth prospects for trade finance

Global / 07-02-18 / by
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The International Chamber of Commerce (ICC)’s Banking Commission has issued the final call for participation in its annual global survey on trade finance, now in its 10th year.

The survey covers growth prospects for traditional trade finance and supply chain finance, progress on digitisation of trade finance processes, client requirements and know your customer and transaction due diligence utilities, among other topics.

Banks can use the survey results to assess where they stand in trade and supply chain finance compared to their peers, both regionally and globally.

The survey, which is open to banks as well as other members of the wider trade finance community, can be accessed here. The deadline is February 16.

Last year’s survey revealed a gloomy outlook for traditional mechanisms for financing trade, with close to 80% of survey respondents expecting traditional trade finance to exhibit “little or no growth, or decline outright year-on-year going forward”.

As reported by GTR at the time, the ICC’s Rethinking Trade Finance report found that letters of credit will continue to be important for 10% of global merchandise trade – which is still a sizeable volume of trade – but that banks around the world are looking beyond them.

The survey also showed that 2016 was a flat year for global trade, and thus global trade finance. Swift trade finance message data for the year was down by 4.72% in 2016. This reflected the ongoing slump in global trade – according to the WTO, merchandise trade was down 1.7% in 2016.

The trend of unmet demand for trade finance continues, the report found. 61% of banks perceived that there is more demand for trade finance than there is supply. This tied in with concerns over compliance and regulation, and the ongoing trend of banks severing correspondent banking relationships and the stemming of the flow of capital to emerging markets.

Other top findings from last year’s report:

  • The top three concerns among the banks surveyed were compliance requirements (29.7%), increasing regulation (20.7%) and increasing protectionist and trade-restrictive measures (17.9%).
  • Supply chain finance was highlighted as having the greatest potential for growth in trade finance, with 38.4% of those polled considering it the most fertile growth area.
  • Only 12% of those surveyed perceive market uptake of fintech, with 40% seeing some progress in digitalisation. Just 1.4% view fintech companies as competitors and a threat to banks in trade finance, while only 18% feel that “technical capabilities and technology are ahead of trade finance business practice”.

The full 2017 report can be accessed here.

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