Sustainability and digitalisation have been among the key watchwords of global trade in recent years, with conversations buoyed by the coronavirus pandemic and the move towards global net zero by mid-century at Cop26. In this Industry Perspective, Sriram Muthukrishnan, managing director and group head of global transaction services product management at DBS Bank, says the two must go hand in hand. As demand for seamless corporate banking grows and banks seek to encourage sustainable trade practices, he says a strong digital infrastructure and common standards are required for sustainability efforts to scale.


GTR: What global macroeconomic trends are accelerating the adoption of technology and sustainability in 2022?

Muthukrishnan: A significant push factor for increased digitalisation has been the pandemic and the lockdowns it triggered around the world. This has highlighted the need for digitalisation, and more corporates and SMEs are looking for ways to digitise their processes to overcome restrictions in mobility and logistics disruptions, increase efficiency and expand market reach.

The second trend is the rise of e-commerce. We see this as one of the most defining changes to the way in which business is done. It also transcends trade finance, payments and collections because of the growth of the direct-to-consumer model. Corporates are also demanding a banking experience that mirrors the consumer’s. Why should it be so much more difficult to place an order for 1,000 t-shirts for a trading company compared to placing an order for one by a consumer?

Last but not least, sustainability is high on many corporates’ agenda. It is not only about the environment and responsible practices within a specific organisation, but also about ensuring long-term business viability, while spanning the entire value chain.


GTR: Can you provide examples of how DBS’s innovations help customers at different points in the supply chain?

Muthukrishnan: As the pandemic has made face-to-face interactions and travel more difficult, we are offering fully digital onboarding experience to our clients. In supply chain finance, we have launched an end-to-end DBS Digital Supplier Onboarding tool to onboard suppliers seamlessly and digitally, significantly reducing onboarding process from up to two or three weeks down to as low as 30 minutes.

In addition, DBS rolled out Alternative Lending for Trade, a digital and data-driven approach that leverages real-time supply chain data and predictive analysis to provide working capital support to online merchants, as well as buyers or suppliers on digital aggregator platforms.

We also offer solutions allowing our customers to have visibility into their supply chains. For example, a customer who is importing grains from Australia can track the provenance of the grain down to the farmer, the aggregator and see how the product is being processed. Because that is data driven, it also allows us to pay the seller much faster and build in pricing incentives for sustainably grown products.


GTR: What are you seeing in how trade finance is driving sustainability goals?

Muthukrishnan: We are taking a leadership position in sustainable and transition finance as the world’s first commercial bank to launch a comprehensive Sustainable and Transition Finance Framework and taxonomy, serving as a reference guide for clients to adapt and build resilience in the face of climate change, resource scarcity and social inequality.

We have applied this approach to sustainable trade finance in three ways: first, tracking the provenance of goods; secondly, certification by the appropriate bodies; and finally, incentivising SMEs and supply chains to adopt green practices. The last point is particularly important during the pandemic as some small businesses are struggling to survive and it’s not reasonable to expect them to have the same resources and focus on sustainability as large corporations.

In the long term, it will be difficult for banks to continue subsidising businesses to become more sustainable, but we are happy to do it in the short term to educate customers and get them on board, especially because it contributes to the additional objective of making supply chains more digital.

SGTraDex is another Singapore initiative in which DBS has been involved since inception as one of the founding members, alongside other public and private sector participants. SGTraDex facilitates trusted and secure sharing of information between supply chain ecosystem partners, permissioned on a use-case basis. One of the use cases focuses on green and sustainable trade finance, where we collaborate with the industry to develop digital solutions to exchange and validate sustainability certifications in selected sectors.


GTR: How important are strategic partnerships to the future of supply chains?

Muthukrishnan: We consider this to be important because it is difficult for a single company or a single provider to be everything to everybody and to be everywhere. Of course, a few large banks might say they can do this, but in reality, no one has coverage of every aspect of a supply chain.

Although DBS has superior proprietary supply chain finance capabilities, we are open to partner with leading platforms in different markets to increase market reach and deliver our solutions at scale. An example is our collaboration with Infor Nexus to co-create a digital and data-led financing programme for their client base that provides faster and more efficient trade financing. Partnering with Infor Nexus – which is deeply entrenched in the apparel industry flows – was a win-win for us and a good example of a strategic partnership. While the platform was able to help its customers obtain financing support and advisory from DBS, we were able to access a wider base of suppliers operating on the platform.

In general, we are happy to build strategic relationships with partners that help us to extend reach of our trade solutions, augment our offerings with additional features and enhance customer journeys by embedding and improving services offered to our clients where they operate. The only way to overcome digital islands is to enhance connectivity between them. Our market-leading API capability, DBS RAPID, makes this easy.


GTR: How do you see digitalisation as a driver of growth for sustainable trade and supply chain finance products?

Muthukrishnan: I would say that it is not only a driver but also a critical pre-condition if we want to see sustainability become mainstream and enable the easy tracking and monitoring of supply chains to ensure compliance. This requires a good digital architecture in place to view structured data on an ongoing basis and allow the necessary data exchange with relevant counterparties and banks.

This is especially critical once sustainability becomes mainstream, as the number of transactions to be assessed will grow exponentially and this can be only managed efficiently through digital processes.

There is also a growing awareness among corporates that the combination of digital and sustainability can be a winning mantra as more consumers look to ethical procurement and consumption. An organisation that can validate and substantiate its claims on decarbonisation and sustainability is poised to come out on top. Studies show that large companies which have combined sustainability and digitalisation practices are far more resilient and better placed for growth.

At DBS, we are keen to enable willing corporates to move forward in this journey towards sustainability and growth through digitalisation.