Bank of China, DBS Bank and HSBC will help digital container shipping consortium to form an advisory group that aims to improve existing trade finance processes. The focus will be put on helping small and medium-sized enterprises gain access to trade finance from banks, with the support of reliable shipping data collected via the digital platform.
Trade finance has been undergoing a digital revolution for decades. But the advancement of new technologies such as blockchain and distributed ledger technologies (DLT) have accelerated this.
“BOCHK is pleased to deepen our collaboration with GSBN by becoming a key member of the Trade Finance Advisory Group. We have been actively supporting the cooperation between the finance and the shipping industries to facilitate trade and create value for all stakeholders in the supply chain. James Ho, Deputy General Manager of Transaction Banking Department from Bank of China (Hong Kong) (“BOCHK”), said.
“HSBC is the world’s leading bank for trade finance and has been at the forefront of trade digitisation. Through our collaboration with GSBN and our investments in fintechs such as Contour, we are utilising our market leadership to effect the digital transformation of the trade ecosystem, from minimising the use of paper in trade finance to converting clients to digital ways of working. We look forward to working with GSBN, our peers and stakeholders to drive trade transformation and create new opportunities.” Ajay Sharma, Regional Head of Global Trade and Receivables Finance, Asia Pacific at HSBC said. All other joining members made similar congratulatory statements.
According to the International Chamber of Commerce (ICC), there is an estimated trade finance gap of USD 1.5 trillion projected to grow to USD 2.5 trillion by 2025. The mandate of the Trade Finance Advisory Group is to help bridge this financing gap by helping partner institutions improve their existing processes, by leveraging trusted digital data from supply chains.
In turn, this will help enhance financing support for small and medium enterprise, many of which have been deeply impacted by the COVID-19 crisis.The announcement builds upon the recent growth of GSBN, following the rollout of its Cargo Release application across Asia and partnerships with 8 major port groups in China.
The advisory group will explore the technical, legal and regulatory frameworks needed to break the siloes between the global supply chain and financial institutions. Furthermore, the group will also work together to test digital solutions such as electronic Bill of Lading and other supply chain data to improve the financing process for banks.