Beijing offers a warm welcome to trade finance digitisation experts

Jacco de Jong

Beijing may be home to the Forbidden City, but the Chinese capital readily opened its doors to 700 trade finance experts, banking professionals and regulators attending the ICC Banking Commission Annual Meeting.

I was among them and managed to squeeze in a quick visit to the Forbidden City before I left, despite participating in a panel discussion, a roundtable, a committee meeting and the conference itself.

More importantly, this major event confirmed how trade finance digitisation is advancing fast in the region, despite the usual global challenges with standards, interoperability and regulatory bodies.

I took part in the panel discussion on Digital Transformation: New funding sources and their role in the existing ecosystem, which had a very engaged audience. We all know there is a global trade finance funding gap, perhaps as large as US$1.6 trillion, with SMEs particularly affected. Banks are hampered by Know Your Customer, AML and other regulations. So our discussion touched on how fintechs can fill this void with automated SCF tools such as Bolero currently offers to third parties, which in turn led to some very useful further conversations for me.

The TXF China round table, meanwhile, confirmed how digitisation of trade documents continues to grow, which is why at Bolero we are increasing our staffing in the region. There is no substitute for Chinese-speaking staff if you want to develop your presence in such a vast market. The appetite in the Far East for electronic presentation of trade documents, especially utilising letters of credit and electronic bills of lading, shows no sign of abating despite slowing economic growth. Still, at six per cent, China is growing at double the rate of most Western economies.

With digitisation and regulation such intertwined topics, the ICC Digitisation Committee meeting I attended inevitably covered the updates to eUCP and the launch of the new eURC rules, which are coming into force in July 2019. It was clear from this and other discussions, that the rules needed updating to cope with the developments around the use of electronic documents and data in trade finance transactions.

Another announcement made in Beijing was the termination, by end of next year, of the Swift TSU (trade services utility), the centralised matching and workflow engine that is behind the bank payment obligation (BPO). Given that 18 banks, and their clients, did embrace the BPO, this development has created some unrest in the market as to the future of BPO, even though the URBPO rules merely refer to a matching engine (not necessarily the SWIFT TSU engine). This is a subject that is close to our hearts given the SWIFT DNA within Bolero. The core matching engine was in fact initially developed by Bolero before being expanded by SWIFT. It was inevitable therefore that Bolero was mentioned as a natural fit to (re)create and enable an alternative for the SWIFT TSU. Food for thought to say the least.

Overall then, a very worthwhile visit that confirmed there is no let-up in this region’s voracious demand for innovation and growth, but which also emphasised how Bolero is at the centre of the multi-faceted debate about trade finance digitisation.

 

 

 

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