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Enabling international trade - Technology and Education

03 July, 2018Michael Backhouse

The 2018 ICC publication “Global trade – Securing Future Growth”  highlights once again, the current trade finance gap of $1.5 trillion.  Whilst it is a very modest improvement on the previous year’s figure of $1.6 billion it does emphasise the work required to unlock the potential for the financial community and ultimately for society.

Much is being done by the ICC and  many governments to rectify this current position, but the enhancements in technology and greater education can also play their part in enabling international trade and the financing of it.

Re-evaluation of Technology

If you go back 10 to 15 years, there was enormous enthusiasm about how electronic documentation would revolutionise the operations of international trade by lowering costs, improving speed and reducing risks.  The development of technology did not materialise in the way many would have liked and that is perhaps why many trade practitioners today are sceptical of the current wave of technology which is helping to transform trade and to deliver trade finance.  This may be understandable in the wake of the significant regulatory and compliance requirements, all absolutely necessary, which the financial community now has to adhere to.  However, such has been the recent rapid enhancements in technology over the past 5 years, we need to reactivate our enthusiasm and embrace the technological solutions which are increasingly being developed.

The impact of technology is being felt in many areas, whether it is high resolution satellite imagery used to assess agricultural field yields, the product-tracking technologies used by freight and logistic companies or new technology solutions improving the compliance and KYC process. These topics were discussed at length at the recent London Institute of Banking and Finance’s Annual Trade Finance Compliance Conference in May.  All, collectively, have the potential to increase productivity, improve quality control and stock management.  Mitigating many of the risks banks and increasingly non-banks are concerned about and may prove the difference when finance is being sought.

Learning about technology

Scepticism of the impact of technology may be due to our lack of understanding and knowledge of the subject and perhaps greater education is required if we are to ensure the benefits of technological development are maximised.  However, equally as important is the need for a thorough understanding of the value of trade compliance for international trade and a deep knowledge of both the physical and financial supply chains of both large and small companies.

It is this combination of learning and technology development which should go some way to improving the trade finance gap.

The London Institute of Banking & Finance has recently launched qualifications in Trade Finance Compliance and Supply Chain Finance - The Certificate in Trade Finance Compliance (CTFC) and The Certificate in Supply Chain Finance (CSCF)