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Trade finance’s next challenge is getting innovators to work together

There is no shortage of great ideas in digitalizing trade finance. If only all these systems and programmes would talk to one another.


Trade finance, above all areas of banking, has long been considered ripe for disruption. It is a vast market where some practices seem to belong to the previous century: surely the only reason you could ever conceivably need a fax machine these days is to deal with the paperwork around trade finance.

And it is an area where Covid-19 has made existing problems worse: the Asian Development Bank says the gap in trade finance availability hit $1.7 trillion in 2020, worth 10% of all global trade.

But the problem now is not in driving innovation to make things better – it is that there are too many innovations and they do not talk to one another. Blockchain, application programming interface (APIs), tokenization, natural-language processing, non-fungible token (NFTs) and advanced optical character recognition have all been applied to the task of bringing trade finance into the 2020s. There are dozens of smart examples.

It would help if there was a single organization driving the governance around the whole sector

But they are, as McKinsey & Co puts it in a new report with the International Chamber of Commerce (ICC), digital islands – “closed systems of trading partners leveraging (usually) proprietary technology tailored to address specific use cases and pain points”.

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