Trade Tech New Age for Trade Finance

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Current trade finance value proposition,Baseline trade growth. Impediments to more growth,Distributed ledger technology DLT. Current trade finance value proposition Trade finance processes have. multiple pain points i e human error delays verification challenges. ILLUSTRATIVE,EXAMPLE LETTER OF CREDIT,Goods Documents. Contracting B2B Payments,handling handling,A Delays A pays bank B. A Prompts incurred in value of goods,Buyer the Bank B to 8.
sending across LC issuing fee,Importer issue LC multiple transfer fee. e g Energy Co 10, B issues and incurred by B releases goods B rechecks and B performs an. sends LC to C significant to payer A sends docs to A international transfer to. LC Issuing Bank manual C via correspondent,labour Manual banking of invoice. Energy Co s Bank procedures risk 6 amount,of delays due to transfer fee. human errors,C Human and add re Delays and,error fraud processing Human 11 fees.
risk error fraud incurred by, LC Advising Bank C Hands over processing C checks risk hard copies correspondent. Oil Co Bank LC to D once delays docs and,increasing lead C transfers D banking. documents sends times invoice amount,are accepted 7 them to B LC advising fee. D provides 12,1 3 documents,Seller the Exporter Seller D ships. attesting proof,goods to the 4,Oil Co of shipping,D sends invoice to A for buyer A.
product quality,the oil order A placed to C,Country Importer Exporter Pain points. Source Bain FS Practice, Current trade finance value proposition Trade finance has. been moving to open account solutions,LETTERS OF CREDIT ARE WHILE OPEN ACCOUNT CAUSES. LOSING SHARE SOLUTIONS SURGE AND CONSEQUENCES,Cost factor along with. trillions rising trust in supply,chains has prompted.
some companies to,shift from traditional,Primarily cash trade to trade. advance payments,facilitation and,working capital,finance solutions. through open account,Primary open,accounts solutions That increases risk for. the exporter who also,needs more financing,of working capital. Letters of credit and,Traditional trade,guarantees are.
letters of credit particularly,document collections unattractive for small. ticket transactions and, Source World Bank ICC Global Survey Rethinking Trade and Finance annual reports 2010 2015 MISYS Financing Future Supply Chains. Current trade finance value proposition,Baseline trade growth. Impediments to more growth,Distributed ledger technology DLT. Baseline trade growth Global trade reached US 16T in 2016. with largest contribution from Europe and Asia,351 763 923 317.
AMERICA EUROPE,564 197 4 275 192 681 125,MIDDLE EAST. Legend 137 314 ASIA PACIFIC,Africa 2 990 318,Australasia AFRICA. Middle East 64 734,Asia Pacific LATIN,Latin America 140 746. North America AUSTRALASIA,Europe 12 006,Intra region trade 903 183. value US M,Inter region trade,value US M, Note Only trade routes with highest value are shown based on export merchandise.
Source WTO IMF World Economic Forum Euromonitor, Baseline trade growth APAC region will be the main growth. driver for Global Trade,CAGR 16 26,AMERICA EUROPE,MIDDLE ASIA. Legend EAST,3 4 PACIFIC,Africa 5 4 6 2,Australasia AFRICA. Middle East,Asia Pacific LATIN,AMERICA 4 4,Latin America 1 3. North America,AUSTRALASIA,Europe 1 4,Intra region trade.
growth 3 1,Inter region trade, Note Only trade routes with highest value are shown based on export merchandise. Source WTO IMF World Economic Forum Euromonitor, Baseline trade growth Doc Trade expected to have 9 market share in. 2026 WITHOUT DLT, OPEN ACCOUNT WILL GROW FASTER DRIVEN BY ASIAN DEMAND. DOC TRADE WILL REMAIN SIGNIFICANT FOR DOC TRADE PRODUCTS. Source Bain FS Practice Estimates WTO ICC ADB,Current trade finance value proposition. Baseline trade growth,Impediments to more growth,Distributed ledger technology DLT.
Impediments to more growth 1 6T unmet trade finance gap. currently Access to financing is a major barrier to Global Trade. 1 6T UNMET TRADE FINANCE DEMAND ACCESS TO TRADE FINANCE IS A KEY. TODAY 40 FROM DEV ASIA BARRIER TO TRADE TODAY,Barriers to Export 2016 of responses. Africa Example,Developing Asia,including India,and China 0 7T. Source ICC WTO ADB, Impediments to more growth DLT can improve some of the. pain points faced today in Doc Trade especially for SMEs. DLT COULD ADDRESS KEY BARRIERS E G SMES LIKELY BENEFIT THE MOST FROM. KYC AML COLLATERAL REQ TXN COSTS ADDRESSING THESE PAIN POINTS. SMEs face higher,rejection rates,driven by greater. riskiness and lack,of collateral,Source ICC WTO ADB.
Current trade finance value proposition,Baseline trade growth. Impediments to more growth,Distributed ledger technology DLT. DLT New technologies enable the digitalization of trade. Pre transaction Transaction processing After transaction. technologies Client mgmt,Product Data Workflow Document Compliance Problem. information, selection entry management check check resolution system. Optical Text recognition Check for,character from trade completeness of.
documents for,recognition documents to documents based. OCR AML keyword hit,minimize data entry on transaction. product type,Populate fields with Intelligentproblem. Artificial Intelligent and text extracted from Validate remed Contextual resolution Track. intelligence personalized documents iate data with filtering Identify individual error rates. AI marketing Offer integrate OCR with cross references suspicious or and flag users in. transaction process machine learning, new product sales unusual activity and need of remediation. or client promotions block suspicious Reports enable. Advanced based on insights Efficient process and productivity transactions based enhanced. on clients needs Enhanced KYC on predictive, analytics monitoring and predictive analytics to operational and.
AA and behaviors e g web scrape indicators,detect patterns strategic. process Bridge data flow and communication, automation Integrate data from different systems into single interface. Ease of tracking goods and, documents dynamic pricing and Track document locations. Internet of, financing triggered by shipment Track goods location. things IoT,events automated payments volume quality.
release based on smart contracts,Create smart letter Replace document. Distributed, of credit as smart ation checks data Real time verification and reconciliation workflow. contract on entry validation executed as per smart contract conditions. technology, distributed ledger with single digital replace payment and funds transfer with cryptocurrency. auto notifications record,Source Bain Company, DLT Distributed ledger based letters of credit could yield cost. savings and real time document checking,INITIATION SHIPPING AND PROCESSING SETTLEMENT.
Letter of credit LC creation and transmission to all Transmission of shipping proof to all participants Simultaneous validation of shipping proofs and. participants on the same day in real time payment via distributed ledger platform. Questionable whether, Bank A Bank B ShipCo C ShipCo D Bank A Bank B s checking is Bank B. still required,3 8 7 10 9, Importer Exporter Importer Exporter Importer Exporter. 1 ShipCo C,Exporter sends invoice and his,1 Exporter sends goods via ShipCo D. 6 9 Bank A and Bank B instantly receive, account details to the importer providing his account details 10 shipping proof update from the DL. Importer prompts Bank A to issue LC, ShipCo D automatically updates LC on and LC s status is automatically.
via an app oronline confirms with his DL with validated proof of shipping updated based on smart contract. DL password and exporter s account using its DL private password conditions. details triggering execution of smart contract Importer confirms payment on app or. Bank A checks importer s credit conditions e g partial payment online account via his DL password. worthiness and creates an LC as a ShipCo C triggers DL status update Seller gets notified that he has. smart contract on the DL linked to 8 when goods arrive 12 received the payment on his account. both the importer and exporter via ShipCo C releases good to Importer. their account details once status on DL states he has. Both exporter and Bank B are notified,4 13 fulfilled all obligations e g payments. 5 when the LC is created on the DL, Note Account details refer to DL user s public key and password refers to DL user s private key. Trade Tech New Age for Trade Finance World Economic Forum in collaboration with Bain amp Company 2 Agenda Current trade finance value proposition Baseline trade growth Impediments to more growth Distributed ledger technology DLT 3 Current trade finance value proposition Trade finance processes have multiple pain points i e human error delays verification challenges

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