Banks Team Up to Develop Digital Trade Finance Network

The ‘Trade Information Network’ is expected to be production-ready by Q3 2019, representing the “first inclusive global multi-bank, multi-corporate network in trade finance”. 

Seven top-tier banks have signed an MoU (Memorandum of Understanding) to jointly develop a digitised trade and supply chain finance network.

In development for two years, the ‘Trade Information Network’ project earlier this year completed development on a prototype, which was formally launched and demoed at Sibos in Sydney on Monday (22 October) by the project’s founding banks: ANZ, Banco Santander, BNP Paribas, Citi, Deutsche Bank, HSBC and Standard Chartered.

More than 20 additional banks are now actively participating the Network’s further development over the next few months, with technology support from Canada’s largest IT service firm, CGI. Several corporates have already expressed interest in participating in pilots expected to begin in Q1 2019.

The Network seeks to address financing needs earlier in the supply chain by enabling corporates to submit and verify purchase orders and invoices, and request trade financing from a bank of their choice from within the platform. A one-time registration process will allow corporates to achieve connectivity with all the banks on the Network.

“Having a single platform that provides transactional data on underlying trade flows will not only enable financing, but will also stimulate further innovation in the trade finance industry,” said Banco Santander global head trade & working capital solutions Rogier Schulpen.

According to the Asian Development Bank, there is currently a USD 1.5 trillion shortfall in the coverage of global trade financing. The Network aims to lower the risks and costs associated with providing financing to smaller companies that are ignored or dropped by large banks in an effort to de-risk their client portfolios.

One of the key aims of the Network is to mitigate the risk of double financing and fraudulent trade information, enabling banks to better assess risks and provide trade financing earlier in the supply chain, including for SMEs that experience difficulties accessing funding.

“This enhanced visibility enables banks to provide more pre and post shipment finance to the currently underserved supplier segment,” said HSBC global head of product & propositions, Global Trade and Receivables Finance, Vinay Mendonca.

The platform is expected to be production-ready by Q3 2019, representing the “first inclusive global multi-bank, multi-corporate network in trade finance” with “the potential to transform international trade”, ANZ said in a press statement.

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