Insight & Analysis

Facilitating Asian trade finance

Published: Nov 2022

Recent developments in the digital trade finance space will be of particular interest to Asia-based corporates.

In October, HSBC announced that it had completed the re-platforming of its trade finance capabilities, a project that has been underway for a number of years.

HSBC Trade Solutions (HTS) allows clients in Hong Kong and the UK to originate and manage all their trade finance products online through self-service digital interfaces. The platform is expected to support increased automation and straight through processing and strengthen risk management and monitoring through integrated anti-money laundering, sanctions, fraud, and credit risk controls.

The platform has already enabled the bank to launch two additional services for clients in Hong Kong – the ability to provide competitive FX rates to suppliers and counterparties in other countries in a supply chain financing proposition; and a simplified portal for business banking clients.

The next stage will see HTS integrating with distributed ledger technology platforms such as Contour and there are also plans to integrate it with other fintech and regulatory platforms.

“Marketplaces, B2B e-commerce portals, and other fintech solutions are now commonplace and customers are demanding that we embed our financial solutions within them,” says Vinay Mendonca, Global Head of Trade Finance Products and Propositions at HSBC. “This requires a comprehensive set of APIs across all our trade products, and developer friendly tools such as developer portals and sandboxes.”

HSBC claims the platform’s converged data architecture will minimise manual data input and enable faster digital decisioning and improved customer insights.

J.P. Morgan has also revamped its trade finance offering by integrating the ClearTrade platform into its trade processing system. This initiative is expected to enable smart interpretation of data and documents to automate letter of credit document examination and its developers reckon it can increase trade finance operations productivity by up to 70%.

Letters of credit initiation will continue to come into the bank by way of an application form through a proprietary or third-party front-end solution. Once the letter of credit has been issued by the issuing bank it is sent via SWIFT to an advising bank, which will share it with the beneficiary and await the presentation of the necessary documents.

Over time ClearTrade will process many other traditional trade products such as collections and standby letters of credit explains Merlin Dowse, Executive Director Digital Innovation and Solutions, Trade & Working Capital at J.P. Morgan.

“By implementing this solution we have been able to achieve an enhanced straight through process for many components associated with the processing of various types of transactions,” he says.

ClearTrade is supporting transactions in the APAC region initially, with a global rollout planned over the coming quarters. In the meantime, J.P. Morgan is working with industry bodies such as BAFT, ITFA, ICC and the ICC digital standards initiative to advocate for legal reform to enable digital negotiable instruments.

Asia is also a focus area for the International Chamber of Commerce (ICC) Centre for Digital Trade & Innovation, which recently commenced testing of electronic bills of lading connectivity between Singapore and the UK in conjunction with Singapore’s Infocomm Media Development Authority.

The objective of this work is to operationalise the UK-Singapore digital economy agreement, implement international standards identified by the ICC’s digital standards initiative and the WTO in the recently published standards toolkit for cross-border paperless trade, and establish a model digital trade corridor.

The centre is also introducing a technical assistance programme for low-to-middle income countries in partnership with the Centre for Applied Sustainable Transition Law to accelerate legal reform. The first project in this initiative will be run in partnership with an as yet to be identified country in the ASEAN region.

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