Trade & Supply Chain

Trade finance and data security

Published: Apr 2022

Coins and trade charts
Portrait of Professor Kwok-Yan Lam, Nanyang Technological University, Singapore

Professor Kwok-Yan Lam

Nanyang Technological University, Singapore
Portrait of Kanika Thakur, Managing Director, Head of Asia Trade, Citi

Kanika Thakur

Managing Director, Head of Asia Trade

Citi logo

What is Digital Dialogues?

In 2021 Treasury Today Group and Citi bring you a new series dedicated to the topics of the moment. This audio centred content series brings together leading voices from across Asia Pacific. From academics to corporate treasurers to financial leaders, we will focus on the issues affecting corporate decision makers against a backdrop of the pandemic and global risk.

Listen to podcast

In this episode of Digital Dialogues, Citi’s Kanika Thakur spoke about trade finance trends in APAC, while Nanyang Technological University’s Kwok-Yan Lam shared his views on developments in data security.

Innovation in trade finance

Kanika Thakur explained that the last year has brought plenty of innovation in the trade space, including the adoption of blockchain and the digitisation of processes and flows. As Thakur said, “We’ve seen shippers looking at electronic bills of exchange; we’re seeing insurance partners looking at potential electronic solutions; we’re looking at governments finding more digital ways to engage with exporters, importers and banks.”

Other developments include the increasing sophistication of supply chain financing solutions, which are now extending to the second and third tiers of supply chains, as well as taking advantage of partnerships with fintechs. “Last but not least, the increased interest from our clients in ensuring that their whole ecosystem is part of the supply chain solutioning space is a very key development – and this has extended to sustainability,” said Thakur, noting that ESG is set to play an even bigger role in the future in terms of how trade can help clients achieve their own sustainability goals, as well as making their suppliers more sustainable.

Thakur turned to the collaborative work that Citi is undertaking with clients, citing a fast-moving consumer goods (FMCG) client in Asia, which was keen to unlock sustainability within its supply chain. She described how Citi worked with the company to encourage its suppliers to set sustainability goals, with a financing benefit available from the bank for suppliers that meet their goals.

Next developments

Turning to future developments, Thakur said she was looking forward to seeing the current trade digitisation journey continue, adding that where ESG is concerned, “I’m very excited about the contribution that a bank like us can make in that space.”

Thakur also referenced the growing levels of acceptance of electronic bills of exchange in markets such as Singapore. In India and China, she added, the regulator is playing a very active role in the digitisation of trade, while fintechs and marketplaces are increasingly playing a role in intermediating the market via consortiums. “Banks like us are playing a key partner role in Singapore, for example, where we’re one of the investing and key members of a blockchain platform called Contour, that helps digitise and hasten the whole documentary trade process.”

Tackling the cybersecurity threat

In the second half of the podcast, Professor Kwok-Yan Lam from Nanyang Technological University spoke about the work he is doing in the areas of data security and computer science. “In the last year or so, we have done more work on the cybersecurity of Internet of Things (IoT) systems, especially with relevance to smart cities or smart nation applications,” he said. Going forward, Lam said he expects to see a lot of IoT devices sensing the environment and transmitting data to the cloud, where analytics and automated decision making will take place. “So there will be different types of cybersecurity issues.”

Another area of focus is the use of AI to improve cyber attack detection capabilities. Lam said that one problem today is that people are able to access a lot more data – “and when there’s so much data, inspecting the transaction logs, audit logs or network logs will be overwhelming.” With this in mind, a spin-off from the university is looking to commercialise analytic techniques to automate the analysis of cyber threat intelligence reports.

Lam also discussed the role of blockchain in the trade finance space. “People have been talking about the use of blockchain in order to allow different stakeholders in trade finance or supply chain to ensure data integrity, or to eliminate fraudulent transactions,” he noted.

Security and data privacy

Turning to the importance of security and data privacy, Lam spoke about the vulnerability of client devices to malware or cyberattacks, and the risk that if a laptop is compromised by malware, fraudulent transactions will then be performed on the user’s other devices. As such, there is scope to focus on the use of secure multi-party computing to support wallet transactions, “so that even if one device is attached, at least it will not automatically enable the attackers to generate four million transactions.”

Finally, Lam shared his thoughts on what corporates need to be aware of this year. Alongside IoT security for smart cities and the use of AI techniques to enhance cybersecurity, he noted the importance of addressing privacy issues. “What we are looking at is how to address the security and privacy aspects when people try to perform analytics for fintechs, or for the digital economy,” he explained. “The other thing is that when assets are virtualised, the protection of the title of the asset could be another emerging problem that I think we need to focus on.”

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