#Blockchain capacity has been measured in public blockchains, where transaction rates have been very slow. #DTCC showed that a #private permissioned distributed ledger can #handle high #volumes.
Financial Technology
In today’s market all these services are available through non-bank service providers, posing a threat to the trade finance establishment.
The over-reliance on paper and manual checks means that the current processing of transactions is fraught with inefficiencies and risk, which ultimately leads to higher costs. #Banks often seek to protect their margins in traditional trade finance by passing these costs on to the corporate client, driving such clients towards open account trade that is riskier but cheaper.
This is a unique moment in our industry, when changing regulation, increased availability of emerging #technology and changing expectations from corporate clients are pushing banks to #change their business models beyond the simple digitization of current processes.
In a sector particularly vulnerable to fraud, letters of credit, standby-letters-of-credit and other trade finance instruments are used to ensure exporters are paid on time by importers. Meanwhile, banks guarantee that importers receive goods that match the terms of the letter of credit. Bank-intermediated trade provides confidence and fosters trade around the world while providing banks with a low-risk source of revenue that is capital efficient under Basel III.
Out of this mix of social, technological and regulatory change, next-generation trade platforms and processes are emerging. Distributed business models, which no longer rely on banks being central to the financial supply chain, mean that those institutions are looking at ways to retain their relevance to corporate clients. Traditional competitors are collaborating through consortia of ecosystem players, working for the benefit of the entire industry instead of being self-serving in their approach.
In the second part of this series, we will look at how #blockchain and other technologies are helping banks rethink and redesign their approach to trade finance.
Join me at Sibos 2018, as I moderate the “Delivering the trade environment of the future” roundtable. Register here.
The post The need for change in trade finance appeared first on Accenture Banking Blog.
The letter of credit transaction in #trade #finance is a relatively neglected area when it comes to digitization, which is why #HSBC bank chose this transaction to test out its #blockchain-related initiatives, Joshua Kroeker, blockchain lead for Global Commercial Banking Growth and Innovation at HSBC, told Bank Innovation. “The letter of credit transaction had fallen […]
Bank Innovation
PwC expects a lot of movement to #blockchain in #finance during 2018, but industrial companies are ahead of finance in using blockchain for supply chain and other operations.
Financial Technology
Digital Federal #Credit #Union has joined the Chamber of Digital Commerce, the Washington, DC-based #blockchain #trade organization.
Conventional thinking about #blockchain #technology‘s use in stock markets may be wrong, according to one academic.
UBS has revealed work on a #blockchain #prototype being developed with IBM on Hyperledger’s Fabric.
CGI has launched a #blockchain #trade #finance and supply chain laboratory to explore applications of blockchain #technology.
#Bank of #America and #Microsoft have announced their intent to build and test #blockchain applications for #trade #finance.
Leading members of the #Hyperledger #blockchain project are scheduled to #address ISITC next week.
CoinDesk
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