Offering her insights to the latest edition of Sibos Issues – the official newsletter of the 2016 global banking conference in Geneva – Angela Koll, Commerzbank’s vice president of specialist trade and supply chain finance, suggests that recent innovations in digital payments can improve transparency across supply chains, help bring trade finance to new markets, and free up liquidity for the world’s SMEs.
The article, ‘Bridging the trade gaps’, identifies the key challenges facing world trade today. Regulatory requirements, in particular, are putting pressure on trade with key emerging markets such as Latin America and Africa. As a result, and despite abundant liquidity, SMEs are struggling to attract financing – a worrying trend for those businesses that drive 50% of world trade, and employ two thirds of the global workforce.
However, according to Koll, increased digitalisation in supply chain finance offers a way forward. She argues that new methods such as the Bank Payment Obligation (BPO) can help provide a lifeline; “At Commerzbank we’re actively promoting the BPO as a digitised solution that can provide risk mitigation through secure matching of agreed data online. It is a hybrid instrument, positioned between a letter of credit and open account. It offers lots of potential.” Such innovations will be crucial to move the financing of trade into the 21st century.
The full article can be read online, on pages 10-11 of the issue, here.