Dubai
At a time when global trade volumes, values and growth of trade finance is facing a slowdown from a sharp decline in commodity prices, weak global growth and rising protectionism, Natalie Blyth, Global Head of Global Trade and Receivables Finance for HSBC Group is optimistic on the future of global trade.
“In trade and trade finance we are at the cusp of a real curve jump. Historically, trade finance has arguably been done the same way for a couple of thousand years. Today, many new technologies out there can be applied to solve old problems and deliver some creative solutions.,” Blyth told Gulf News in an interview.
Blyth acknowledges that there has been a dislocation in global trade in recent years. According to the World Trade Organisation (WTO), in value terms, merchandise exports fell by 3.3 per cent to $15.46 trillion, in 2016. Volumes rose, but at a disappointingly slow pace.
According to WTO, in 2016, world merchandise trade recorded its lowest growth rate in volume terms since the financial crisis of 2008 with a modest increase of 1.3 per cent, as measured by the average of exports and imports. This low level of expansion was half as strong as the 2.6 per cent in 2015.
A recent Euromoney Trade Finance report said that apart from the weaker global growth and sagging commodity prices, protectionism is emerging as an equally destabilising influence in global trade.
Amid all that is hindering trade growth, Blyth believes technology and innovation will support a new era of growth for trade and trade finance.
Blockchain or the distributed ledger technology, according to her, is one of the technologies and innovations which are the future of global trade and trade finance — alongside automating and digitisation. The innovations in trade and trade finance are expected to come from the development and applications of this technology that provides access to trade related data almost real time on a shared platform to all parties involved in a transaction.
“While the quick availability of data on a single platform makes trade more efficient, the whole process of trade financing becomes much easier for banks and financial institutions that are required to meet many compliance requirements in the context of rising financial crimes,” said Blyth.
The new technologies under development and some of them already in use can eliminate thousands of manual processes in trade and trade finance. The application of blockchain based document verification, use of artificial intelligence and use of robotics are expected boost both volumes and values of trade.
A number of banks and stakeholders in the global trade ecosystem are working towards a solution based on the distributed ledger solutions and application of technology in trade. Blyth sees blockchain and technology adoption is biggest change in trade that will transform the concept of global trade after the introduction of containers a few decades ago.
“Containers made trade faster, cheaper and safer. The blockchain and application of new technologies that are either being used or in the process of development are very promising. The new developments, in concept and outcome are very similar to containerisation of global trade,” Blyth said.
Beyond blockchain
In its quest for bringing more efficiency in its trade financing business, HSBC is seeking newer technologies. Last year the bank teamed up with technology giant IBM to develop a robotics solution which simplifies the processing of millions of documents used daily in international commerce.
The cognitive automation technology combines optical character recognition with advanced robotics to make global trade safer and more efficient for thousands of businesses.
Based off IBM’s Watson analytics technology, the document processing solution includes intelligent segmentation and text analytics, to identify, digitise, and extract key data within these documents before feeding it into the bank’s transaction processing systems. This not only serves to boost accuracy, but also frees up staff for more value-adding activities.
The technology is currently being used to analyse English-language import and export bills in several markets in Asia, Europe, the Americas and the MENA region. Developers are seeking to enhance the solution so it can read a wider range of documents and languages.
An average trade transaction requires numerous data fields to be extracted from a number of different documents.
“By digitising this process we will make transactions quicker and safer for both buyers and suppliers, leading our industry forwards, and we will reduce compliance risks through an enhanced ability to manage huge volumes of data,” Blyth said.
