Three banks — the Bank of China, Singapore’s DBS and HSBC — have partnered with the Global Shipping Business Network (GSBN), a Hong Kong-based non-profit consortium that recently launched a blockchain-based trade platform, to form a trade finance advisory group, according to a media release shared with Forkast.News today.

Fast facts

  • Trade finance — the financing of import and export transactions — has been said to be a lubricant for global trade. However, small and medium-sized enterprises often face challenges obtaining trade finance, and current trade processes are largely paper-based and fraught with inefficiencies. The estimated global trade finance gap of US$1.5 trillion is projected to grow to US$2.5 trillion by 2025, according to the International Chamber of Commerce (ICC). Digital trade is widely seen as a key enabler to help banks close the trade finance gap, the ICC said.
  • GSBN’s trade finance advisory group aims to bridge the financing gap by helping partner organizations digitize and improve their existing processes, and enhance financing support for SMEs. “The COVID-19 pandemic has demonstrated many areas where paper can be eliminated in favor for more efficient, trusted digital systems,” said Bertrand Chen, CEO at GSBN. “Given the symbiotic relationship between the shipping sector and finance, we must explore how we can connect with and enhance banking processes to bridge the $1.5 trillion trade finance gap.”
  • The advisory group will explore the technical, legal and regulatory frameworks needed to improve the links between the global supply chain and financial institutions, GSBN said. The group will also test digital solutions such as electronic Bill of Lading and other supply chain data to improve the financing process for banks.
  • “Bringing shipping and logistics players onto a digital ecosystem will enable critical information and documents to be seamlessly shared, processed and transacted between the multiple participants in the trade flow,” said Sriram Muthu Krishnan, Managing Director and Group Head of Product Management at DBS Bank.

See related article: How blockchain is transforming shipping and redefining global trade