Why is it taking so long to digitalise trade finance? While the rubber stamp underpins all documentary credits, and while courts will only accept paper in trade finance disputes, it’s hard to move forward. But if enough countries agree on the next steps, progress should be possible, says Deutsche Bank’s Daniel Schmand
In a session introduced by London Institute of Banking and Finance Relationship Director David Morrish on the first day of the World Conference of Banking Institutes 2019 at London’s Guildhall, Deutsche Bank’s Daniel Schmand, Global Head of Trade Finance and Chairman of the International Chamber of Commerce (ICC) Banking Commission was invited to address delegates on ‘Creating a new regulatory environment for a new global trade and finance reality’. This article is a summary of the main points of his talk.
Status quo, next steps and road ahead
“Thank you for the kind introduction and the invitation. I want to quickly go through three stages: first, what is the status quo of digital trade, where are we, and what are the constraints; second, what do I see as the next step for digitalising trade; and third, what is ahead of us and how this ties back to where we are now.
We have seen fintech initiatives mushrooming and nobody knows who is going to survive. Usually what happens with fintechs and some of the initiatives we have all seen is that people who have a very good technological understanding ask you, as banks, to pay money to basically help them to educate them and, in essence, hand over your intellectual property over to them. Then they will try to make a business model.
I have not yet seen any of the initiatives really taking off. Yes, we have blockchain and hyperledger in the mix, but if that is the best thing since sliced bread, why have they not been fully taken up and why are they not flourishing?
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