How Digital Disruptors Could Transform Trade Finance

If digital tracking can be baked into the physical flow of goods, via the IoT, then many of the bottlenecks to trade financing can be removed.


Digital disruptors are a key theme at this week’s Sibos conference in Singapore—and few developments hold more promise for transforming the corporate landscape than the “Internet of Things.

The IoT is not just changing the manufacturing space or helping companies makes use of mountains of process data. It also could also drastically alter the relationship between the physical and financial supply chains.

So much of a trade finance transaction is dependent on documentation of the physical movement of goods. If digital tracking can be baked into the physical flow of goods, via the IoT, then many of the bottlenecks to trade financing can be removed.

Ian Kerr, CEO of trade automation technology provider Bolero, noted in a recent thought leadership piece that a much closer tie-up between physical and financial trade flows, empowered by digitization, could create greater visibility of trade transactions and pathways, reduce risk and enable certainty of delivery.

“This may include, for example, using current real-world applications of electronics, software, sensors and connectivity to give individual IP addresses to shipments, containers and individual pallets within containers,”he said, noting that they could then be tracked digitally along the journey from seller to buyer.

“As organizations operating in the international trade network continue to move towards digital platforms and digital working, connected technologies and data-led processes could be the key to unlocking new commercial advantages,”said Kerr.

In a plenary session at Sibos on Tuesday morning, entitled: “The Internet of Things and banks’ core platforms,” panelist Oliver Bussman, CIO of UBS, said that trade finance is ripe for reinvention. He said that the IoT “is where the physical and [virtual] worlds are coming together.”

But the key challenges, here, are not just creating the infrastructure and solutions to support IoT-enabled trade, but also to convince global policymakers to create a regulatory framework that upholds it.

Watch this space.