Top Innovators In Trade Finance | 2016

Trade finance is behind some other banking sectors in transitioning to paperless documents and digital distribution, but it’s catching up.

Table of Contents

Trade Finance Technology Catchng Up

This may be the age of fintech (financial technology), but the world of trade often bears better comparison with the Dark Ages than the digital age. Phones, faxes and paper—not computer nodes and e-documents—are still the order of the day. But if our Innovators in Trade Finance are anything to go by, that is all about to change.

Online trade finance portals, as well as competition from nonbank providers in trade document management and supply chain finance, have forced banks to up their game. A number of product innovations, including new instruments such as the bank payment obligation, have facilitated the development of more streamlined, automated trade settlement for multinationals. More traditional instruments, such as the humble letter of credit (L/C), are being re-purposed to help a new generation do business in frontier markets such as Africa.

Digitizing a purchase order, L/C or bill of lading may sound like a no-brainer, but for an industry that has spent the past 20 years trying to automate pieces of paper, it has been a long and difficult road with many failed projects. However, the promise of fully automated trade, end to end, among multiple counterparties is no longer remote. The challenge is to get more parties in the trade settlement process involved and for the banking industry as a whole to come to grips with a lack of centralized control.

Further digital benefits accrue from the ability to leverage Big Data. Nonbank providers are already using information from collaborative buyer/supplier networks to extend supply chain financing earlier in the process—preshipment—to the small and midsize enterprises that most need it. Banks seem to be missing a trick here, and it may be that innovation is needed in the financial metrics that underpin decisions as to which companies get funded.

This year’s innovators are a mix of firms plunging into digital waters and those that are dipping in toes, refining existing processes or devising solutions that enhance the customer experience and streamline trade-document management and settlement.


The Innovators Of Trade Finance 2016

Type Of Innovation

Abu Dhabi Commercial Bank

Process Innovation

L/C + Confirmation + Irrevocable
Reimbursement Undertaking

Standard Chartered, DBS and Infocomm Development Authority of Singapore

Product/Process Innovation

Irrevocable Distributable Ledger

ING Bank

Process Innovation

Third-Party Funders

Intesa Sanpaolo

Process Innovation

Dematerialization of Trade Documents

Standard Chartered Bank

Process Innovation

Bank Payment Obligation

Banco Bradesco

Product/Process Innovation

Easy Receipt

Bank of America Merrill Lynch

Process Innovation

Document Retrieval Solution


Process Innovation

Fully-Digitized Platform for BPO Execution


Product/Process Innovation

Trade Finance Global





Product/Process Innovation

Basware Advance

GT Nexus and Seabury TFX

Product/Process Innovation

Small Seller and Standard Seller Program



Abu Dhabi Commercial Bank | Process innovation

ADCB combined a number of solutions—letters of credit, risk mitigation tools, as well as a proprietary documentation preparation service—to mitigate risk for a client looking to enter the Libyan and Egyptian markets. The solution minimized the client’s risk of doing business in new markets with new buyers. The combination of the L/C with confirmation and an irrevocable reimbursement undertaking guaranteed that they would receive payment for the goods.

Standard Chartered, DBS Bank and Info-comm Development Authority of Singapore | Product/process innovation

A collaboration between Standard Chartered, DBS and IDA Singapore—one of the first in the trade space—demonstrated the potential value of an irrevocable distributable ledger that facilitates exchange of digitized assets on a decentralized, distributed network of third parties to reduce the risk of fraudulent invoices and duplicate financing. Authenticating trade documents has historically been a highly inefficient, manually intensive process; this proof of concept took a major step toward a fully automated solution that enables multiple, independent, decentralized third parties (banks, governments) to check the status of an invoice without impinging on confidentiality.

ING Bank | Process innovation

With regulations impinging on banks’ ability to invest in supply-chain finance, a number of providers have spoken about the need to attract a different class of nonbank investor. For the most part, few programs have managed to attract interest from outside investors such as hedge funds and private equity firms. However, ING says by the end of this year it will have brought in 15 different investors (both banks and nonbanks), generating more than 20 separate investments in more than five different SCF programs. Leveraging a broader funding base will enable ING to more readily scale up its SCF programs.

Intesa Sanpaolo | Process innovation

Despite advances in digital technology, the fully digital exchange of trade documents (bills of lading, purchase orders, invoices) among all counterparties in the transaction value chain, (banks, customs, shipping companies, insurers) is still a dream rather than reality. An e-presentation module on ISP’s corporate banking platform enables clients of the bank to exchange trade documents electronically with all counterparties to a trade. The bank is also piloting a program to fully digitize a trade transaction end to end.

Standard Chartered Bank | Process innovation

Standard Chartered completed the first fully automated bank payment obligation transaction for an automotive dealer in the Middle East/ North Africa region. It is believed to be one of the largest BPO transactions globally. Previously, the company had used letters of credit to conduct trade on open account, but L/Cs are costly, time-consuming and manually intensive. The BPO provides an irrevocable undertaking between a buyer’s and seller’s banks that payment will be made, but in a more streamlined process, with the electronic matching of data based on a defined set of rules. As the process is automated end to end, goods can be cleared faster and payment made more quickly.

Banco Bradesco | Product/process innovation

Traditionally, distributors of goods relied on checks or cash for payment. Using Banco Bradesco’s Easy Receipt expense tracker, they can now receive payment immediately on delivery via the text message. The driver sends a message to the buyer’s registered cellphone. Money is automatically debited from the buyer’s account, and an text message confirmation is sent to both parties. The seller doesn’t have to wait for the buyer’s check to clear. Funds are automatically debited and credited, a transaction both parties witness in real time, with a record via SMS confirmation. Both the distributor and buyer must have accounts with Bradesco, but the SMS messages provides a safer, faster method of payment than cash or checks.

Bank of America Merrill Lynch | Process innovation

Data capture technology and the addition of metadata enables corporate customers using the bank’s CashPro Trade portal to more easily identify and retrieve documents. Trade between buyers and suppliers is contingent on the exchange and approval of various documents. BofA Merrill devised a document-imaging module as part of its CashPro Trade offering. The addition of metadata to the document image provides a more “robust query tool” to help trade clients of the bank more quickly and easily find and link related documents, which are required for transaction approval. This cuts down on time spent retrieving and reviewing trade documents, which has an effect further down the supply chain in terms of ensuring goods are delivered more quickly and payment is received on time.

UniCredit | Process innovation

By providing a single digital platform for every step in the bank payment obligation process—from initiation of a transaction to settlement—UniCredit has made the process significantly quicker and more convenient for customers. A single digital platform also enables UniCredit to bring its BPO settlement solution for open-account trade to new customers and markets more quickly and effectively. As UniCredit rolls out BPO to more corporate customers in new markets, to ensure a seamless transition and speedier adoption, the bank needs to ensure that clients, regardless of which country they’re located in, understand the procedures involved and can easily execute them.

Nordea | Product/process innovation

A new, upgraded front-end customer application, Trade Finance Global leverages the latest technologies to digitize the handling and presentation of all trade documents. Trade Finance Global aims to make the trade process more seamless and automated for the bank’s corporate clients. Document handling and preparation are fully automated, and communication with Nordea trade finance experts or other members of the client’s company can be carried out via the same platform without having to go offline. Any discrepancies with trade documents can be more easily resolved. Streamlining the document approval process shortens ship-to-payment time, which enhances working capital.


Basware | Product/process innovation

Basware Advance, a new online solution, aims to address a gap in the market when it comes to small and midsize enterprises (SMEs) finding affordable financing. Instead inflexible forms of finance (credit cards, bank wires, factoring) that typically cover only 80% of their receivables, companies can connect to one of the largest B2B networks in the world, the Basware Commerce Network. It provides access to the Virtaus Cloud financing tool. Companies can leverage the power of the network to receive financing for different invoices they select, giving them greater control over their working capital. Visibility of the financing process is enhanced with companies able to track the status of financing and the payment status of invoices. The time taken to approve financing is also significantly reduced.

GT Nexus and Seabury TFX | Product/process innovation

Companies that extend financing to suppliers consider criteria such as credit rating or balance sheet. However, smaller suppliers, particularly those in developing markets, are usually below investment grade, and thus often precluded from buyer-led supply-chain finance programs on the basis of their poor credit rating or financial strength. GT Nexus and Seabury TFX have come up with a creative solution. Instead of looking at financial metrics, Seabury TFX studies the transactional data on the GT Nexus B2B network, which provides insights into a supplier’s trading history and ongoing transactions. It then uses that data to provide suppliers both pre- and post-shipment financing options on a sliding scale, depending on their platform history. Suppliers using this financing option do not need to provide any up-front collateral. The solution speeds up the financing approval process, reducing it to days, instead of the usual weeks or months.