Engaging in world trade holds enormous potential for business yet many companies, especially small- and medium-sized enterprises (SMEs), depend on access to banking services in order to unlock new markets. Trade finance allows companies to mitigate the risks associated with importing or exporting goods and services, permitting world trade to flow in a predictable and secure manner.
Trade finance has been a key catalyst of the expansion of international trade in the past century, and bank-intermediated transactions now represent more than a third of world trade, equal to trillions of dollars each year.
More than simply maintaining our international trading system though, trade finance is essential for the future outlook of global growth. SMEs are the backbone of the global economy, representing around 95% of the world’s companies and 60% of private sector jobs, and play a great role in promoting employment and social cohesion.
The supply or shortage of trade finance hurts SMEs the most, and thus has negative knock-on effects for economies and families across the globe.
While robust regulation is crucial for banks following the financial crisis, it is also essential that rules do not hamper banks’ ability to help businesses get financing for their international operations
Given the importance of trade finance for trade and economic growth, ICC publishes an annual Global Survey on Trade Finance with data from over 100 countries. The survey provides in-depth analysis on how trade finance trends are evolving over time, observing how policies are impacting banks’ funding and risk mitigation activities and where there is room for improvement.
The 2018 ICC Global Survey shows that over 60% of banks surveyed have implemented or are in process of implementing technology solutions to digitalise their trade finance operations. However, only 9% of banks reported that the solutions implemented have so far led to a reduction of time and costs in trade finance transactions. The report also reveals that the industry needs to do more to agree on common standards so that all the benefits of trade digitalisation can be realised.
ICC regularly uses its data to develop concrete policy recommendations to stimulate trade finance alongside international organisations and other public and private sector partners.