2018 GLOBAL SURVEY REPORT
Global trade: Securing future growth
A lack of access to trade finance is a barrier preventing small business from making the most of the opportunities that trade provides and it demands our urgent attention.
Trade financing is an essential tool to enable the trade of goods and—increasingly—services, allowing local firms and value chains to sell into global markets.
A comprehensive digital transformation of trade will not be successful until all major links in the value chain collaborate.
Providing essential data on trade and receivables finance, ICC’s Global Survey plays a crucial role in building transparency so that together our industry can act to close global trade finance gaps.
Digitalisation in the trade finance sector will boost economic growth and sustainable development. Digitalisation will make trade more inclusive.
We need to do everything we can now to stimulate growth. Trade finance is an obvious place for policymakers to start.
Executive Director, International Trade Centre
Partner and Managing Director, BCG
Global Head of GTRF and Group General Manager, HSBC
John W.H. Denton AO
Secretary General, International Chamber of Commerce
Sir Michael Rake
Chairman, ICC United Kingdom
Where will future gains come from?
Protectionism, transformative technologies, shifting economic trends… Trade and trade finance are in a state of global uncertainty. So where are banks looking to secure future growth?
New players, new places: Banks expect medium-term gains from non-bank entities and greater geographical coverage
Please indicate what you consider to be the priority areas of development and strategic focus for your bank in terms of growth and evolution in the financing of international trade?
In the next 12 months
Traditional trade finance 72%
Supply Chain Finance 42%
Organisational structural reform towards transaction banking 33%
Financing new sectors 32%
Digital trade and online trade platforms 29%
New alliances between banks and FinTechs 27%
Attraction of non-bank capital to create additional trade financing 23%
Change in geographic coverage 21%
Emerging technology, such as Digital Ledgers 17%
In the next 1-3 years
Traditional trade finance 32%
Supply Chain Finance 38%
Organisational structural reform towards transaction banking 43%
Financing new sectors 47%
Digital trade and online trade platforms 29%
New alliances between banks and FinTechs 43%
Attraction of non-bank capital to create additional trade financing 29%
Change in geographic coverage 36%
Emerging technology, such as Digital Ledgers 38%
In the next 3-5 years
Traditional trade finance 5%
Supply Chain Finance 18%
Organisational structural reform towards transaction banking 24%
Financing new sectors 21%
Digital trade and online trade platforms 26%
New alliances between banks and FinTechs 30%
Attraction of non-bank capital to create additional trade financing 48%
Change in geographic coverage 42%
Emerging technology, such as Digital Ledgers 46%
Trade finance barriers: What might stand in the way of future growth?
From new regulatory regimes to fintech disruption, what do banks see as the biggest obstacles to future trade finance growth?
It’s all about compliance
Not at all / Not very concerned
Regulation and compliance 6%
Counter-terrorism and international sanctions regulation and compliance 13%
Competition and disruption from FinTechs and Non-Banks 32%
Increasing protectionist and trade-restrictive measures 33%
Volatile commodity markets 34%
Capital constraints 34%
Reduction in pool of senior technical specialists 34%
Legacy technologies 38%
Shifting trade flows and corridors 48%
Somewhat / Extremely concerned
Regulation and compliance 93%
Counter-terrorism and international sanctions regulation and compliance 87%
Competition and disruption from FinTechs and Non-Banks 66%
Increasing protectionist and trade-restrictive measures 65%
Volatile commodity markets 64%
Capital constraints 64%
Reduction in pool of senior technical specialists 63%
Legacy technologies 54%
Shifting trade flows and corridors 48%
Regulation and compliance 1%
Counter-terrorism and international sanctions regulation and compliance 0%
Competition and disruption from FinTechs and Non-Banks 2%
Increasing protectionist and trade-restrictive measures 2%
Volatile commodity markets 2%
Capital constraints 2%
Reduction in pool of senior technical specialists 3%
Legacy technologies 8%
Shifting trade flows and corridors 4%
Q4. Please find a list of potential obstacles to your bank’s growth prospects in the financing of international trade. How concerned is your bank, if at all, about each of these? (Note: Unable to trend due to structural change in question)
Going digital: Where are we at?
From Big Data to blockchain, everyone agrees that digital technologies hold immense transformative potential for the global trade finance industry, which remains largely paper-based. Looking at the reality on the ground, though, how far along are banks in their digital transformation?
Post-paper? Documentary transactions are rarely fully digitised
While progress is being made towards digitalisation, document verification is a notable laggard when it comes to removing the use of physical paper.
- To a great extent; fully implemented for all transactions
- To some extent; implemented for some transactions
- To no extent; not implemented at this time
Q10. To what extent has your bank removed the use of physical paper for documentary transactions?
Digital maturity: Most banks remain years away from digitalisation
While only 12% of respondents have successfully implemented technology solutions in their trade finance operations—and only 9% have found the solutions to increase efficiency—the Global Survey results show clear movement towards greater digitalisation.
We have successfully implemented solutions but benefits not yet evidenced 3%
We have successfully implemented resulting in a reduction of time and costs 9%
We are currently struggling to implement technology solutions 13%
We have implemented technology solutions but there is room for improvement 36%
Technology solutions implementation is on our agenda for the next 1-2 years 30%
Technology solutions implementation is not on our agenda at this time 7%
Don’t know 3%
Q12a. Please indicate the maturity of your organization in using technology solution to achieve benefits such as reduced time and costs as well as improved associated with trade related due diligence?
MACROECONOMIC CONTEXT FOR TRADE AND FINANCE
- Setting the scene/WTO Director-General Roberto Azevêdo
Unmet demand for trade finance leads to a loss of economic growth and global trade, but the international community is stepping up efforts and working together to improve trade finance.
- Global Economic Outlook/Protectionism and reform complacency could imperil a sustained recovery
The global economic recovery is hardy by many measures. But economists see many risks in the not-too-distant future, and much remains to be done to capture the jobs of the future. Economists from the World Bank give their own views.
- Global trade and supply chains/Growing anew, but for how long?
Global trade may be flowing faster but anti- trade rhetoric could have an impact. 3 scenarios to forecast trade and trade finance evolution.
- Commodity trade finance/La vie en rose ? Not quite
Commodities are attractive again to investors. But the effects of depressed prices in 2015 are lingering.
FINANCE FOR TRADE
- Setting the scene/International Trade Centre Executive Director Arancha González
Governments are helping to bridge the gulf in trade finance, especially in developing countries, evidenced by recent declarations on financing for development and to expand trade finance support for under-served groups, such as women.
- ICC Global Survey on Trade Finance / Where banks stand on strategy and operations
ICC Banking Commission
An analysis of the wider context for trade finance and supply chain finance based on responses gathered from 251 banks across 91 countries and a total US$9 trillion of trade finance processed.
- SWIFT trade traffic/The year in review
The SWIFT interbank payment system offers a bird’s eye view of global trade activity in the last year. It also reveals upcoming changes in messaging standards for trade finance.
- TXF-ICC Export Finance Survey/ Profits hold up amid mixed views on the market
A total of 65 senior professionals share their views in the annual TXF-ICC survey on the export finance market on a range of measures.
- Export credit and investment insurance/ Strong performance, but political risks cast a long shadow
2017 was a good year for underwriters of export credit and investment insurance, but the current environment for political risks remains delicate.
- Multilateral development banks/ No letup in expansion
ADB, AfDB, EBRD, IFC, ITFC & Finance for Impact
A deep dive deep dive into the trade finance activities of multilateral development banks – and what’s in the pipeline.
REGULATION AND COMPLIANCE
- Setting the scene/ Worldpay CEO Sir Michael Rake
The public and interested parties must understand that a more proportional regulatory regime for trade finance will boost economic growth and not backtrack on the hard-won safeguards put in place to prevent another financial crisis.
- Making trade finance attractive investments/ What it would take
Krishnan Ramadurai and Surath Sengupta, HSBC
Remedies to make trade finance really catch on as an investment.
- Trends in trade finance regulation/ Dealing better with anti-money laundering
There are three new methods to more efficiently deal with all the new regulations on money laundering, terrorist financing and sanctions.
- Risk-based regulatory compliance/ Back to basics for better surveillance
As regulations get ever stricter, increasing time and resources required, organisations can get more efficient in pinpointing which cases to pursue, by following suggested actions.
- Basel IV/ Will new rules help or harm the market for trade finance?
Félix Prévost and Krishnan Ramadurai, HSBC
An explanation of the new requirements under Basel IV, the wider ambition of the reformed standards, and how trade finance will be affected by these.
- Regulating business/ The two pillars of ethical regulation
University of Oxford and AretéWork LLP
Two of the world’s experts on ethical regulation spell out the state of play in curbing corporate malfeasance and offer a new way forward.
- Setting the scene/ ICC Banking Commission Chair Daniel Schmand
A call to action for collaboration addressed at the trade finance industry, as it sits on the cusp of a digital revolution. The growth experienced and further anticipated by banks in terms of value of trade finance and supply chyain finance processed needs to be sustainable.
- Digital trade/Plotting the path to transformation
Early indications show the trade finance industry could make big savings in time and staffing today, through methods such as Robotic Process Automation, and blockchain is quickly turning into a commercially viable proposition. But the hurdles to an all-digital strategy may be more political than technical.
- Digitising trade/ Kicking it into higher gear
ICC Working Group on Digitalisation
ICC’s working group on digitisation gives an overview of where things stand on developing minimum standards for digital connectivity, electronic documents, on the shelf solutions, and cutting edge technology.
- Conflicts in laws/ Time to get your clauses in order
Why banks need to take a hard look at their policies, procedures and exposure – and tread carefully in using electronic contracts.
- Digital forfaiting/ Making distributed ledger tech a reality
Forfaiting may help solve the problems getting in the way of commercialising distributed ledger technology (DLT).
- ICC’s work on sustainable trade finance/ Blueprint in the making
ICC Sustainable Trade Finance working group
A new ICC working group on sustainable finance started in 2016 is looking into standards, a due diligence tool, and ways to spread best practices.
- Voluntary sustainability standards/ Schemes are spreading
International Trade Center
Consumers are getting savvier about the carbon footprint of the products they buy – a big reason for the growth in voluntary sustainability standards – but several problems need to be solved on the use of voluntary sustainability standards.
COUNTRIES IN FOCUS
- Global trade in 2028/ Singapore’s digital trade finance journey
Enterprise Singapore, Monetary Authority of Singapore, National Trade Platform Program Office
Singapore lays out its vision for a globally connected, digitized world for trade and trade finance.
- From the field/ How China finances its growing trade and globalisation
Jun Xu, Bank of China and Vincent O’Brien, ICC Banking Commission
China’s trade finance market has some unique features, and the country is moving forward with novel ways to fund e-commerce.
- SINOSURE view/ What’s driving China’s galloping growth in trade finance?
China Export and Credit Insurance Corporation (SINOSURE)
Amid a transformation of China’s foreign trade structure, SINOSURE is providing risk coverage as the country transitions to an innovation-led economy.
About Global Survey 2018: Securing future growth in trade finance
Published annually, the ICC Banking Commission’s Global Survey report is an unparalleled look into the global trade finance industry. Based on exclusive information from over 250 banks in more than 90 countries, the Global Survey offers invaluable perspectives on challenges and opportunities in the trade finance industry from the practitioners themselves. The survey results are bolstered by contributions from an international array of leading voices on trade, including experts from the World Bank, Boston Consulting Group and the World Trade Organization.
Global Survey, global perspective: Respondents around the world
banks participated in the 2018 Global Survey, from 91 countries
Estimated global value of trade finance transactions processed by respondents
of trade finance is provided by 13 banks, or 8% of Global Survey respondents
Western Europe 25%
Asia Pacific 22%
Central and Eastern Europe, the Baltic States and the CIS 14%
Latin America 12%
Middle East 8%
North America 8%