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Trade Finance: The landscape is changing—are you?

Regulatory changes and increasing market competition are changing the rules of the game.

Overview

Trade finance is an attractive business for banks, but the market is changing. If banks are to remain competitive, they will need to step up, innovating their trade finance client offerings and investing in their people, process and technology capabilities.

In this Accenture report, we explore how banks can stay in the game as competition from global and local players gets fierce.

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"Technological innovation, switches in corporate behavior, regulatory changes and increasing market competition are changing the trade finance game."
EDLE EVERAERT
Managing Director,
Accenture Banking


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Key Findings

Global trade of goods has been growing at double-digit rates since the early 2000s, outpacing the growth in nominal world Gross Domestic Product.

However, technological innovation in the form of digitization of channels and products, switches in corporate behavior and expectations, regulatory changes and increasing market competition are fundamentally changing the trade finance market space.

Technological innovation
Lots of banks are still meeting the increased expectations on online channel sophistication through proprietary, mono-bank solutions. However bank independent platforms—portals and many-to-many host-to-host connections—offered by software vendors are gaining importance.

Switches in corporate behavior and expectations
In addition, the focus of large corporates is shifting away from their own needs to the needs of their supply chain ecosystem consisting of a large number of often smaller companies.

Increasing competition
It is likely that nimble start-ups will be the first to leverage blockchain technology for trade finance, further adding to the threat for traditional banks.

Recommendations

What can banks do to stay in the game?

Innovate in product and channel offerings.
Extending the traditional trade finance products with sophisticated, online access and with supply chain offerings will be key for banks to safeguard their position and continue to drive growth. The supply chain offering spans a vast range of financing, payment and liquidity management services, and is still in full development with product characteristics varying between banks and geographies.

Get efficiency and scale in traditional products.
While new products and channels are emerging, traditional trade finance is getting more and more commoditized, leading to growing pressure on the need for efficiency in delivery. Banks are therefore modernizing their trade finance platforms, opting for proven technology solutions and maximum simplification and automation of processes. Outsourcing and offshoring strategies are imminent as the next step in the pursuit of cost savings.


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