Trade finance for all? Industry approaches to widening reach

Daniel Schmand of Deutsche Bank and the ICC Banking Commission and Sean Edwards of the International Trade & Forfaiting Association and SMBC talk to Trade Finance TV’s Clarissa Dann about trade finance access in a safe and sound environment, and facilitating trade flows

Given the new normal of uncertainty in trade, they discuss how trade will always find its way and financiers will go getting finance to those that need it most. They talk about how the secondary market has grown to include private credit insurance and plays a huge part in helping banks adjust their liquidity, despite being relatively “silent”.

The ICC Trade Register underlines the low default rate of trade finance, which helps support its credibility as an asset class. “We are at an inflection point of creating trade finance as its own asset class, and there is a lot of liquidity in the market that needs to be invested,” says Schmand. Edwards points out that the ICC trade finance gap estimate of US$1.5trn is not shrinking and it is getting harder to service SME with trade finance.

While both guests agreed that you need to control trade finance flows in a safe and sound way, the industry has to take responsibility of managing the non-financial risk of trade flows or lack of them as well as the financial ones. 

“Post acceptance finance is well catered for, but we really have a gap in pre-acceptance and pre-delivery,” says Schmand. He sees this is as the space where international banks, multilaterals and regional/local banks need to come together and agree a solution.

“The Trade Information Network (the Network), is a very encouraging first step it is completely open and, says Schmand, “We learned from fintechs that banks can become disenfranchised if networks are not open.”

Published on January 28, 2019

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