Trade finance is a dynamic, highly innovative business with multiple opportunities linked to new technologies and environmental/social/regulatory demands.
In that context, I see three major challenges for banking players:
How to gain sustainability, speed and cost out in order to expand in trade finance—particularly with the small-to-medium enterprise (SME) segment? Which partners should the bank leverage to create the optimal stack of solutions?
With the growth of supply chain and banking consortia, how to differentiate in terms of offer and development of ecosystems? But also, as a member of different consortia developing common software solutions, how to develop the competencies needed to become a software company?
As Asian tech giants enter the trade market—leveraging their already established SME relationships—how to retain a share of the total market and which posture to develop vis-à-vis those platforms?
Banking players’ response to these challenges—and to the macro problems presented by the global economy—will, in my view, determine their success in defending and building a bigger share of the trade finance market.
For more on trade finance, have a look at my previous blog series, where I examined the need for change, impacts of blockchain and how banks can recapture momentum.
In my next post, I will be examining maturity levels among different players in the broad category of Open Banking.