Financial institutions are always seeking effective ways to integrate technology with existing processes to enhance productivity. Banks that facilitate international commerce are becoming more aware of the significance of digital operating models and the benefits they may deliver. According to the ADB study, the COVID-19 pandemic in 2020 would increase the issue of trade financing accessibility, and “panic and uncertainty” will exacerbate the problem of trade financing access. According to GTW Review, the demand-supply mismatch has expanded to a massive US$1.7tn, a 15% increase over the previous year's prediction of US$1.5tn.

Benefits of Trade Finance Digitisation

Trade finance digitization, alongside blockchain technology, took the spotlight in trade finance when the global pandemic hit. They served a key function in establishing an ecosystem that connects buyers and sellers in a safe and efficient trade financing environment. This not only safeguards financial institutions' future business operations, but also allows documents to move transparently and securely across banks, trading businesses, and other network players.

Financial institutions gain more control over importers' and exporters’ data, platforms, and smart contracts, which will codify the commercial and shipping aspects of a contract between parties. When the platform deems certain trade contract conditions are fulfilled, such as successful shipment of goods, the smart contracts generate payment alerts and proceed with payment. For total transparency, everyone with the necessary authority views the same information in real time, resulting in stronger confidence and elimination of fraud.

Trade finance digitization benefits corporations by helping them achieve better control of their credit facilities, reduce fees, and speed up application and other business processes. Enterprises can grow their transaction volumes without the requirement for additional credit facilities, leveraging blockchain technology's inherent characteristics of immutability, security, record keeping, and flexibility.

Conclusion: Growth in Digitization

Trade finance digitization enables financial institutions to open up new revenue streams through the development of new financing products, providing banking services to small and medium-sized organizations (SMEs), and reducing operating costs.

Additionally, trade finance digitization aims to improve current processes through mitigating potential financial risks, and speeding up cross-border trade for buyers and sellers.

DLT Ledgers is the world’s fastest trade finance digitization provider that utilizes blockchain technology to establish new and secure trading partnerships, uncover new liquidity pools, and create new business models. We deploy an integrated digital solution that provides transparency, visibility, and proper risk management in real-time.


For more information about us and what we do, visit our website at: dlt.sg