As with seemingly everything at the moment, digitalisation is revolutionizing trade finance. With the introduction of new and exciting technology such as blockchain and AI, trade finance is quickly beginning to look different. Financial institutions across the board are actively exploring exciting new technology in order to automate and streamline their processes.
While AI may be the most talked about topic, there are other technology and digital trends that are likely to shape the future of digital trade, too.
Here’s how we believe that the digitalization of trade finance will change the trajectory of the industry and some of the top trends to look out for.
Artificial intelligence
The world’s eyes have been on artificial intelligence lately and with good reason. There have been recent advances in deep learning this year, which has led to a dramatic increase in AI startups. AI is powering so many different aspects of industries, now. Trade finance is no exception.
AI is being used in trade finance already, but this is likely to increase as the technology continues to develop. AI can completely elevate trade finance by automating manual processing. These manual processes in trade finance are notorious for being tedious, long, and susceptible to human error.
AI, in this regard, is improving risk management and enhancing decision-making. A great example of this is how AI is helping financial institutions to make better lending decisions with an automated credit scoring tool.
Blockchain technology
Blockchain technology is also completely transforming trade finance. Blockchain and AI can easily and seamlessly work in conjunction, too. Making the benefits of both AI and blockchain technology-enhanced.
Blockchain is already being used in many trade finance operations, this will only increase as the benefits of using such technology become more well-known, too. Blockchain technology is being used to help reduce costs and time that are commonly associated with cross-border payments. It is also helping to reduce the risk of fraud and improve transparency. This is a massive trend that will continue to develop in the future.
Electronic documentation
If you are in the trade finance sphere, you would have likely already seen a massive switch to electronic documentation. This is a trend that will continue. Electronic documentation, just like blockchain and AI, also reduces time and associated costs. Paperless is the way forward.
In trade finance, electronic bills of lading will become the go-to. This will reduce risk of errors, speed up the process, and help with security.
Digital trade platforms
Digital trade platforms are becoming more standard, too. Digital trade platforms are essentially platforms in which buyers and sellers can connect in the digital marketplace. It’s beneficial to both parties and will continue to grow and evolve.
If you’ve been on one of these platforms, you’ll be aware that these platforms can reduce admin work as well as provide both buyers and sellers larger access to potential trading partners. Digital trade platforms will be such a huge trend as digital technology develops, and will completely elevate the industry.
If you are in the trade finance sector, you should consider using one of the emerging digital trade platforms that are currently available.
Integration
Trade finance has been integrating itself with other enterprises for a little while now. This is likely to continue to be a trend in the future, too. Trade financing has been integrated with logistics and supply chain management, for example. This integration with other systems can improve the visibility and efficiency of trade operations, as well as help with better decision-making and provide better data.
It will be incredibly exciting to see what new integrations will elevate the trade finance industry.
The future of digitalisation in trade finance is incredibly interesting. It is being defined by an increase in AI, greater transparency, and improved efficiency – all with the help of evolving and emerging technologies. As this technology continues to progress, new innovations will make way for new solutions. There is no doubt that the trade finance landscape and sphere will adapt and change.
Digitalisation has already solved many issues that trade finance has faced for a while. As AI and blockchain, in particular, developing trade finance will undoubtedly benefit.