According to the Asian Development Bank, the global trade finance gap in 2020 widened to $1.7 trillion. There are no prizes for guessing why. Social isolation and lockdowns, at times, have ground the world to a near halt, not least of all in trade and its financing. Especially hard hit were SMEs. This article looks at the innovators in the trade finance space through the awards issued to them by Global Finance and its World’s Best Trade Finance Providers 2022.
Chances are, if you swim in the waters of the financial world in almost any capacity, you
will be at least vaguely aware of Global Finance Magazine. It was established in 1987
and is released on a monthly basis. The motivation behind the magazine was to delve into the globalization of finance with its target audience being Chairmen, Presidents, CEOs, CFOs, treasurers, and other wider financial roles.
The magazine is distributed through 158 countries worldwide, has over 50,000 subscribers, and is certified by BPA Worldwide. Global Finance has offices in New York, London, Milan, and Rio de Janeiro.
Ultimately, the magazine holds a number of award ceremonies each year to acknowledge outstanding institutions and entities in the financial space and the largest of these is held in time with the International Monetary Fund(IMF) and World Bank annual meetings.
In selecting winners, Global Finance gathers input from industry analysts, corporate executives, and technological experts, and they also consider submissions made by financial service providers as well as independent research. The awards covered here are drawn from 102 countries through eight regions, and are based on performance from the 4th quarter of 2020 to the 3rd quarter of 2021. The winners themselves are those entities that have shown to best serve the needs of businesses as they operate across borders. Winners may well not be the biggest businesses in a particular industry, but rather the best: they exhibit attributes companies should most consider when choosing a service provider
To the winners then. These are shown with their categories in Figure 1. The standout entity is BNP Paribas. BNP Paribas: A French international banking group, BNP is the leading European bank in terms of business and profitability. According to Fintech Magazine, BNP owned assets $3000 billion in value as of September of last year, is the 7th largest banking group as of October 2021, and is present in 65 countries around the world.
Global Finance awarded BNP the Best Trade Finance Provider – Bank. It was also awarded the best Regional Winner: Western Europe. Finastra: Awarded Best Trade Finance Provider – Non-Bank, Finastra is a London-based Limited company that offers a variety of products and solutions to retail banking, transaction banking, lending, as well as treasury capital markets (Wik).
Finastra came into being in 2017 when Misys – a financial software provider – and D+H – a payments technology provider – merged. At the time, the company was thought to be one of the largest financial services companies in the world.
Shinhan Bank: Shinhan Bank is based in Seoul, in South Korea, its second largest bank (Banks Around the World). It is considered to have been the first bank in Korea and was originally called Hanseong Bank being founded in 1897. It is part of the Shinhan Financial Group, along with Jeju Bank.
It has been awarded Most Innovative Bank for Trade Finance due to its ongoing push to use the digitalization of trade finance to simplify the sector and utilize AI in compliance adherence. GeTS Asia: Global eTrade Services Asia was awarded The Best Provider of Sustainable Finance Solutions in Trade Finance for its creation of its Green Trade Navigator. The navigator is able to calculate the carbon footprint of trading activities within the supply chain.
The navigator assesses the amount of gas emissions that come with each trade and traders can then use a ‘green score’ to obtain green trade reports and make applications for invoice finance by scrutinizing sustainable practices. The navigator too has automated functionality built into it that provides advice on what aspects of a companies trading can be more sustainable.
Ahli United Bank: Is a regional bank based in Bahrain. Its head office is based in Manama and it is the largest bank in the country (AUB). It has been awarded The Best Bank for Export Finance. AUB is present in eight countries around the Middle East and the United Kingdom. It was formed in May 2000 through a merger between The United Bank of Kuwait and Al-Alhi Commercial Bank.
Standard Chartered: Awarded Best Trade Document Management, Standard had already achieved renown for being the first to issue a renminbi-denominated blockchain LC (on Contour: a blockchain-based trade platform). A leading steel manufacturer chose Standard Chartered Hong Kong to provide the first back-to-back LC structure and eDocument presentation with essDOCS. A multinational banking corporation, Standard is based in London and operates a network of over 1200 branches across more than 70 countries worldwide.
Sberbank: Is a Russian state-owned financial services company headquartered in Moscow and has been given the award for Best Use of Artificial Intelligence in Trade finance. In 2014 it was the largest bank in Russia and Eastern Europe, the third largest in Europe, and ultimately ranked as 60th in the world’s largest banks in terms of its assets (as per S&P Global Market Intelligence). Its AI algorithm finds the best trade finance offers for clients. How this bank fares going forward however has become somewhat of a question mark as during the writing of this article, the Russian state invaded the Ukraine and sanctions from countries all over the world have been levied on the Russian government and are ongoing.
we.trade: Awarded The Best DLT Platform for Trade Finance, we.trade has shown itself to be the premier platform through which buyers, sellers, bankers, and logistics businesses, can communicate across a network to make cross-border trading simpler and more expeditious. Owned by 12 banks, the company was started in January 2017 by nine banks under the title Digital Trade Chain and was renamed soon after. The platform is based on Linus Foundation’s Hyperledger Fabric that runs on the IBM Blockchain Platform
CGI: Awarded Best Trade Finance Software Provider, CGI have created application programming interfaces to assist clients as well as drive innovation and change in supply chain financing. This is in aspects of the space such as payables financing, eSignature solutions, process automation, digitalization and integration of documentation, utilization of blockchain technology, and sustainable supply chain finance and loan product offerings
TDB: The award for Best Bank for Trade Finance in Frontier Markets went to the Eastern and Southern African Trade and Development Bank (TDB). The bank was set up to serve frontier economies and 16 out of its 22 member states are considered to be among the least developed countries on the planet. TDB has made huge strides forward by establishing financial frameworks that entwine ESG policy and systems. Areas where benefits have been seen are agriculture, productivity levels, food security, boost of high-value exports and their diversification, energy security, industrialization, job creation, and wider cross-border trade.
VTB Bank: has increased support for Russian exports and trade financing operations for clients in the countries of the Commonwealth of Independent States. VTB was awarded Best Bank for Trade Finance in Emerging Markets. Once again, since writing this article, the Russian state has invaded the Ukraine and international sanctions have been levied as a result. How this might affect VTB in the short and long term is open to speculation