Three banks, the Bank of China, Singapore’s DBS and HSBC partnered with the Global Shipping Business Network (GSBN), a Hong Kong-based non-profit consortium, in order to form a trade finance advisory group.
According to the International Chamber of Commerce (ICC), there is an estimated trade finance gap of USD 1.5 trillion projected to grow to USD 2.5 trillion by 2025.
In fact, the mandate of the Trade Finance Advisory Group is to help bridge this financing gap by helping partner institutions improve their existing processes, by leveraging trusted digital data from supply chains. In turn, this will help enhance financing support for small and medium enterprise, many of which have been deeply impacted by the COVID-19 crisis.
The announcement builds upon the recent growth of GSBN, following the rollout of its Cargo Release application across Asia and partnerships with 8 major port groups in China.
The COVID-19 pandemic has demonstrated many areas where paper can be eliminated in favour for more efficient, trusted digital systems. Given the symbiotic relationship between the shipping sector and finance, we must explore how we can connect with, and enhance banking processes to bridge the $1.5 trillion trade finance gap.
…Bertrand Chen, CEO at GSBN, said.
The advisory group will explore the technical, legal and regulatory frameworks needed to break the siloes between the global supply chain and financial institutions.
Furthermore, the group will also work together to test digital solutions such as electronic Bill of Lading and other supply chain data to improve the financing process for banks.
As part of GSBN’s rapidly growing ecosystem of members that including the likes of COSCO, Hapag-Lloyd, Hutchison Ports, OOCL and PSA, the Trade Finance Advisory Group will also benefit from collaboration and co-creation opportunities with various market participants.