In recent years, global trade has undergone a digital revolution. Online marketplaces and digital platforms have made it easier than ever for buyers and sellers to connect, regardless of their location. At the same time, digital technologies have transformed financial operations, making it possible to conduct transactions instantaneously and with minimal fees. As a result, global trade is now more efficient and accessible than ever before.
This piece is posted in Global Trade Review and covers topics of interest around digitization of financial operations, the reasons for continuing down that path, and then some commentary about sustainability, which can have different meanings depending upon one’s corporate perspective. We of course cover most of this on an ongoing basis from the perspective of improving corporate performance as it relates to the bottom line and balance sheet strength, these days underlined by the need for effective supply chain management.
GTR: What global macroeconomic trends are accelerating the adoption of technology and sustainability in 2022?
Muthukrishnan: A significant push factor for increased digitalisation has been the pandemic and the lockdowns it triggered around the world. This has highlighted the need for digitalisation, and more corporates and SMEs are looking for ways to digitise their processes to overcome restrictions in mobility and logistics disruptions, increase efficiency and expand market reach...
The second trend is the rise of e-commerce. We see this as one of the most defining changes to the way in which business is done. It also transcends trade finance, payments and collections because of the growth of the direct-to-consumer model. Corporates are also demanding a banking experience that mirrors the consumer’s. Why should it be so much more difficult to place an order for 1,000 t-shirts for a trading company compared to placing an order for one by a consumer?…
Last but not least, sustainability is high on many corporates’ agenda. It is not only about the environment and responsible practices within a specific organisation, but also about ensuring long-term business viability, while spanning the entire value chain.
Those who have interest in the commentary of a senior banker in an innovative Asian Pacific transaction banking institution may wish to review the full posting, since it has relevant thinking vis-à-vis trade finance, technology partnerships, and the value of a strong supply chain. These are all topics that have remained at the top of the priority list as global trade continues to undergo the stress and strain of economic disruptions brought on by multiple factors.
‘We consider this to be important because it is difficult for a single company or a single provider to be everything to everybody and to be everywhere. Of course, a few large banks might say they can do this, but in reality, no one has coverage of every aspect of a supply chain…
Although DBS has superior proprietary supply chain finance capabilities, we are open to partner with leading platforms in different markets to increase market reach and deliver our solutions at scale. An example is our collaboration with Infor Nexus to co-create a digital and data-led financing programme for their client base that provides faster and more efficient trade financing. Partnering with Infor Nexus – which is deeply entrenched in the apparel industry flows – was a win-win for us and a good example of a strategic partnership. While the platform was able to help its customers obtain financing support and advisory from DBS, we were able to access a wider base of suppliers operating on the platform.’
Despite these advances, however, global trade remains complex and difficult to navigate. Different countries have different rules and regulations, and the process of shipping goods from one place to another can be cumbersome and expensive. As digital technologies continue to evolve, it is hoped that they will help to simplifying global trade and make it more accessible to businesses of all sizes.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group