TRADE FINANCE
Supply Chain Innovation Technology’s role in supply chain management and trade finance Devid Jegerson Head of Customer Experience & Platform Development, National Bank of Fujairah, makes a compelling case for the adoption of distributed ledger and blockchain technology in trade finance
Devid Jegerson
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Table 1: List of essential banking services that can be disrupted by Blockchain technology
nternational trade and global value chains are essential both for the prosperity of nations and for reducing geopolitical tensions. The distribution of production worldwide has driven globalization while gradually narrowing the gap between developed and developing countries. As a result, international trade has made the world more economically balanced and inclusive. However, more remains to be done, and the poorest nations continue to have a minimal share of world trade. Participation in international markets and value chains requires breaking down trade barriers and establishing seamless processes at the core of an effective and efficient cross-border ecosystem. Improving border processes and systems has become even more critical as trade growth has slowed from historical highs, limiting its potential contribution to jobs, opportunities, and economic development. Nevertheless, experiments have shown that the current situation could significantly improve at many borders.
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PROCESS
DESCRIPTION
Payments
By setting up a decentralized ledger for payments (e.g., Bitcoin), blockchain technology could enable faster payments with lower fees than banks
Clearance and Settlement Distributed ledgers can reduce operational costs and bring us closer to real-time Systems transactions between financial institutions Fundraising
Initial Coin Offerings (ICOs) are experimenting with a new funding model that unbundles access to capital from traditional fundraising services and firms
Securities
By tokenizing traditional securities such as stocks, bonds, and alternative assets and placing them on public blockchains, blockchain technology could create more efficient, interoperable capital markets
Loans and Credit
By eliminating the need for gatekeepers in the credit and lending industry, blockchain technology can make borrowing safer and offer lower interest rates
Bill issuing
By replacing the cumbersome, paper-heavy bill of lading process in the trade finance industry, blockchain technology can create greater transparency, security and trust between trading parties worldwide
By storing customer information on decentralized blocks, blockchain technology Customer KYC and Fraud can make information sharing between financial institutions more accessible and Prevention more secure
Distributed ledger and blockchain technology guarantee to have farreaching implications for global trade and supply chains. Providing increased transparency, effectiveness and combination throughout supply chains has been one of the most fruitful areas for blockchain testing. There is a high
Banking and Finance news in the MEA market
probability that most supply chains will be influenced by blockchain technology.
The trade finance disruption Blockchain technology ensures a way for untrusted parties to agree on the state of a database without using an intermediary. By giving a ledger that no one manages
