Asia really is the trade finance innovation hub

The ASEAN-Australia Digital Trade Standards Initiative is yet another proof that Asia is one step ahead when it comes to innovation in trade finance.

Announced last month at the ASEAN-Australia Summit in Sydney, the initiative aims to “provide a framework for Australia and ASEAN countries to cooperate in developing, adopting and using international standards that promote digital trade and support inclusive economic growth in the region”. It is the first multilateral government initiative to standardise the booming digitisation of trade.

But Asian economies have been at the forefront of recent innovations, both on the public and private level. At the end of 2017, the Monetary Authority of Singapore (MAS) and the Hong Kong Monetary Authority (HKMA) announced that they would collaborate to launch a blockchain-based cross-border trade platform. The solution is expected to go live in 2019, and will be enable “the seamless transfer of digital documents and data across borders, starting with the Singapore-Hong Kong trade corridor”. Fintech vendors have already started pitching to the two authorities to be included on the platform.

Singapore launched its National Trade Platform last year, a trade and logistics IT ecosystem aiming to connect businesses, community systems and platforms, and government systems, which won the best e-business initiative award at the World Summit on the Information Society in June.

Meanwhile, Hong Kong started working with Deloitte, Bank of China, the Bank of East Asia, Hang Seng Bank, HSBC and Standard Chartered in April 2017 to develop a blockchain proof-of-concept that formed the basis of the government’s digital trade infrastructure, which the Singapore collaboration will leverage.

In comparison, most European and American attempts to harmonise the digitisation of trade have been by private consortia (think we.trade) or industry associations. The involvement of government authorities in Asia is having a double effect on banks: first, they have to keep in touch with developments in order to comply with new standards and regulations; second, they have more incentive to take their innovations further, knowing that their regulators will support them with the right framework.

Already, a number of banks in the region have recognised the potential of the secondary market for trade finance assets, and are ready to invest in the right platforms to support this development. As the collaborative network for trade finance investors and originators to connect, interact, and transact, Tradeteq just opened an office in Singapore, led by Mattia Tomba.

We see Asia as a key growth market for Tradeteq, as the wider region contributes 60% of the world’s growth and needs reliable access to trade finance. Singapore, with its business-friendly environment and infrastructure, is an ideal launchpad for us.