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For years, trade finance and cross-border payments have looked ripe for disruption by distributed-ledger technologies. Asia provides some firm examples of breakthroughs, but – in the second of a two-part series – Euromoney asks whether trade finance will always be just that little bit too complicated for the blockchain?
Ever since distributed-ledger technologies and blockchain entered the industry lexicon about six years ago, it has been widely believed that trade finance ought to be an area where this technology should excel.
It is a field crying out for disruption, with far too much paper and labour-intensive back office work which ought, theoretically, to fit quite well with distributed-ledger technologies. “Traditionally, a shipment of oil from the Middle East to Asia has taken a week, while the document has taken three weeks,” says Raof Latiff, group head of digital at DBS Bank.
That, surely, is worth fixing.
Cross-border payments have led something of an advance march in this area. But trade finance has been rather more resistant, chiefly because of the number of parties who have to be convinced to work together on any one transaction.
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