• Bank of China, DBS, and HSBC collaborate with GSBN to digitize trade finance

  • According to a media release shared with ULTCOIN365 today, three banks — the Bank of China, Singapore’s DBS, and HSBC — have formed a trade finance advisory group with the Global Shipping Business Network (GSBN), a Hong Kong-based non-profit consortium that recently launched a blockchain-based trade platform.

    Trade finance, or the financing of import and export transactions, has been described as a global trade lubricant. However, small and medium-sized businesses frequently face difficulties in obtaining trade finance, and current trade processes are largely paper-based and inefficient. According to the International Chamber of Commerce, the estimated global trade finance gap of US$1.5 trillion is expected to grow to US$2.5 trillion by 2025. (ICC). According to the ICC, digital trade is widely regarded as a key enabler in assisting banks in closing the trade finance gap.

    The GSBN’s trade finance advisory group aims to close the financing gap by assisting partner organizations in digitizing and improving their existing processes, as well as improving financing support for SMEs. “The COVID-19 pandemic has demonstrated many areas where paper can be replaced with more efficient, trusted digital systems,” said Bertrand Chen, CEO of GSBN. “Given the symbiotic relationship between the shipping and finance sectors, we must investigate how we can connect with and improve banking processes to bridge the $1.5 trillion trade finance gap.”

    According to GSBN, the advisory group will investigate the technical, legal, and regulatory frameworks required to strengthen the links between the global supply chain and financial institutions. To improve the financing process for banks, the group will also test digital solutions such as electronic Bills of Lading and other supply chain data.

    “By bringing shipping and logistics players onto a digital ecosystem, critical information and documents will be seamlessly shared, processed, and transacted among the multiple participants in the trade flow,” said Sriram Muthu Krishnan, Managing Director and Group Head of Product Management at DBS Bank.

    According to the GSBN, its members handle one-third of all shipping containers worldwide. The consortium, which was formed earlier this year, recently launched its blockchain platform for global trade as well as the Asia-wide rollout of its Cargo Release application.

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