Simplifying trade finance for small businesses
As more and more manual processes are automated, industries are looking at how to best implement them without disrupting their operations. While some industries have chosen to do without paper, reduce forms and shorten processing times, others are still trying to do so. Trade finance is an industry that seeks to accelerate traditional and complex processes.
Like any financial services industry (FSI), trade finance also goes through various compliance and regulatory checks before it can implement any use of the technology. However, unlike fintech, which is applied by most ISFs, trade finance covers a wider range of services.
According to Asian Development Bank (AfDB) Trade Finance Program (TFP), there have been 8,950 transactions valued at around $ 8.3 billion (of which $ 4.7 billion has been co-financed) since April 1, 2020. However, in its survey of trade finance, growth and As of September 2019, the global trade finance gap stood at $ 1.5 trillion. has become a huge global challenge that hinders economic growth and hinders efforts to reduce global poverty.
The survey report also notes that small and medium-sized enterprises (SMEs) face the greatest challenges in obtaining trade finance as well. These SMEs represent the majority of businesses and jobs in developing economies in Asia and the Pacific.
An estimated 45% of SME trade finance applications are rejected, compared to 39% for medium and large companies and 17% for multinationals. These are due to complicated processes, strict requirements and customer familiarization procedures, especially on traditional commercial finance applications from banks, with many SMEs not meeting the application criteria.
At the same time, technologies such as blockchain help reduce the high fixed costs of engaging in complex global supply chain procedures. For SMEs, blockchain helps them in terms of cost reduction, making it easier for them to participate in international trade.
Introducing RYTE, a platform for facilitating cross-border digital trade
To help alleviate the complexity of trade finance, GUUD, a Singaporean technology platform, launched RYTE, and a smart trade finance technology platform to connect business users to banks and alternative funders. RYTE is expected to provide businesses with greater opportunities to access financing options as well as meet working capital needs.
Desmond Loh, CEO of GUUD Finance, the finance arm of the GUUD Group, said via RYTE that processes are streamlined and standardized, making it easy for companies to submit documents. The trade finance platform also allows businesses to extract the required digital data or documents through secure repositories such as the Networked Trading Platform (NTP) or from digital trade facilitation platforms operated. by GUUD, such as trade declaration services.
Companies using RYTE will have a myriad of financing options revolving around their flow, including supply chain financing, within a single platform. The platform allows them to get in touch with a service provider who will support them in their needs.
Desmond explained that what sets the platform apart is that it uses the power of data not only to provide a better experience for users, but also fast and secure services through a trusted network. Users can navigate their workflows digitally and simply, saving time, costs and unnecessary errors.
At the launch, Lim Cheng Khai, Executive Director of Singapore Monetary Authority (MAS), said: “The RYTE trade finance platform harnesses digitization to deliver a more inclusive and efficient experience for trade finance solutions. It is a welcome addition to Singapore’s trade finance ecosystem and strengthens Singapore’s proposition as a smart finance hub. MAS will continue to work closely with the financial, technology and business sectors and government partners to facilitate a transparent, digital and trusted trade and trade finance ecosystem in Singapore. “
Last year another trade finance platform was launched. Contour, R3’s Corda-powered trade finance network brings buyers, suppliers and banks together on the world’s leading, decentralized and digital trade finance platform, open to all geographies and industries. Contour has proven to reduce end-to-end processing time by 90% or more, while simplifying processes that have enabled new business opportunities for banks, enterprises and players in the business ecosystem.