Paperless Trade Financing an Inevitability
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The paper-filled world of trade financing is ripe for reform as the expertise of forgers in faking documents used by banks is forcing the industry to digitalize.
Trade financing is being forced into the digital age because of the scale and expertise of forgery, said Ng Chuey Peng, Oversea-Chinese Banking Corp’s (OCBC) managing director, and head of global commodities finance, in an interview with Bloomberg.
The widespread use of paper in trade financing – to establish the existence, ownership, and provenance of goods – stands in contrast to the high-tech world of finance, but is critical for banks to issue loans for trades. Digitalization and high levels of security can improve efficiency and help reduce fraud in trade finance by removing paper documents that are often manipulated.
Ng said that OCBC is currently working on projects «that leverage technology in order to reduce the use of paper in commodities trade finance,» without providing further details.
OCBC started its trade finance unit in 2014. Since then, it has tripled its number of trade financing customers, Ng said, Bloomberg reported. She added that the bank will soon add a Hong Kong and U.S.-based team for this business.
Questions & Answers
Q.What is the primary reason the trade financing industry is being forced to digitalise?
What is the primary reason the trade financing industry is being forced to digitalise?
The industry is being forced into digitalisation because of the scale and expertise of forgers creating fake documents. Paper documents are often manipulated, making a digital approach necessary to combat fraud.
Q.Who highlighted the issue of forgery driving the need for digital trade financing?
Who highlighted the issue of forgery driving the need for digital trade financing?
Ng Chuey Peng, Oversea-Chinese Banking Corp’s (OCBC) managing director and head of global commodities finance, discussed this in an interview with Bloomberg. She emphasised that forgery expertise is a key driver.
Q.How does OCBC plan to address the issue of paper use in trade finance?
How does OCBC plan to address the issue of paper use in trade finance?
OCBC is currently working on projects that use technology to reduce the reliance on paper in commodities trade finance. Further details on these specific projects were not provided in the interview.
Q.What expansion plans does OCBC have for its trade financing business?
What expansion plans does OCBC have for its trade financing business?
OCBC plans to add a Hong Kong and U.S.-based team for its trade financing business soon. This follows a significant increase in their trade financing customer base since 2014.