Duarte Pedreira, Head of Trade Finance at the Crown Agents, a UK based bank offering cross-border transaction banking solutions and trade finance with a focus on emerging markets including Africa and South East Asia, discusses digital transformation and how exporters can grow their businesses.
Duarte Pedreira is involved in a wide range of projects across Sub-Saharan Africa and South East Asia, and when it comes to technology and trade, he has a very precise view on how digital technology should support trade finance. “Denying the importance of technology would be short sighted,” he says. “But we need to rethink the relationship between technology and trade. We can use technology to maximise the availability of trade finance globally. However, we must also address the problems that have impeded lending in the past. It’s no good simply transferring trade finance from one channel to another.”
Tackling the underlying issues
Pedreira believes that the major problems are client onboarding, client risk assessment, and structuring. “If we deploy technology for intermediate trade flows, and we don’t produce any enhancements in terms of client onboarding and client risk assessment, then all we’re doing is moving existing flows from non-technology bilateral pathways and placing them on a technology-based platform. You may gain speed and other benefits, but you’re not adding anything to the market,” he says. “You must first solve the fundamental structural issues that are preventing banks and other investors from bridging the trade finance gap globally. Then you stand a much better chance of getting incremental business when you transfer to a technological channel.”
With credit assessment, Pedreira says that technology can help to bring the right data to the surface, enabling funders to use a dependable credit scoring and rating system. In some African countries for example, he says it would be difficult to find many businesses with complete and carefully audited financial statements, but technology can help to unlock data and aid transparency, therefore adding value and generating incremental business.
Pedreira believes that partnerships and collaboration are essential for innovations in trade finance, and that Fineon’s marketplace approach is a welcome development. “If Fineon can bring all the players together and develop new channels that add value, that’s a step forward,” he says.
“We can use technology to maximise the availability of trade finance globally. However, we must also address the problems that have impeded lending in the past. It’s no good simply transferring trade finance from one channel to another.”
-Duarte Pedreira, Crown Agents Bank
This article was previously published by Fineon, a client of The Realization Group, HERE