Estimated reading time: 4 minutes
Beijing, China. Welcome to the latest edition of Trade Finance Talks, entitled ‘A balancing act: Juggling conflicting priorities in trade and payments.’
It’s hard to ignore the continued growth and influence coming out of Asia for trade. Asia’s trade growth continues to surge, with the Asian Development Bank (ADB) forecasting 5% growth in 2024, driven by strong domestic demand and recovering exports. Regional integration and modern trade agreements are enhancing resilience in key sectors like food and technology. Asia also benefits from rising demand for tech exports, particularly semiconductors, driven by AI. However, risks such as geopolitical tensions and protectionism remain.
Issue 23 bundles seemingly disparate topics, united, we think, by a fundamental question that everyone asks themselves all the time: What should I prioritise? Unfortunately, trade is a playground for bad actors. From trade-based money laundering and fraud to the financing of Russia or Iran-backed arms deals, bad actors exploit global supply chains. And as technology evolves, the methods by which to exploit this technology evolve alongside it.
For banks and corporates, however, the decision-making isn’t binary. They must juggle digital transformation, green investment, and compliance with regulatory frameworks, all while staying competitive and profitable. It’s not just complex—it’s like juggling on a unicycle, uphill, on a tightrope. This delicate balancing act perfectly aligns with the Sibos theme: ‘Connecting the future of finance’.
But, to allude to our cover art, the hope is that the world of trade, treasury, and payments will resemble Bozo the Clown rather than Pennywise. That is, a fun, circus clown designed to make people laugh, rather than a Halloween costume which will terrify trick-or-treaters next week.
For Sibos, to conform to popular demand and our historical choices, a section of this magazine dedicated to digitalisation developments was inevitable. We take an international lens but also a narrow focus on Africa; a holistic view of the industry and some scrutiny of SMEs; and examine individual onus, partnership, and the role of government.
A long-standing source of grievance for many in the industry has been cumbersome documentation requiring wet ink signatures. When every other industry has taken up technology so quickly, why have bills of lading and bills of exchange retained their paper-based nature? But developments are coming hard and fast, and this magazine, as a supplement to our frequent online content, should guide the way.
Looking forward, the question of environmental, social, and governance (ESG) refuses to be ignored. During Sibos, discussions will no doubt touch on the unfortunate fact that returns on ESG investment have been sub-par. For our ‘green financing’ section, we drew on a variety of sectors to try and get an understanding of exactly what has been working, what hasn’t, and where to go next. The opportunity to speak to industry leaders shone a light on just how strong these green initiatives have been and painted an optimistic picture for the next few years.
And finally, onto regulation. From the Prudential Regulatory Authority’s (PRA) Basel 3.1, or Basel IV, to the mandatory reimbursement for victims of authorised push payment (APP) fraud enrolled by the Payment Systems Regulator (PSR) and the Bank of England, regulation here in the UK has been labyrinthian. And abroad, the Hin Leong Trading debacle turned trade finance law on its head in Singapore, while in Georgia, regulatory changes are reshaping the financial landscape to support alternative financing for SMEs.
Though responses have been reluctant, almost recalcitrant, it’s evident that more regulation will allow room for productivity and innovation. They say that the most important part of a Formula 1 car is the brakes: knowing there is a failsafe gives drivers the courage to go faster and take more risks. The same is true for regulation. Though they ostensibly exist just to slow banks down, in reality, they allow for sustainable and accelerated development.
Luckily, many of these objectives go hand in hand. As our esteemed writers will elaborate on, digital solutions bring environmental solutions; regulatory compliance protects from technology being exploited for illicit activity; sustainable initiatives can be enforced through government mandates; and so forth, with any number of connections. And the more connections, the more tightly knit the net, and the stronger the industry becomes.
If the world of trade, treasury, and payments is rotating too quickly, this magazine exists to provide an axis, a gravitational pull of industry-leading analysis provided by our network of experts.