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Trade finance has often been called banking’s “last bastion of paper”. This is because it is a difficult area to digitalize, due to disparate jurisdictions, incompatible systems, legal requirements for physical possession of documents and other challenges. However, digitalization has been ongoing and is now being fast-tracked by the global pandemic.

At Euro Exim Bank, we have played a pioneering role in the digital transformation of trade finance. Since 2020, we have offered our customers digital banking solutions for trade finance, including our fully-featured, proprietary online trade settlement platform, Exim Wave, which provides instant access to over 150 currencies.

Embracing the Future, Early

Taking digitalization even further, we are one of the first trade finance providers to have adopted blockchain for international trade settlements and in our own workflows. Since 2019, through our partnership with RippleNet, we have provided an alternative to SWIFT for international trade settlements. This is a huge advantage for SMEs in emerging and frontier markets.

How Does Blockchain Work for Settlements

Instead of using the US dollar for international trade transactions, RippleNet allows us to use Ripple, a cryptocurrency, for cross border payments. This is not merely an instruction but a virtually instantaneous mechanism with on-demand liquidity, allowing for the secure flow of funds and reduced restrictions on cash flow. RippleNet, which is probably the most widely distributed blockchain network among banks, also enables end-to-end tracking and secure real-time messaging.

Blockchain for Trade Finance

It is now possible to issue digital trade finance instruments, such as letters of credit and bank guarantees using smart contracts, another marvel of blockchain technology. A smart contract is a self-governing mechanism that once initiated will automatically manage, track, trace and settle international trade transactions with minimal human interference. At Euro Exim Bank, we provide both blockchain driven and traditional digital trade finance instruments, along with paper-based solutions where needed

Untapped Potential

The ability of blockchain to create, maintain and transmit non-fungible tokens or NFTs is a major area of untapped potential. An NFT is a unique digital token that cannot be corrupted or interchanged; an ideal way to manage tracking, transmission, transfer of possession and verification of international trade documents, such as bills of lading; a major hurdle for trade finance digitalization.

Furthermore, blockchain makes it possible, for the first time ever, to create a truly global, interoperable, immutable, absolutely secure, reliable and decentralized system for international trade. A system where all participants can submit and retrieve information related to international trade, trade finance, shipping, customs and supply chains. This has the potential to create a single unified, transparent, incorruptible system for global trade that can make the whole process safer, cheaper, easier and faster.

At Euro Exim Bank, we are excited about the digital future of trade finance, supported by blockchain. We are constantly innovating to ensure that our customers, particularly SMEs in emerging and frontier markets, can enjoy the most modern, convenient and secure trade finance and settlement solutions.

Presently, international trade is plagued by a deep lack of trust. Reasons include terrorism, illegal migration, illicit trade of goods, outright fraud, failed delivery, money laundering, and, global restrictions brought about by Covid. These factors have contributed to tighter border controls and increased friction in terms of cross border transactions. Thus, there is a crucial need to embrace a technology that can underpin and improve processes and contribute to restoration of trust in international trade.

Blockchain Could Be the Answer

Until fairy recently, a global, interoperable, immutable and infinitely scalable technology for global trade simply did not exist. However, with the advent of blockchain, it now does. Powered by decentralized ledger technology (effectively a cloud-based ledger secured by modern cryptography), blockchain can work to ensure publicly available records that cannot be duplicated, manipulated or faked, all while increasing visibility in supply chains, end-to-end. Thus, blockchain has the ability to establish and maintain unprecedented levels of trust within the entire system of international trade.

Beyond Transactional

Blockchain is not limited to simple transactions but can also be relied upon to handle complex trade finance and international trade transactions. Smart contracts can be used to monitor and manage trade transactions from end-to-end and cryptocurrencies, such as Ripple, can be used to settle international trade transactions. For example, through our partnership with Ripple Net, we at Euro Exim Bank are able to provide instant, economical and highly accessible international trade settlement services to SMEs in emerging and frontier markets.

Every form of legal, financial and product-related information (including comprehensive details such as origin, source of raw materials etc…) can be made publicly available through blockchain, increasing transparency. Blockchain’s universally interoperable nature will make such a system of public records easily accessible and contributable to. This will create an environment that will make it easier for trade participants to look up each other, while also helping banks better manage risk. Such a system will also dramatically reduce the risk of trade finance fraud and money laundering as banks and other trade finance providers will be able to instantly access records and report any anomalies reducing costs, improving efficiency and re-building trust.

The Blockchain Revolution is Already Here

As early as 2016, one of the first blockchain based trade finance and settlement transaction was recorded by a major London bank for USD 100,000 worth of cheese and butter between Ireland and the Seychelles.

At Euro Exim Bank, we are dedicated to implementation of new technologies, having adopted blockchain since 2019 for international trade settlements via RippleNet. Blockchain also enables us to provide, where acceptable, any form of digital trade finance including letters of credit, bank guarantees, performance bonds, factoring and other supply chain finance arrangements. We are leveraging the power of blockchain every day and look forward to a freer and more open international trade arena, supported by this revolutionary technology.

The face of trade in China is changing. External demand is subdued and, in some cases, declining. Demographics are shifting and the global geopolitical environment is in flux. It is easy to chalk all of this down to the global pandemic. However, a closer analysis reveals how all of this is more a natural result of China’s growth than due to external factors.

In this article, we will take a brief overview of China’s present trade environment and examine the shifts that are occurring. Import and export businesses are paying increased attention to these movements as the changing face of trade in China is expected to bring more opportunities for international trade than ever before.

Changing Demographics, Transforming Economy

Since the late 1970s, China has been undergoing a massive economic boom, steadily posting robust trade and economic growth figures. The seemingly unlimited supply of cheap labour and natural resources saw the country develop into one of the world’s great powers. However, China’s labour supply peaked in 2012 and has been stagnant since. Furthermore, Chinese labour, while still cheap, is no longer as cheap as it once was.

An ageing population has fundamentally altered supply and demand patterns. To illustrate, 15 million Chinese enter the labour force each year, on average. In 2000, only about 1 million of that number went to university, leaving 14 million to enter the workforce right away. Today, its closer to 7 million going to university. This is resulting in changes in the labour market too, with firms finding it difficult to retain talent and graduates often finding it difficult to get jobs.

However, this has resulted in an ever expanding middle-class and more affluent Chinese, which has created a huge market for Chinese goods and services within China itself. Furthermore, it has created a major market for imported goods as well. In fact, China’s economic recovery has been partly fuelled by a huge surge in imports, which grew at an unprecedented rate last year.

China’s ability to invest in new technologies is also making it a prime destination for companies setting up R&D facilities. In the future, we can expect to see huge innovation coming out of China, along with much more sophisticated industries being attracted to set up shop there.

Geopolitical Transformation

As the pandemic unfolds, international trade rules are being rewritten. New alliances and partnerships are being formed, such as the Trans Pacific Partnership and the Regional Comprehensive Economic Partnership (RCEP). While the WTO remains the primary multilateral trade body, international trade is taking on a decidedly more “regional tone” as opposed to a global one.

Facilitating International Trade

At Euro Exim Bank, we specialize in international trade finance and settlement. We provide customers across the world with paper-based and digital trade finance services. Our customers also enjoy 24/7 instant access to our proprietary Exim Wave multicurrency global settlements platform, which enables access to over 150 currencies. With a focus on SMEs in emerging and frontier markets, we are ensuring that import and export businesses of all sizes can access trade finance and participate in international trade.

At the end of July 2021, Kenya’s capital city, Nairobi, witnessed the launch of the Nairobi International Financial Centre (NIFC). The city has already earned a reputation as a regional hub for technology, innovation, commerce and trade. Now, it also enjoys the status of being a financial hub. The NIFC is a clear demonstration of the openness of the Kenyan economy and that Kenya is now ready to compete on the world stage in terms of international trade and finance.

The Nairobi International Financial Centre is based upon the same principles as other international financial centres such as the Doha International Financial Centre. The NIFC has carved a place for Kenya amongst the handful of African countries that are home to such IFCs including Mauritius, Morocco, Rwanda and South Africa

Why it is Important

Kenya is already an economic powerhouse in Africa and a major player in international trade. Nairobi has also earned itself a name as a tech hub, which means that there is plenty of interest for investment in the city. Thus, the new NIFC will help to create a funnel for investment, while also connecting Nairobi with the rest of the global financial system.

It will also provide plenty of opportunities for international financial services providers, including trade finance providers, to operate in Kenya. This in turn will create an atmosphere that is highly conducive to international trade, not just in terms of merchandise but also in terms of services, backed by the country’s robust IT/BPM sector

IP Opportunity

Nairobi is already rated quite high in terms of its intellectual property laws and regimes. The opening of the NIFC will provide significant tax efficiencies and, thus, may result in many companies choosing Nairobi as their preferred destination for conducting international business related to intellectual property. Whether it is a start-up, a large tech company, big pharma or other industry, intellectual property commercialization is a major area of business, which could soon see Nairobi emerge as a hub for intellectual property exports

An Opportunity for Increased Access to Trade Finance

At Euro Exim Bank, we are keen and excited by the developments in Nairobi. Through the NIFC, Kenyans, and potentially others in Africa, will gain wider access to global markets. As an international bank that specializes in trade finance products and services, including letters of credit, bank guarantees and blockchain driven international trade settlements, we see the possibility of many new opportunities and relationships through the NIFC in the future. As a bank with a focus on SMEs in emerging markets, particularly Africa, we look forward to developing new connections and helping more participants succeed in the world of international trade.

For many entrepreneurs and SMEs interested in import and export trade, their dreams are quickly shattered as they face complexity, barriers and rejection from traditional banks. In fact, up to 40% of trade finance applications globally, in emerging and frontier markets, are rejected.

Why Trade Finance is Important

In the global market place, trade finance is the “great equalizer”. It can help smaller participants with low volume and value to enjoy a more competitive environment , creating equal opportunities and possibilities of risk reduced trade. Thus, if you have any intention of reaching beyond your domestic market, here are some important things you should know about trade finance.

It Reduces Risk

Instruments like letters of credit and bank guarantees can help to significantly reduce risk for one or both parties to an international trade deal. A letter of credit, for example, is commonly considered the gold standard of trade finance instruments as it provides equal protection for both export and import businesses. It will guarantee payment to the exporter, provided they fulfil all the terms and conditions set out in the letter of credit by the importer, following consultation and agreement with the exporter.

Improved Your Access to Capital

Trade instruments, such as a letter of credit or a bank guarantee, may be used to obtain temporary working capital facilities from banks, sometimes referred to as packing credit. These instruments will add credibility to your application, while also sometimes being able to act as security in their own right, depending on your business’s creditworthiness.

More importantly, trade finance provides for facilities such as factoring, where the invoices for your orders can be sold at a marginal discount to a trade finance provider. This will provide you with cashflow and faster turnaround of your capital,  leaving the trade finance provider to receive the payment from the importer when it becomes due.

Effective Competition

Many large clients will be offered preferential terms, that smaller players will struggle to match. However, by obtaining suitable and appropriate trade finance products and services, with associated flexible terms for collateral and payment, it is possible for smaller SMEs to effectively compete with large export and import businesses.

For example, by using factoring, which may also be referred to as supply chain financing, a small business could potentially provide customers with the credit payment terms they may ask for, and which big players provide, without being disadvantaged through having their limited capital tied up for extended periods.

Alternate Trade Finance Providers

For SMEs who find it difficult to obtain facilities from a traditional bank, alternate trade finance providers exist, such as Euro Exim Bank. We are a reputed international bank specialized in trade finance and focused on catering to the needs of SME import and export businesses in emerging markets. Through a range of trade finance products and services, including digital trade finance and international trade settlement powered by blockchain, we are helping vulnerable SMEs meet their goals and realize their ambitions. If you are seeking to grow your business, speak to us today about our cost-effective, innovative trade solutions.

Ever since the global pandemic highlighted the weaknesses of paper-based international trade systems, huge efforts have been made to embrace digitisation of documents and digitalisation of systems. Now, international efforts are focussed on producing standards through MLETR, the Model Law on Electronic Transferable Records.

Whilst countries are at different stages in their digital trade journeys, international efforts are being made, including ratification through the pledging to transition to paperless, more secure digital trade. However, the move to digital may also expose international trade to cyberthreats, along with new challenges regarding denial of access, confidentiality breaches, data theft, contract manipulation and a breakdown of trust.

Major Cybersecurity Threats

The most common cyberthreats in international trade include:

Form-Jacking

Where JavaScript is used to steal information such as payment information

Supply Chain Hacks

Exploiting 3^rd party services to attack a final target.

Ransomware

Encrypting valuable data and demanding money to provide access.

Global Cooperation on Cybersecurity

Over 50 countries have now adopted standard cybersecurity policies and regulation, mainly around payments, but which also cover international trade. Many of these policies call for increased international cooperation, promoting standardized policies, to ensure consistency between jurisdictions. Such cooperation will be crucial to developing robust mechanisms to defend against the growing number of cyberthreats.

How International Trade Policies Can Improve Cybersecurity

Data Access and Information Sharing

The power of AI and data analytics are key elements in the armoury of companies to detect and prevent cyberattacks. However, for such mechanisms to be effective they need to access information islands, where data is held in multiple locations, formats, languages, all with differing access levels. Normalising data, finding commonality, and promoting data sharing with trusted parties will help strengthen the system for all.

Standards for Cybersecurity & Compliance Certification

 Organizations such as ISO and ICC are already developing a number of standards with guidelines as “dictated approaches” and more “frameworks for managing risk”, thus making them widely applicable. Trade policies that incorporate these standards can ensure robust protections, with access to experts in case or dispute. Compliance certification for these standards can further help consumers, businesses and government agencies have more trust in the system, while also ensuring that standards are correctly implemented.

A Risk-Based Approach

 The Organisation for Economic Co-operation and Development (OECD) is also taking a lead for its 38 members in  encouraging the adoption of a risk-based approach to cybersecurity. Taking a similar approach to international trade policy too, will help to create a system where risks can be reduced to an acceptable level without impeding the flow of trade.

The Dark Side

Rather than opening data access, and working with such initiatives as Free Trade Agreements, there has been a steady increase in nationalistic, isolationist and protectionist policies from some countries, culminating in an increase in restricted trade, citing national security.

This is potentially a major risk factor as the world progresses towards a more open digitally enabled international trade system. Countries should encourage working together to mutually ensure that trade partners enjoy sufficient, cost-effective and efficient access to each other’s markets.

Supporting Cybersecurity in International Trade

At Euro Exim Bank, our next-gen technologies and skilled individuals manage the security of our extensive trade infrastructure. Blockchain technology is also a focus area for us as it is one of the safest digital technologies for international trade and banking services. Thus, we can confidently assure our global portfolio of customers that every trade finance product or service from Euro Exim Bank enjoys best-in-class cybersecurity and data protection from end-to-end.

As people and businesses increasingly transact online, particularly in the wake of the global pandemic, criminals too have migrated to cyberspace. Thus, cybersecurity, the practices and procedures for protecting computer systems and networks from malicious attack, has become more important than ever. In this article, we will look at some of the major cybersecurity threats and challenges banks face today and the measures being taken to mitigate these risks

Top Threats

Unencrypted Data

Cybercriminals love unencrypted data, as once they gain access, they can freely collect, identify, and use this data with little effort. Encryption can prevent access to data in the event of a breach.

Malware, Phishing & Spoofing

Malicious software (malware) and phishing/spoofing (tricking people into providing sensitive information/transferring assets by masquerading as a legitimate entity), are serious problems, especially when used in combination with one another.

3^rd Party Services

Banks use 3^rd party services that may have vulnerabilities exposing core banking systems to attack. Modern software is constantly being developed to stay one step ahead,  allowing modules to run independently and in isolation from each other, in the fight to mitigate risk.

Top Challenges

Lack of Awareness

Being aware of how cyberattacks happen can help prevent them. In addition to complacency, awareness of the sophistication, effort and resources of cyber criminals, be it an individual or nation state, is often lacking in the industry. Constant vigilance and action are the best safeguards.

Insufficient Budgets and Management Support

Cybersecurity is often overlooked until an incident occurs. Many organizations will try to optimize costs by reducing spending on cybersecurity, which ends up being detrimental.

Poor Access Management

Robust cybersecurity regimes will include stringent access management, where without access to multiple credentials, the damage from an attack is minimal. But this is costly and adds complexity, which can be inconvenient. Thus, this is often overlooked.

Mobile Devices and social media

With employees on mobile and working from home, banks have been forced to rethink remote and mobile access to company and personal devices. However, there is often little control over employees’ devices, the apps they install, how they use their devices and what they post on social media. This has opened doors to whole new vectors of attack.

Ensuring Data Security & Quality

At Euro Exim Bank,  digital banking, trade finance, and cybersecurity are key priorities. From early on, we implemented industry-standard data security protocols across the organization, including an integrated security policy where all components of our digital infrastructure communicate and work together.

We also employ process automation, machine learning and artificial intelligence to reduce paper, human intervention, and thus minimize cybersecurity risks. Through internal and external awareness initiatives, all of our people and customers are constantly kept abreast with the most current information about potential cyberthreats and recommended mitigation measures.

Looking towards the future, we are also investing heavily in next-gen digital security technologies for and employing skilled individuals to manage the security of our extensive digital banking infrastructure. Implementation and enablement of Blockchain technology is also a focus area for us, with promise as one of the safest innovative mechanisms supporting electronic Bills of Lading and digitised documents across the entire international trade ecosystem. Thus, we can confidently assure our global portfolio of customers that every transaction and asset held with Euro Exim Bank enjoys best-in-class cybersecurity and data protection from end-to-end.  

Choosing the right banking partner is crucial for success for corporations engaged in international trade. It is essential to choose a provider based on the requirements of the business.

Here are 5 tips to help that would help a corporate to choose wisely.

1. Consider Your Special Requirements

For an SME in the import/export business, it is important to look for a financial institution that specializes in trade finance products, that provides services such as letters of credit, bank guarantees, supply chain finance and international trade settlement.

2. Consider an International Bank

Physical location is less important today as digital banking has taken hold. However, choosing an easily accessible institution is key. It would be vital to consider an international organization to obtain trade services. This will provide increased flexibility and options while allowing access to services and facilities that may not otherwise be available domestically.

3. Digital Enablement and Accessibility

Today, digital accessibility is among the most important factors influencing one’s choice. For trade finance, it is important that the prospective bank has a tech-savvy team who can easily deal with electronic trade documents and instruments. Euro Exim Bank, offers a full range of electronic trade instruments such as Letters of Credit and digital bank guarantees, while also providing instant access to over 150 global currencies for trade settlements through its proprietary Exim Wave global settlements platform.

4. What Support Do You Need?

SME’s looking for corporate banking and trade facilities are often turned down by bigger, more traditional banks, since those institutions have strict rules within which they must operate, as they accept deposits from the public. In such circumstances, alternate trade finance providers like Euro Exim Bank, do not operate like traditional banks because they are financed using their own capital or capital provided through sophisticated investors and not through funds from the public.

5. Choose a Flexible, Competent, Global Partner

Traditional banks take a long time to process documents and check KYCs. A global trade finance institution that has the quickest issuance procedures and ensures that you spend minimum time on processes and documentation which would assist a business to operate trade seamlessly.  

Euro Exim Bank can be an ideal choice for SMEs in emerging and frontier markets. Comprising of qualified professionals who are highly experienced in the areas of trade finance, corporate banking and investment banking, they will be able to find the right solution that fits you.