World’s central bank seeks tech developers to reboot trade finance in wake of Covid collapse

BIS Global Trade Finance Platform Technology Developers

The Bank of International Settlements (BIS), the ‘central bank of central banks’, has called upon tech developers to build a range of solutions to address critical interoperability and data-sharing roadblocks in existing trade finance platforms.

The TechChallenge, a joint initiative between the BIS’s Innovation Hub and Hong Kong’s chief financial regulator, the HKMA, invites developers to submit solutions that can increase interoperability between banks’ digital trade finance platforms – an effort, ultimately, to boost banking and corporate participation in the global trade finance ecosystem.

The BIS has flagged three broad areas of concern for developers to address: reducing connectivity and data-sharing barriers between discrete banking platforms and apps – in effect, bridging the ‘digital islands’ of existing trade finance platforms; boosting financial inclusion for SMEs, which, the BIS states, currently have “only limited access to trade finance”; and, finally, addressing financial gaps in emerging markets.

The first of the three propositions involve a facility to better connect banks’ trade finance platforms, increasing the interchange of customer data “through secure, authenticated exchange” and reducing “liability risk of banks for data corruption and cyber risks”.

The second proposed solution seeks to address “data silos or data gaps” believed to limit SMEs’ access to trade finance. Developers are asked to create a “tech-driven” system for SME risk-profiling, trade authenticity verification and fraud risk assessment.

In building these solutions, the BIS has invited developers to explore and test “novel technologies”, including internet of things (IoT), artificial intelligence (AI), machine learning (ML), federated learning, and blockchain/DLT or quantum computing.

Financial sponsorship will be offered to developers presenting the “most promising responses”.

Head of the BIS Innovation Hub, Benoit Coeuré expects the TechChallenge competition to “encourage international collaboration, spur innovation, and produce fruitful results that benefit the trade finance industry globally”.

“The TechChallenge is taking place against the backdrop of the Covid-19 global pandemic, which is impacting global trade volumes and by implication the livelihoods of many SMEs,” he said.

“This initiative recognises that novel technologies and public-private partnerships can assist in improving outcomes, including through further digitising trade finance.”

Recent estimates from the OECD’s June Economic Outlook have projected a gloomy outlook for the global economy, with an “unprecedented collapse” in trade and goods demand in the first half of 2020 leading to an almost 13 per cent decline in global GDP.

“[The] costs to the global economy from support packages, through central banks and fiscal actions, are very significant and likely to have long-lasting and complex effects on management of sovereign and corporate debt,” the OECD said in its Covid-19 and international trade: Issues and actions paper.

The TechChallenge is administered by the Deloitte Asia Pacific Blockchain Lab.

Solutions will be judged by a panel comprising representatives from both public and private sectors, including leaders from the World Trade Organisation, The World Economic Forum, We.Trade, and the University of Oxford, as well as global TradeTech platform developers.

Developers can register to compete and submit their proposals through the dedicated TechChallenge website.

The deadline for submissions close on 31 August 2020.