Trade finance platform eTradeConnect launches two proof-of-concepts

Will digitalize trade finance by enabling customers to exchange information through platform

Hong Kong blockchain-based trade finance platform eTradeConnect has announced two proof-of-concepts to enhance the connectivity of its trade finance platform. Both initiatives aim to explore ways to transform the traditional heavily manual and paper-based trade finance process towards a digital era where customers can easily exchange their trade, financing and shipping information through a secure, streamlined and digitalized trade finance process.

Linking banks to a global shipping network

eTradeConnect has entered into discussions with CargoSmart and shipping industry participants that are proposing to form a Global Shipping Business Network (GSBN) on how the banking and shipping industries can work together to create value to their mutual customers.

A proof-of-concept has been designed to validate the benefits of enhanced transparency, traceability and efficiency to the banks and their trade finance customers if ocean carriers and terminals can share shipping information (e.g. Bill of Lading) on a real-time basis. It will also evaluate how a paperless trade finance process can reduce financing risk on the one hand and promote product innovation and efficiency gain on the other.

eTradeConnect and CargoSmart, facilitated by PwC as project manager, have successfully completed the proof-of-concept with banks, including Bank of China (Hong Kong) Limited, The Bank of East Asia, Limited, HSBC and Standard Chartered Bank (Hong Kong) Limited, and ocean carriers, including COSCO Shipping Lines, OOCL. The proof-of-concept verified the feasibility of data exchange from the financing and shipping cycles on a "need-to-know" basis. The aim is to identify potential implications from the customer experience, operation and technology perspectives.

Integrating with corporate procurement systems through ERP.Connect

eTradeConnect has conducted another proof-of-concept to integrate with customer procurement systems. The “ERP.Connect”, a digital asset designed by PwC as a proof of concept, enables seamless connection among platforms for the submission of necessary digital information and documents on corporate procurement, order management, and treasury to facilitate trade financing.

eTradeConnect and PwC have been working together over the past months to explore and validate the integration between the eTradeConnect platform and ERP.Connect.

Participating banks of the eTradeConnect, including DBS Bank (Hong Kong) Limited, HSBC and Standard Chartered Bank (Hong Kong) Limited, shared ideas on how the user experience can be enhanced into a “digital end-to-end vision”.

ERP.Connect would allow corporate treasurers to access immediate financing options through their existing ERP systems. As a result, better visibility on their financial positions and abilities to manage working capitals could be achieved.

Teng Linhui, general manager of the transaction banking department of Bank of China (Hong Kong), says, “This year, the bank took the lead in building the application programming interface (API) and became the first bank to connect its system with eTradeConnect. By bringing in the shipping industry and integrating with customer procurement systems with proof of concept, eTradeConnect will facilitate data sharing among different parties and improve operational efficiency and transparency of trade finance, resulting in greater customer experience. Going forward, BOCHK will continue to invest resources in related fields to digitalize the trade ecosystem, while enhancing its cooperation with relevant parties to promote the development of eTradeConnect.”

Adrian Li, co-Chief Executive of The Bank of East Asia, Limited, says, “With blockchain technology, banks will be able to exchange information with logistics service providers in real-time. This development will facilitate trade finance processes, reduce risk, and make trade finance more accessible to SMEs.”

Nimish Panchmatia, head of global transaction services at DBS Bank (Hong Kong), says, “The distinctiveness of an ERP connector on eTradeConnect is the seamless connectivity between corporate ERP systems and participating banks allowing for a one-stop shop execution. This will mean significant efficiency gains for our customers as they take advantage of the integration and connectivity.”

“Being digital is the differentiation. With this hassle-free financing experience our customers can monitor their loan applications on a real-time basis resulting in improved visibility and reduced administrative costs,” Panchmatia says.

Jeanny Ip, head of global trade and receivables finance, Hong Kong and Macau, HSBC, says, “Based on the feedback we obtained from previous eTradeConnect pilot transactions, HSBC sees the need and demand for a single platform where clients can facilitate cross-border trade. Clients are telling us that they want a more comprehensive customer journey, one that removes duplication. This is a win-win for all participants of international trade.”

Biswajyoti Upadhyay, head of transaction banking, Hong Kong, Standard Chartered Bank (Hong Kong) Limited, comments, “In today’s complex trade environment, clients are looking for more efficient and reliable trade processes and information flow. The connection with the proposed GSBN and corporate ERP allows seamless exchange of digital trade and shipment information, moving clients away from paper intensive processes, and more importantly connecting the various counter parties within the ecosystem, offering end-to-end visibility while bringing about supply chain efficiency.”

With these two collaborations, eTradeConnect aims to create a digital eco-system to strengthen linkages amongst members in the global trading system, stimulate economic cooperation and promote Hong Kong as a major regional trading hub.

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