Commodity
COMMODITIES

Connectedness beyond Disruption

There is a preoccupation with new language, marketing driven orientation, to be new, innovative.

Disruption is said over and over, like some new player, fintech no less, is totally replacing traditional players and processes. But something bigger is going on, renovation and convergence.

Renovation is bigger than innovation alone. And renovation and innovation lead to transformative ecosystems.

Take trade finance for example...
First, the evolution of standards and now even more standards. 
Second, massive ERP automation of AR(Accounts Receivables) and AP(Accounts Payables) across multiple tiers of the market. 
Third, regulatory forces are opening up customer data. 
Fourth, corporate to bank STP models are well established.
 Fifth, open account substitute to traditional trade finance documentation has been largely played out.

So now all the innovation and renovation of technology stacks will converge and underpin the environment of digitization of data and workflows.

Now connectivity between banks and corporates, not bilateral alone, but multilateral is enabled. Connectivity of SCF platforms and currency platforms will ultimately connect trade finance and capital markets. Securitization of trade finance becomes possible which means global trade finance will not be limited by the banks balance sheets and regulatory capital constraints. 

Moreover, fintechs can step into correspondence banking networks from pullbacks of others due to regulatory requirements. A new feeding chain, not from disruption but from connectivity could bring trade finance into better days.

So all this means more alliances and interfaces, and leveraging of API technology by banks, customers and vendors will be one of the most important trends going forward.


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