Trade Finance TechChallenge
This TechChallenge was a joint initiative of the BIS Innovation Hub (BISIH) and the Hong Kong Monetary Authority (HKMA). It was designed to showcase the potential for new innovative technologies to resolve problems in trade finance ("trade tech").
The 17 winners tackled challenges of connecting trade tech platforms, improving trade finance inclusion for small and medium-sized enterprises (SMEs) and developing trade tech infrastructure for emerging market economies (EMEs).
Problem statements
Trade finance platforms operate as networks where participant banks have access to customer data that are stored on the platform. However, the existing trade finance platforms run on different applications and technology solutions and have different participants - thereby becoming "digital islands". This, in turn, hinders the formation and maximisation of network effects. The aim of this part of the TechChallenge is to connect trade platforms, enable the interchange of information or make them more interoperable to increase network effects, and explore other means to increase network size.
SMEs still have only limited access to trade finance, mostly as a result of data gaps or data silos. Increasingly, technology-driven approaches are being developed to bridge these gaps and reduce these silos. The aim of this part of the TechChallenge is to improve trade finance inclusion for SMEs through technology, including through tech-driven SME risk profiling, trade authenticity verification and fraud risk assessment.
The trade finance gap is particularly acute in EMEs. Many such markets do not yet benefit from tech-driven trade networks and platforms. Accordingly, they could greatly benefit from low-cost or open-sourced technology that leverages common standards (eg ISO 20022, UCP 600) to deploy trade finance applications. These applications could connect to jurisdictional infrastructures, such as automated single windows or implementations of the ASYCUDA software developed by the United Nations Conference on Trade and Development (UNCTAD). The aim of this part of the TechChallenge is to develop technology solutions that support trade finance functionalities for EMEs.
The winners were selected from a total of 103 technology solutions submitted by applicants from all over the world to the three problem statements. The winners showcased their submissions at the Hong Kong Fintech Week, which ran as a virtual event this year on 2-6 November 2020.