The Metaverse is the Tipping Point in the Evolution of Trade Finance

One hundred years ago, trade finance was conducted using pens, paper, ink stamps, and background bookkeeping. All transactions were processed and approved manually based on the medium of paper. Signatures were in wet ink – and, in the eyes of bank documentary checkers, preferably in blue.

Next came phone banking which provided clients the comfort of processing transactions over the telephone rather than physically visiting a bank’s premises. This was progress but, to be honest, at this time we began to miss the human like communication and interaction as we transacted our business.

Now we have introduced internet and digital banking, sharply reducing the need for physical branches with banks closing their buildings and customers transitioning to mainstream digital banking, whether they like it or not. For those who are tech savvy this provides a convenient means of banking remotely. This development gives customers a sense of more direct control of their account/wallet. Transactions proceeding through a bank or perhaps a financial intermediary are now more common via a financial technology driven intermediary ‘fintech’.

In my opinion, this process of digitalization and sophistication of banking for trade is maturing. We can clearly see the tangible benefits realized through higher levels of sophistication and improved end-to-end processes.

For example, the trade finance community witnessed some great presentations by leading FinTechs during the ICC UAE Global Trade Facilitation Summit in March 2022.

• China Systems successfully demonstrated the practical functionality of digital end-to-end guarantees.
• Enigio with its trace original solution illustrated that it is possible to have an electronic record with a significantly higher level of authentication than any paper document with ownership 100% verifiable.
• Traydstream digitizes trade documents and automates trade and compliance checking processes which provide document checkers with technology that supports and enhances efficiency in the complicated process of document checking.
• TradeAssets created the world’s first eMarketplace for trade finance assets and in less than two years have facilitated more than USD2bn through their blockchain-driven trade asset platform.

These truly amazing initiatives by some of the top performing financial technology innovators are proof-positive of the transformational tools available in the world of international trade & finance.

The challenge is that these wonderful “digital tools” must operate within a “physical world”. In my opinion, this change is possible: enter the metaverse.