ICC WBO Banking Commision Wraps Up

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In case you couldn’t make it to Miami – or were running from one meeting to the next – here are three takeaways from the first day of the ICC Banking Commission’s 2018 Annual Meeting.

With nearly 400 participants from over 50 countries, the ICC Banking Commission’s 2018 Annual Meeting is the leading international forum for all actors in the trade finance ecosystem to network, discuss challenges and opportunities in the sector and chart a path towards future growth. The event this year takes place in Miami from 3-6 April.

The first day of the Annual Meeting saw trade finance professionals and other experts discuss a wide range of the sector’s most pressing issues, from macro-economic trends in Latin America to the use of blockchain and 3-D printing in the international trading system.

Here are three main highlights from the day:

1. The global trade finance industry is in flux

From the very start of the Annual Meeting, it was clear that the trade finance industry currently finds itself in a very different and pivotal context. In her opening remarks, Maria Fernanda Garza, ICC Executive Board Member and CEO of Orestia, Mexico, noted that financial institutions are currently facing a triple threat of new post-crisis regulations, new competition from innovative players— from fintech entities and other startups— and new geopolitical tensions that threaten to fundamentally alter the international trading system.

Setting the tone, ICC Banking Commission Chairman and Global Head of Trade Finance at Deutsche Bank Daniel Schmand said:

“We have to focus on surviving in an environment where the new normal is uncertainty. […] Uncertainty is the biggest threat to world trade.”


 


These changes need not all be seen as negative, however. With regards to fintechs, for instance, many banks are already forming mutually beneficial partnerships with these new players.

Ms Garza said:                                 

“By integrating fintech innovations into bank portfolios and fintechs getting access to banks’ established customer relationships, risk management expertise and funding, we can create mutual benefits that will spill over to increased trade for small, medium and large businesses.”

 

2. Latin American growth is compelling, but holds uncertainties

In one of the morning’s highlights, Ernesto Revilla, Head of LATAM Economics at Citi, offered a tour d’horizon of Latin America’s macroeconomic situation. Mr Revilla showed that Latin American growth is generally robust and that inflation levels between many countries in the region are converging. Nevertheless, Mr Revilla outlined three sources of macroeconomic risk in Latin America. First, many countries continue to hold high levels of public debt. Second, there is a noted increase in protectionist sentiment in Latin America, as is the case elsewhere. Third, this next year features a packed political calendar for the region, in what will likely prove to be a set of anti-establishment elections.

 

 

More globally, a subsequent panel discussion noted the very real dangers posed by current protectionist and anti-trade measures.

“A US withdrawal from NAFTA [the North American Free Trade Agreement] would hurt all trading partners, including the United States,” said Patricia Gomes, Head of Global Trade and Receivables Finance for North America at HSBC.

“The biggest losers of protectionism are always those that impose barriers to trade,” added Dominic Broom, Global Head of Trade Business Development at BNY Mellon.

The panel agreed that there is a need to address the “serious misconception” that trade is bad for consumers, workers or governments, and that ICC has a major role to play in defending the benefits of globalisation.

 

3. Digital technologies will be key in facing future challenges

Speaking to a packed room, ICC Banking Commission Project Manager Doina Buruiana offered the first public briefing of forthcoming ICC Global Survey results, which was followed by a panel discussion of trade finance experts. Perhaps the most anticipated and surprising results concerned the pace of digitalisation in the trade finance industry.

 

 

 “There is no doubt that the digitalisation of trade finance is inevitable, but the ICC Global Survey shows that this process isn’t moving as fast as the headlines would suggest,” said Mark Evans, Managing Director of Transaction Banking at ANZ. The report is due to be released in May 2018.

While many speakers relayed the immense challenges in moving past paper, there was also little doubt that digital technologies will play a key role in facing present and future challenges in the trade finance industry, from tackling trade-based money laundering to bridging the trade finance gap.

Faced with several questions from the audience regarding the hype surrounding blockchain, an afternoon panel devoted to the technology agreed the bottom line is that blockchain can shorten trade finance processing times from weeks to hours. There is little doubt that such a change would be transformational in its impact.

The ICC Banking Commission established the first rules governing trade finance in the 1930s – in another era of rising populism and protectionism. Today, speakers at the Annual Meeting argued, that as a global rule setting body, ICC was ideally placed to set new rules to govern the digitalisation of the industry. (ICC Indonesia)