Banks are spending more money on technology to make trading with other countries easier. A new report shows how this could help businesses grow in the coming years.
FIS, a company that provides money services, asked 812 big banks about their plans. They found that 44% of these banks will put more money into trade finance technology by 2025. This means they’re building better digital tools to help companies buy and sell things across borders.
“Banks are finally understanding that old paper methods don’t work anymore,” says Marco Chen, who studies global trade at Stanford University. “The pandemic showed us how fragile our systems were when people couldn’t meet in person.”
Trade finance helps companies manage the risks of international business. When a company in America wants to buy products from China, banks can provide guarantees and loans to make sure everyone gets paid correctly. Without these services, many businesses wouldn’t be able to trade internationally.
The problem is that a lot of trade finance still uses paper documents and old computer systems. This makes everything slow and expensive. Now banks are trying to fix this with new technology.
The FIS report found that 37% of banks are looking at blockchain technology for trade finance. Blockchain creates permanent digital records that everyone involved can trust. This could replace stacks of paper documents that sometimes get lost or damaged.
“We’re seeing real-world benefits now,” says Sarah Williams from Trade Finance Global. “A process that took two weeks can now happen in hours with the right technology.”
Banks are also using artificial intelligence to check documents faster. Trade deals often need dozens of papers to be reviewed. AI can spot mistakes and problems much quicker than humans can.
Small and medium businesses will benefit the most from these improvements. These companies often struggle to get trade financing because the paperwork is too complicated. Digital solutions could open doors for them to sell their products worldwide.
“My company waited three months for approval on a simple export deal last year,” says Miguel Rodriguez, who owns a furniture business in Mexico. “Banks with better technology could have done it in days.”
The report also shows that 52% of banks want to work together with financial technology companies instead of building everything themselves. This teamwork helps banks move faster without spending as much money.
Trade finance is worth about $5 trillion globally each year. But there’s still a funding gap of around $1.7 trillion, according to the World Trade Organization. This means many businesses can’t get the financial support they need for international trade.
Better technology could help close this gap. Digital systems make it cheaper for banks to offer services to more customers, including smaller businesses that were ignored before.
“This isn’t just about making banks more money,” explains Professor Lisa Chen from Columbia Business School. “It’s about creating more opportunities for businesses everywhere to join the global marketplace.”
Banks in Asia are moving fastest, with 51% planning major technology upgrades. Europe follows at 47%, while North American banks are a bit slower at 38%.
Security remains a big concern as banks adopt new technology. The report shows 64% of banks worry about keeping digital trade finance systems safe from hackers and fraud.
As these new systems roll out over the next few years, businesses should start seeing faster approvals, less paperwork, and better service from their banks. This could help world trade grow even when economic times are tough.
For companies looking to expand internationally, now might be the time to talk with their banks about new digital trade finance options becoming available. The future of international trade is becoming more digital every day, and both banks and businesses need to be ready.
