Two Singapore banks have ramped up efforts to boost efficiency in trade finance, an old trillion-dollar industry that, until recently, was heavily based on paper documents.
DBS Bank yesterday completed its first trade financing settlement through the CamelOne Trade Finance portal (TFP) - Singapore's first unified digital trade platform backed by several banks. The inaugural transaction relates to a $4.8 million letter of credit transaction by home-grown steel wholesaler and supplier Super Steel, with two more transactions slated to close this week, DBS said.
DBS said it is the first bank to complete a transaction through the TFP. The Business Times understands that TFP offers a standardised application process for trade finance products offered by DBS, United Overseas Bank, OCBC Bank, ANZ, BNP Paribas, HSBC, Industrial and Commercial Bank of China, MUFG and Standard Chartered Bank.
By providing a standardised application form, the TFP eliminates the hassle of having to navigate through different banks' sites, resulting in quicker application and reduced human errors.
This in turn helps enhance efficiency and productivity for both large companies and small and medium-sized enterprises seeking access to trade financing, and helps banks to provide the service more efficiently, said DBS.
Information and data submitted for other trade purposes, such as permit declaration, freight booking and cargo insurance, can also be used to supplement companies' digital trade applications to banks to maximise digital data reuse.
DBS group head of trade product management Sriram Muthukrishnan said the TFP is "especially critical" now, as prolonged geopolitical tensions, trade friction and the Covid-19 situation continue to disrupt global and Asian supply chains.
"Trade finance is the lifeblood of commerce but can sometimes be quite manual and complex. By digitalising trade financing services via a one-stop portal, we are able to provide swift, easy and contact-free financing solutions to help our customers enjoy greater peace of mind when it comes to managing their banking needs," he said.
As part of industry-wide efforts to digitalise trade finance on all fronts, DBS and OCBC yesterday both issued their first electronic banker's guarantee on the Singapore Customs Electronic Banker's Guarantee Programme, or eBG programme.
DBS' eBG relates to a $49,000 transaction by automotive group Komoco Holdings, while OCBC's eBG was issued on behalf of info-communication and technology service provider vCargo Cloud for an undisclosed sum.
Launched yesterday, the eBG programme was developed to shorten the banker's guarantee issuance and submission process to the Singapore Customs, which tends to be manual and time-intensive.
Banks can now transmit details of their customers' eBG to the Singapore Customs online. DBS said the new initiative helps cut short the process from about four working days to less than 24 hours, while OCBC said its processing time has been reduced from seven working days to one working day.
Businesses benefit from this more efficient process as it mitigates the risk and costs that result from delays and disruptions to their imports into Singapore, said OCBC.
Over at OCBC, close to half of its trade transacting customers who were previously sending in paper trade applications are now doing so via the bank's Internet banking portal. "It has taken some time for trade finance to be digitalised, but the momentum has picked up over the last few years," said OCBC head of global transaction banking Melvyn Low.
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