There are many moving parts in the cross-border trade ecosystem, and a great deal of paperwork is exchanged at each stage. If financial institutions do not abandon their time-consuming and error-prone methods of handling trade finance, they will continue to face an ever-increasing number of problems, including but not limited to: process inefficiencies; higher costs; longer wait times for credit analysis; data privacy worries; and, worst of all, a never-ending vulnerability to fraud. Although fraud in trade finance is not uncommon, the enormous losses it causes are.
International trade’s value chain is notoriously intricate. Despite the fact that its transactions involve numerous parties, trade can nonetheless benefit from the implementation of blockchain technology in areas such as trade financing, customs administration, transportation, and logistics. Because of the extensive prior efforts to digitalize trade transactions, the most common application of blockchain technology is in cross-border payments and settlements.
Blockchain technology has the potential to simplify the myriad paperwork procedures currently required for international trade. The blockchain’s potential to streamline commercial transactions is already being investigated. For instance, Triterras’ Kratos in Singapore uses Amazon Web Services’ (AWS) managed Hyperledger private blockchain for Trade, Trade Finance, and Supply Chain Finance. By facilitating the digitization of trades, the Kratos platform helps the trade finance industry reduce risk and increase productivity. It’s also a breeze to connect with investors all over the world.