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PBoC, ADB, Others Back Emerging Technologies Challenge for Trade Finance

The People’s Bank of China (PBoC) and the Asian Development Bank (ADB) are among institutions that have thrown their weight behind an initiative that is meant to highlight the potential for new technologies to enhance trade finance (TradeTech) mechanisms.

The TechChallenge, put together as a joint initiative of the Bank of International Settlement Innovation Hub (BISIH) and the Hong Kong Monetary Authority (HKMA), and designed to showcase the potential for new innovative technologies to resolve problems in trade finance, also has the International Chamber of Commerce (ICC), the International Institute of Finance (IIF), and the Wolfsberg Group as its supporters.

It seeks to improve trade finance inclusion for SMEs through technology solutions that could include or combine novel technologies like those based on internet of things (IoT), artificial intelligence (AI), machine learning (ML), federated learning, blockchain/ Distributed Ledger Technologies (DLT) or quantum computing, a release by the organisers states.

Introduced in the wake of the COVID-19 global pandemic which has impacted global trade volumes and the livelihoods of many Small and Medium Enterprises (SMEs), the challenge seeks to identify ways that novel technologies and public-private partnerships can assist in improving outcomes, including through further digitizing trade finance, according to Benoît Cœuré, head of the BISIH. For Edmond Lau, the Senior Executive Director of the HKMA, the TechChallenge is expected to encourage international collaboration, spur innovation and produce fruitful results that benefit the trade finance industry globally.

The HKMA and the BISIH highlight three problem statements that they expect interested private firms to develop technology solutions for. They are: connecting TradeTech platforms and increasing network size and effect such as facilitating interoperability and access through APIs, blockchain or distributed ledger technology; tech-driven trade finance inclusion for SMEs; and TradeTech infrastructure for emerging markets where they say trade finance gap is particularly acute and most of the markets do not yet benefit from tech-driven trade networks and platforms.

Solution providers are expected to leverage the diversity of innovation and digitization underway in the area of trade finance globally and to freely suggest any technology approaches they consider suitable to address one or more of the problem statements including decentralized approaches based on blockchain/ DLT, the challenge’s briefing states.

The TechChallenge whose eligibility is open to the public globally is administered by the Deloitte Asia Pacific Blockchain Lab and the deadline for submissions is 31 August 2020. Winning proposals will be featured during the Hong Kong FinTech Week in November where they’d be expected to share a demo (proposals will be evaluated and shortlisted solution providers interviewed between September and October), offered cash sponsorship while selected winners will be taken forward to prototype development for delivery by mid-2021.

Some of the selected panel judges for the challenge are the Director – General at the PBoC’s Institute of Digital Currency, Changchun Mu, Head of Trade and Supply Chain Finance at the ADB, Steven Beck, Managing Director of Digital Finance at the IIF, Brad Carr, and David Bischof, the Deputy Director, Finance for Development at the ICC.

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