Singapore, 7 June: Held in Dubai, the 7th edition of the ICC Academy’s Supply Chain Finance (SCF) Summit concluded on 10 May. Much of the two-day event focused on the sector’s most pressing issues, including the digitalisation of trade and SCF; effects of artificial intelligence (AI) on SCF; potential of Distributor Ledger Technology (DLT) to facilitate development; and China’s Belt and Road Initiative (BRI).
Here are our main highlights from all the action of both days.
Digitalisation of trade and SCF
Speaking in a session entitled “Optimising SCF for global businesses in emerging markets: A global perspective,” Shirish Garg, Senior Vice-President of MUFJ Bank said: “Global supply chains are becoming more complex and the digitisation of underlying processes has not taken off at a desired pace. While technology can play an important role in easing the pain in the long run, speedy and efficient solutions from banks and other market participants are equally important.”
Speakers in this panel also opined that digitisation of the underlying trade processes— processes associated with the physical supply chain—are a pre-requisite to the full, end-to-end digitisation of trade and SCF. The need for standards was hotly debated, the absence of which will inhibit the process of digitisation. The contra view made was standards follow practices, not the other way around, and as innovative solutions emerge, standards will follow.
All panelists agreed that financial technology solutions must look beyond making faster, cheaper payments to providing credit to smaller companies. The focus should be on the client’s needs and efforts must be made to fully optimise the value chain in the client’s ecosystem.
“AI” versus “human” in SCF
Summit speakers were of the view that AI and machine learning are often cited as the future. Lionel Taylor, Managing Director of the Trade Advisory Network said: “In a time where all forms of supply chain finance are becoming more competitive, the option to adopt AI to create operational efficiencies will become more attractive.”
In parallel, there were interesting debates regarding how much “human involvement” could be replaced by these technologies. The session concluded that it is critical for companies to figure out how humans and computers can play off each other’s strengths, as intertwined actors, to create competitive advantage.
DLT: Beyond blockchain
Views continue to be polarised regarding the potential of blockchain to facilitate the development of innovative SCF solutions. The event highlighted that blockchain is probably a misnomer and that a more accurate label would be “Distributed Ledger Technology” or DLT.
John Bugeja, the Founder of the Trade Advisory Network said: “The ‘b’ word (blockchain, not Brexit) is probably the most used word whenever the digitisation of trade and supply chain finance is debated. It is, however, somewhat misunderstood as the proof of concepts that have been publicised to date should more accurately be described as Distributed Ledger Technology (DLT) applications.”
Speakers agreed that technology should not be the only focus—what is more essential is the development of solutions that address real business needs and deliver tangible value. Technology is an important enabler but is not an end in itself. Often the critical component in a blockchain solution is the smart contract, which can exist independently of DLT.
Paving the Silk Road for the Middle East
The key topics covered in this important session were risk analysis of infrastructure projects, recourse financing, multilateral financing, trade opportunities and its connectivity to key global markets.
Yaseen Anwar, the former Governor of the State Bank of Pakistan said: “BRI provides the ample financing resources needed to fill the wide financing gap for infrastructure. It provides both developing and developed economies with opportunities for venture capital, private equity, and IT solutions. Winners and losers will be apparent, but as we go forward, the successes will outweigh the failures and thereby contribute positively to global growth rates.”
The Summit also hosted a signing ceremony for the new partnership between Emirates NBD, a leading bank in the region, and CCRManager, a fintech platform supporting the origination and distribution of trade assets. The bank is first in the United Arab Emirates to join such a platform to digitise trade finance origination.
For more information, contact
Marketing and Events Manager