Digital trade is a key priority for banks in the International Chamber of Commerce's (ICC) 11th annual Global Survey on Trade Finance.

This reflects surging interest in the digitalisation of letters of credit (L/Cs) that has been further stimulated by the disruptive impact of the coronavirus pandemic on conventional paper-based trade finance processing.

Evolution and disruption

The survey reveals that banks are optimistic about the evolving nature of trade finance, though unsurprisingly expect various industry-wide challenges and disruption as a result of the coronavirus pandemic.

Supply chain finance (SCF) and digital trade are confirmed as key growth priorities for banks, with 86 per cent and 84 per cent of respective respondents calling them an 'immediate or near-future priority'.

Digital divide

However, there is a divide between global and non-global banks on their investments in digitalisation.

While 83 per cent of global banks have a digital strategy, only 46 per cent of local banks report having one, highlighting a growing gap between players of different scale and reach.

Coronavirus survey

The ICC also conducted a supplementary coronavirus survey to understand banks' sentiment regarding the initial impact of the pandemic on trade finance.

Banks across geographies reported an average 0-10 per cent decrease in their trade flows in the first quarter of 2020, and most expect at least a 20-30 per cent decline for the full year.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.