Recalibrating Trade Finance for the Post COVID-19 World
The digital path to overcoming the COVID-19 impact on trade finance
The COVID-19 pandemic has disrupted global trade, and consequently, trade finance. Banks will therefore need to take steps to mitigate the impact of COVID-19 on trade finance. Supply chain disruptions, a low interest rate environment, and the possibility of a global recession are worsening the challenges faced by trade firms. To lessen the impact of the COVID-19 pandemic on trade, banks are pumping in funds to ensure liquidity for day to day operations, prevent production shutdown, and facilitate smooth functioning of supply chains.
Once the immediate needs of trade firms are met, banks must build upon the success of solutions that have helped soften the impact and enabled the creation of new opportunities. Banks’ ability to capitalize on new growth opportunities will depend on the quality of their response in the near- and medium-term, which must include:
• Launching new offerings for new revenue sources
• Accelerating digitalization to craft new contextual products
• Leveraging ecosystems to create value
• Adopting agile models to respond swiftly to market shifts