International Chamber of Commerce and Finastra team up to tackle the trade finance gap
The International Chamber of Commerce (ICC) and Finastra are orchestrating an ecosystem and exploring the development of a financing marketplace that will provide micro-, small, and medium-sized enterprises (SMEs) with access to a broader set of alternative finance resources in order to help keep the global economy moving forward. The ICC TRADECOMM marketplace, powered by Finastra, will reduce trade finance barriers for SMEs and enable all parties to benefit from improvements in matching supply and demand.
In the coming months, ICC and Finastra plan a series of pilots across select markets before launching the platform globally. During the initial launch period, bank and non-bank financers will be given the opportunity to transact on invoices from SME suppliers from select marketplaces. Subsequent versions of ICC TRADECOMM may include other trade documents, such as letters of credit, bills of lading, and other bank-syndicated products, in a move towards creating seamless documentary flow.
There is a large and growing trade finance gap representing a mismatch between demand for and supply of trade financing, estimated at $1.5T pre-COVID-19 and potentially reaching $2.5T by 2025. Coupled with the effects of the COVID-19 pandemic, SMEs desperately need short-term liquidity and access to international trade to survive the ongoing economic crisis. Alternative financing options will be required to address this gap and provide SMEs with the immediate capital required to carry out cross-border transactions. ICC TRADECOMM will allow investors to finance trade transactions against title documents and equip SMEs with a broader set of solutions to mitigate perceived risk, the burden of compliance, and enhance access to finance.
ICC Secretary General, John W.H. Denton AO said, “If SMEs are going to survive the ongoing economic crisis, they need tools and solutions that will enable them to trade now. Only then will many micro-, small-, and medium-sized enterprises be able to seize new business opportunities and build back their activity post-pandemic. We are extremely pleased to partner with Finastra on ICC TRADECOMM, one of the solutions that ICC will unveil as part of its commitment to connect investors and SMEs looking for short-term liquidity for their international trade operations.”
ICC TRADECOMM will be one solution offered by ICC TradeNow, a new campaign to accelerate the provision of trade finance to SMEs. The campaign will build upon ICC’s high-level advocacy to regulators, standard-setting reputation, and trade finance research.