ICC and Finastra team up to tackle the trade finance gap

ICC and Finastra have committed to a strategic initiative to tackle the growing trade finance gap. Both organisations 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.

There is a large and growing trade finance gap representing a mismatch between demand for and supply of trade financing, estimated at US$1.5 trillion pre-COVID-19 and potentially reaching US$2.5 trillion 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.”

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.

Simon Paris, CEO at Finastra said: “Access to, and availability of, financing for SMEs​ continues to be a significant challenge and this is only worsening as the pandemic continues. These organisations make up around 90% of the world’s businesses and are the lifeblood of their communities. We have an obligation to redefine finance for good, to help reduce this gap and drive global economic equality. Our plans with ICC to establish and orchestrate this ecosystem are designed to do exactly this and keep trade moving. Our shared ambition is to facilitate millions of dollars in trade financing for SMEs. We are at the beginning of an exciting journey together, a journey towards reducing friction in trade and providing open finance for all.”

Pascal Lamy, President of the Paris Peace Forum and Former Director-General, World Trade Organization said: “For many SMEs, access to trade finance is access to trade. As the trade finance gap continues to grow, especially amidst the pandemic, so too do obstacles to trade, export growth and economic prosperity. Developing trade finance is as important as reducing obstacles to trade. This partnership between ICC and Finastra is a step in the right direction.”

Daniel Schmand, Global Head of Trade Finance and Lending at Deutsche Bank and Chair of the ICC Banking Commission said: “Fully leveraging new technologies and scaling institutional investment will be vital to address the chronic trade financing gap for small businesses – and, what’s more, enable a resilient and durable recovery from the economic effects of COVID-19.”

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.