As businesses face increasing risks associated with a changing global geopolitical climate, risk managers must remain up-to-date on any developments and be able to respond to them to maintain an efficient flow of operations.
According to Chong Kok Keong (pictured), CEO of Global eTrade Services (GeTS), different customs and regulation procedures, and free-trade agreements (FTA) in different countries and regions make international trading more complex.
“To overcome these complexities, a single window is imperative as it helps to simplify trade processes,” he told Corporate Risk and Insurance. “The lengthy processes for trade declarations or documentation which may take days or weeks can be processed within minutes through a single window, connecting users to all moving components in the supply chain.”
Trade advisory tools that leverage AI and machine learning allow businesses to derive trade intelligence, compute the most ideal trading strategies based on their unique needs, and reduce potential risks from unforeseen circumstances and fluctuating global trade relations, he said.
Chong believes that businesses and governments must cooperate to build an open and trusted ecosystem to facilitate information exchange and drive cross-border trade.
“Tapping blockchain, for instance, enhances the security of trade related documents, from certificate of origin, to commercial invoices, ensuring that trust and transparency underlies each transaction made on the platform between entities who may not have worked together before,” he said.
“An immutable trading platform, as such, with its open infrastructure will also be able to provide fundamental utilities as building-blocks for the trade community to co-create and develop new services.”
A technological solution
According to Chong, in response to these risks, GeTS developed CALISTA, which he described as an “interoperable, neutral, and trusted supply chain orchestration platform.” The platform, he said, helps to facilitate seamless data flow and sharing across multiple stakeholders through a single platform. This enhances efficiency as users benefit from the reduction of data duplication, are able to conduct ‘automated handshakes’ across nodes, and gain access to up-to-date status reports.
Chong shared that recently, GeTS launched CALISTA Finance, which provides several financial services for the platform’s users, such as global payments, quick financing, and cargo insurance. Some of its benefits include speeding up the know-your-customer (KYC) process, from the usual two weeks to around a day. It also allows cross-border payments with 22 currencies and faster approval of trade finance products.
“For many SMEs, they are often keener on spot purchases of cargo insurance due to resource constraints and that is where we are helping to fill the gap,” Chong said. “With CALISTA Finance, they can easily access over 40 types of insurance products and advisory services based on their unique trading needs – be it delivering a new product that has not been listed before to other items like a piece of artwork.”
“This will come to great benefit for small-medium enterprises (SMEs) – which makes up 98% of enterprises in Asia-Pacific, they continue to face the greatest finance gap with persisting challenges in accessing funds and credit services to aid in their intended ventures and expansion due to compliance issues,” he added.
Digitalisation’s impact on trade and finance
According to Chong, traditional trade finance processes are complex and time-consuming due to the need for meticulous document checks, circulation of countless papers between banks and businesses, as well as compliance to ever-changing trade regulations. This combination of paper and complexity not only exposes transactions to high risks of human errors and fraud, but also inefficiencies from potential delays in delivering documents to the right stakeholder and more.
This growing complexity of trade creates the need for greater integration between financing platforms and corporates. Chong believes that by embracing digitalisation, businesses can eliminate these persisting challenges and greatly reduce time and cost required for trade finance. Businesses can also access and select the best suited financing and insurance options – both traditional and non-traditional – for each specific trade.
Beyond the efficiency brought by single-window platforms like CALISTA, Chong predicted that the industry will see the rise of new formats of financing and insurance. With more trades being orchestrated ‘on-demand’, the same is likely to happen to financing and insurance products on the market, accompanied by a rise in non-traditional finance firms offering them.
“We hope to come to a point where the trading landscape operates unaffected by geopolitical shifts (other than partial or total economic sanctions), in the sense where digital trade facilitation platforms allow traders to circumvent changes in the regulatory landscape and account for these risks when transacting trades for firms,” he said.