British banking giant Lloyds has formed a trade digitization partnership with Enigio.
The collaboration, announced by document digitization firm Enigio Wednesday (April 4), is designed to promote the use of digital documentation in trade finance via blockchain technology.
The companies say they aim to expand the application of Enigio’s “trace:original” tool and look for ways to feature trace:original documents within wider trade finance products, like documentary collections and credits.
“Existing industry-wide trade solutions are, comparably, much slower, more cumbersome and more environmentally intensive than their digital counterparts, involving upwards of 28 billion pieces of paper, globally every year,” said Gwynne Master, managing director for lending and working capital at Lloyds. “Digitization makes processes faster, cheaper and more secure.”
According to the release, trace:original allows for the creation of digital documents that can be “possessed” by a person, transferred between parties and distinguished from copies, just as with paper documents. This allows digital documents to be used in processes that require an original version.
Last month, PYMNTS examined the trade finance gap that’s developed as banks have tightened their lending. The Federal Reserve’s most recent quarterly report on small business lending showed that small business commercial and industrial (C&I) lending decreased in the third quarter of 2022, while supply chain disruptions increased loan demand.
“Inflation, tightening credit and an uncertain macro climate all foment pressures that come to bear on accounts receivables processes, where cash flow visibility is most critical, and often lacking,” PYMNTS wrote. “Cash in the coffers means that there’s the ability to run businesses day to day and plan for the future.”
Before the pandemic, PYMNTS research found that American companies were owed as much as $3.1 trillion in accounts receivable on any given day. And a report last year by the International Chamber of Commerce found that short-term trade finance has been pressured.
The past weeks and months have seen a number of companies increase their focus on trade finance and general, tech-enabled working capital improvements.
Among them is Santander, which recently announced a B2B buy now, pay later (BNPL) product for multinational corporations.
Created in partnership with Allianz Trade and Oslo-based BNPL FinTech Two, the tool lets companies offer business clients a consumer-style BNPL option with near-instant approval.
Meanwhile, trade credit insurance, as offered by the Tepfin X platform developed by Hyperion X, helps banks and their brokers get quotes from across the structured credit insurance market, so that insurance buyers can secure risk coverage at reduced costs.
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