The paper-filled world of trade financing is ripe for reform as the expertise of forgers in faking documents used by banks is forcing the industry to digitalize.
Trade financing is being forced into the digital age because of the scale and expertise of forgery, said Ng Chuey Peng, Oversea-Chinese Banking Corp’s (OCBC) managing director, and head of global commodities finance, in an interview with Bloomberg.
The widespread use of paper in trade financing – to establish the existence, ownership, and provenance of goods – stands in contrast to the high-tech world of finance, but is critical for banks to issue loans for trades. Digitalization and high levels of security can improve efficiency and help reduce fraud in trade finance by removing paper documents that are often manipulated.
Ng said that OCBC is currently working on projects «that leverage technology in order to reduce the use of paper in commodities trade finance,» without providing further details.
OCBC started its trade finance unit in 2014. Since then, it has tripled its number of trade financing customers, Ng said, Bloomberg reported. She added that the bank will soon add a Hong Kong and U.S.-based team for this business.