Using Blockchain Technology to Facilitate Trade Finance

The increasing logistics costs, rising geopolitical conflicts, and economic hangover from the pandemic causing disruptions due to lockdowns have posed real challenges in handling cross-border trade and supply chain completely, changing its future. 

Business enterprises started realising that challenges like these are not unusual, and many of them have made significant steps to minimise potential supply chain disruptions by upgrading their digital capabilities with customised trade finance blockchain platforms for better resilience, agility, and attentiveness.

As for the trade finance sector, there has never been a pressing need to update its traditional methods of operation more than there is in the current corporate banking environment. Speed has emerged as a non-negotiable criterion for companies to be regarded as deserving of a customer’s time with the digitalisation of business operations across industries.

Blockchain Technology for Cross-Border Trade

Owing to great demands from companies for greater clarity and efficiency, and quicker transactions to meet their own customer expectations, the global supply chain is turning towards reinforcing processes using digital technologies. Trade finance, which is essential to the supply chain, should essentially modernise to keep up with the rapidly evolving cross-border trade environment. Nonetheless, it cannot afford to be mired in paper documents.

Trade finance required a lot of paperwork and labour in the early days. However, the conventional trade finance system is quickly losing its viability due to the need for speedier communication flow and advancements in automation. With the continuous exchange of a lot of documents at each point by various parties involved, cross-border trade is a complicated system.

Managing trade finance by banks in a labour-intensive yet manual way will result in increased costs, high process inefficiency, concerns about data privacy, susceptibility to fraud, and credit analysis delays.

Given the difficulties the conventional trade finance system faces, the best course of action is to immediately start modernizing it using blockchain, which will help minimize several risks and concerns that are currently associated with trade finance. A lot of documentation, like the shipping, products and payment transaction details, are submitted in a cross-border trade and supply chain.

Modern Solutions for Managing Cross-Border Trade 

The modern market environment and conditions have urged companies to embrace digitalization. Businesses today should resort to automation, modernising their value chains for better productivity and increased profit in response to competition and reducing profit margins. Further, digital solutions help your business easily maintain operations in complicated supply chains while also fulfilling growing environmental and social needs, which are set via continuous monitoring using digital tools.

Digital solutions, for instance, offered by DBS, help integrate data services and digital banking into their customers’ business platforms through application programming interfaces (APIs) like DBS RAPID and Digital Trade Platforms (DTPs) to facilitate easy trade finance services.


DBS offers its clients DBS RAPID, an API that can be linked to our corporate clients’ platforms or systems to simplify real-time banking transactions and services and deliver improved customer-centric engagements. A few essential financial services provided by DBS RAPID are direct debit authorisation, real-time collections & payments, verification of a bank account, etc.

With the digital solutions provided for your banking needs, DBS RAPID helps you save time and money by doing away with manual and paper-based procedures. It frees you up from having to worry about the intricate procedures that take place behind the scenes; instead, focus on developing your business. You can have suitable APIs by combining and matching different APIs from an extensive selection of APIs. 

Your business can set up direct debit authorisation, do credit confirmation and verify bank accounts in real-time at any time with the DBS RAPID. It also gives you live status reports of collections and payments. Here are some of the APIs you can choose and combine for a highly efficient trade journey in your industrial sector.

  • Banker’s guarantee
  • Sales invoice financing
  • Purchase invoice financing
  • Import letter of collection
  • Direct export collection
  • Import bill collection
  • Supplier payment services
  • Import bills under the letter of credit
  • Distributor finance
  1. Digital Trade Platforms 

To enhance their clients’ experiences and digitise workflows for improved efficiency, banks like DBS have gone into strategic partnerships with several Digital Trade Platforms (DTP) like Contour, ELCY, Bolero, Komgo, and essDOCS. With the help of DTPs, you can avoid complicated paper processes and improve transparency, for they can facilitate quick electronic document presentation, digital application, and settlement of Letter of Credit (LC) payment.

What Are the Benefits of Using DTPs?

  • Ensures the continuation of business

You can make use of digital procedures to reduce risk under unanticipated conditions with suitable DTPs.

  • Enhances operational effectiveness

DTPs help improve turnaround time by simplifying labour-intensive paper-based operations.

  • Ensures optimal working capital

While reducing settlement times, you can make cash flow planning decisions more quickly.

  • Offers better connectivity

Connecting with banks and trading counterparties in one place online reduces the effort of accessing several user interfaces to handle varied LC requirements.

  • Increases security and clarity

You can have updates on real-time transaction status and a digital audit trail. Further trade finance using blockchain technology also reduces the possibility of documents getting lost or delayed in transit.

Within trade finance, blockchain implementations have picked up recently. With several successful projects going live and financing, you will soon see more new and exciting developments.

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