Earlier this month, Global Trade Review hosted their 2016 Mexico Trade & Export Finance Conference. I was honored with the opportunity to speak on a panel that discussed creating greater value in Mexico’s supply chain.
With an estimated $378 billion of exports and $393 billion of imports in 2016, the Mexican economy relies on Trade Finance as an integral part of the business environment. A vibrant market of trade finance and trade credit exists to enable businesses of all sizes to thrive while serving the needs of their clients.
The 2008 financial crisis re-shaped the way global trade finance participants think and operate. Like our markets in the United States, regulatory concerns and the ever-increasing cost of risk-based capital has diminished the appetite for risk and, unfortunately, the availability of capital for many. Caught in this cycle are the businesses that need finance solutions the most, middle market businesses and SMEs.
Banks and other financial institutions, however, are in the business of evaluating risk, so the importance of tools that can help them better assess that risk is magnified in today’s economy. With this in mind, many of the conference panelists and attendees discussed solutions, whether process or platforms, that would facilitate more efficient means of finance among the whole ecosystem. Discussions revolved around amending existing regulations OR finding new means to address old challenges. Tools that can help financial institutions navigate a highly regulated space as well as provide them with timely information to better assess the risk environment are highly in demand. The development of durable, yet adaptable, financial technology to meet the needs of trade finance experts around the globe is a must.
As I sat with my fellow panelists from Greensill, HSBC, Bank of America, and the Bank of Tokyo Mitsubishi-UFJ Group, the relevance of this point was emphasized repeatedly. Whether it is the navigation of a tighter regulatory environment or the management of risk, FinTech can assist in ensuring financial institutions continue investing in this integral function within not only the Mexican, but global trade finance community.
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