The move is part of its goal to grow its trade finance business which saw revenue growth of 20%.
Bloomberg reports that OCBC is doubling down its efforts to digitise the heavily paper-based trade finance sector in an attempt to reduce the risk of fraud and streamline the drawn-out process, according to Ng Chuey Peng, managing director and head of global commodities finance at OCBC.
Paper features heavily in the global merchandise flow as documents are used to establish existence, ownership and payment of goods. This renders the process particularly vulnerable to fraudsters with increasingly sophisticated attacks as seen when Standard Chartered and Citi lost millions in 2014 after forged warehouse receipts for metal in a Chinese port were used to raise funding.
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In response to these threats, Ng told Bloomberg that OCBC is working on a project that “leverage technology in order to reduce the use of paper in commodities trade finance” as part of its overall efforts to grow its trade finance business which saw revenue grow 20% since its inception in 2014. The bank will also formalise a Hong Kong team and a US-based staff in 2019.
“Blockchain, Komgo, Forcefield, Vakt, one of these will have to work to change how trade is being done,” Ng told Bloomberg. “It’s a matter of time. When, I can’t tell, but I think it has to go paperless.”
Hong Kong, for instance, has launched a blockchain trade finance platform, eTradeConnect, with the aim of digitising trade documents and enabling real-time sharing amongst all participants, effectively making transactions more transparent and reducing the risk of fraud and duplicate financing.
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