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Published by: TowerGroup
Published: Aug. 11, 2008 - 11 Pages
Table of Contents
- Report Coverage
- Background
- Future Trade Flows: Intraregional Trade and the Primacy of Asia
- Factors Influencing the Adoption of Open Account Trade
- Key Components of Successful Global Trade Platforms for the Next Decade
- Summary
AbstractReport Coverage
Global trade in goods and services has experienced historically high growth rates since 2002. Despite current negative economic conditions in the United States and elsewhere and barring catastrophic economic collapse affecting multiple regions in the next decade, businesses will continue rapidly expanding their global supply chains and extending their market presence beyond their own borders.
Global trade platforms offered by banks to facilitate trade are undergoing fundamental changes as volumes grow and open account trade becomes widely adopted for many of the key trade flows. As trade patterns evolve due to shifting economic conditions, technology advances, and industry-specific drivers, banks must develop strategies for leveraging their core capabilities, expertise, and traditional role as trusted intermediary to avoid further disintermediation and retain and grow trade-related revenue. This TowerGroup Research Note addresses three key questions, the answers to which are critical to banks developing and refining their strategies for the trade line of business:
- How will the shifting balance of economic power from North America and Western Europe to China, India, and other emerging economies affect future trade patterns?
- What factors will influence the level of adoption of open account for trade with and among businesses in emerging countries?
- What business and technology components will be key for the successful global trade banking platform of the future?
TowerGroup Take-Aways
- Future trade flows are likely to be dominated by intraregional trade and trade between Asia and other regions, with some short-term and long-term disruptions to Asian trade expected.
- Open account trade has overtaken traditional trade finance instruments almost everywhere, but demand for the latter remains high, especially as new trading partner relationships are formed.
- Trade services offered by banks are no longer "exotic" but are now mainstream wholesale banking solutions facilitating the commercial activities of corporates, both domestic and cross-border.
- Bank solutions must provide enhanced visibility to financial and physical supply chain events and a range of financing and payment options.
- Evolving trade solutions represent the ultimate in wholesale banking convergence, marrying trade, cash, and lending functions.
- Nonbanks (especially logistics providers) are positioned to play the intermediary role in open account trade if banks do not create compelling, integrated solutions.
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