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Digital trade channel between Europe and China slashes transaction times - Industry roundup: 21 October

Digital trade channel between Europe and China slashes transaction times

Enigio and TradeGo have developed an interoperable digital channel for electronic trade documents, facilitating trade between Europe and China. This connected digital channel streamlines the entire process for all stakeholders, including logistics providers, exporters, importers and their banks.  Whether using a letter of credit (LC), documentary collections or open account terms, this enables transactions that previously took up to two weeks to be completed in just one business day.

TradeGo and Enigio have built an integration leveraging the Digital Container Shipping Association’s (DCSA) electronic bill of lading (eBL) standards. This means that users of Enigio’s trace:original in Europe, or elsewhere, can now digitally transact with users of TradeGo in China. 

A real-world example was demonstrated when global freight forwarder and carrier, Fr Meyer’s Sohn Seaways AG (FMS), issued an eBL, under English law, to Global Forest Products Sweden AB, a pulp and paper trader. This eBL, together with other trade documents, was then electronically presented to Lloyds in the UK, the advising bank under an LC issued by a Chinese bank, and subject to the ICC’s e-rules for documentary credits – the eUCP. 

Lloyds then transferred the eBL and supporting documentation to the Chinese bank, who then transferred the documents electronically to the importer, a wood pulp importer in Jinan, China. To complete the transaction, the eBL was surrendered by FMS Qingdao.

This demonstrates that all the pieces needed to transact digitally are now in place, including the UNCITRAL Model Law for Electronic Transferable Records (MLETR) legal framework, ICCs eUCP and Enigio’s trace:original technology interoperable with the TradeGo platform. 

“The opening of the Enigio and TradeGo digital highway between Europe and China demonstrates the value of global collaboration, underlining the importance of interoperability to drive the adoption of digital trade,” said Gwynne Master, Managing Director, Trade and Working Capital at Lloyds. “We look forward to completing the first live transaction, and to leveraging this highway to make transacting between the UK and China faster, simpler, and more sustainable for our clients.” 

 

Bridgepoint to reinvest in Kyriba

Private asset growth investor Bridgepoint will reinvest in Kyriba following a period of record growth for the business and will remain the majority shareholder. In addition, Bridgepoint and Kyriba will welcome a new minority investor, General Atlantic.

The transaction, which values the company at over $3bn, is expected to close in Q4 2024, and financial terms beyond this were not disclosed. 

Following five years of support from Bridgepoint, Kyriba has grown substantially in this period, tripling its software revenue and evolving - in the company’s words - from a pioneer in treasury management to the leader in liquidity performance solutions. Today, Kyriba serves close to 3,000 customers in 170 countries. 

With a significant investment from its latest flagship fund, Bridgepoint will support Kyriba’s next phase of growth. Partnering with General Atlantic brings additional deep technological and operational expertise to the business. 

Kyriba, Bridgepoint and General Atlantic share a collective ambition to reinforce Kyriba’s market leadership while delivering cloud treasury and liquidity performance solutions for CFOs, treasurers, and finance teams to help them connect, protect, forecast and optimise their liquidity.

“With Bridgepoint as a trusted partner, we’ve achieved significant growth and strengthened our leadership in liquidity performance,” commented Melissa Di Donato, Chair and CEO, Kyriba. “We’re excited to continue our journey with Bridgepoint and now also General Atlantic. Together, we will accelerate our investment in technology and talent, creating innovation that we know our customers will need in the future.”

 

Global trade is showing resilience despite rising barriers

Efforts to upend the globalisation of trade and manufacturing have yet to reverse the trend, according to Goldman Sachs Research (GSR). In fact, Asia’s share of world manufacturing and exports has continued to increase, said Patrick, senior analyst for the European transport, infrastructure, and construction sectors in GSR. Creuset’s group maps the fastest-growing trade routes, and all of the top 10 originate in Asia. A majority originate in China.

There has been a slowdown in the growth of global trade. “The wave of China-driven trade globalisation that we saw in the decades leading up to the Great Financial Crisis peaked in 2008,” Creuset said. “But it has not really gone into reverse.” 

Creuset’s work analysing trade data shows that overall volume continues to grow modestly and that the shipment of goods around the planet is increasingly complex. Multi-sourcing supply chain strategies, trade barriers, and geopolitical frictions can all make trade more intricate and difficult. Those factors are creating opportunities for logistics and shipping companies.

 

Worldline launches A2A payment method in 14 European countries

Worldline has announced the launch of its account-to-account (A2A) payment method.  Bank Transfer by Worldline is designed to enable retailers to accept payments and completes the existing payment options offered to merchants. The company says it effectively addresses specific payment scenarios that traditional methods typically cannot accommodate, including invoices and high-value transactions.

Since August 2024, the solution has been available for merchants in 10 countries across Europe, including Austria, Belgium, Croatia, France, Germany, Italy, Luxembourg, the Netherlands, Slovenia and Spain. By the end of 2024, it will also be available in Poland, Slovakia, Czech Republic and Hungary. 

The solution enables merchants to accept payments from a pool of approximately 300 million eligible customers. It has been piloted in these countries during the last 9 months and is now integrated into around 500 of Worldline's existing merchants’ online payment solutions and pay-by-link services. The offering will be further expanded to include all eligible merchants across the EU.

The firm says the solution particularly caters to businesses that handle high-value transactions, such as those in specialty retail, the public sector and B2B payments. By addressing common challenges like card limits and heightened fraud risk, Bank Transfer by Worldline may minimise the likelihood of declined transactions and reduces costs for merchants. Additionally, it offers cross-border capabilities that are essential for merchants operating in multiple markets.

 

ICC DSI launches digital trade reliability assessment tool 

A technical tool to assess the reliability of digital services or networks developed by the International Chamber of Commerce (ICC)’s Digital Standards Initiative (DSI) and the Digital Governance Council (DGC) of Canada is designed to facilitate the transfer of Electronic Transferable Records (ETR) between supply chain parties.

The assessment framework enables an entity to deploy ETRs in place of paper trade documentation assessing a platform’s ability to effect the transfer in conformity with the definition of the Model Law on Electronic Transferable Records (MLETR) definition of reliability. As more economies align to the MLETR, the assessment allows for service providers to assert their reliability through a commonly accepted market standard.

ICC DSI and the DGC led a working group of standards bodies, technical experts, assessment firms, and commercial and industry entities to develop the tool that holds potential to become a major credential for this part of digital trade services. The working group operated with advice from the Industry Advisory Board of ICC DSI. 

The assessment framework was recently piloted by several ETR service providers to test its robustness, utility and market relevance. It has been released as a beta version for self-assessment, while plans for a certification with third party assessment are in development.

“The reliability assessment framework is a collective effort drawing on the knowledge and work of technical and commercial experts from various entities involved in digital trust, standards, certifications and assessment,” said Pamela Mar, Managing Director, ICC DSI. “This launch is an important first step in the development of a framework for ensuring digital trust at scale, an important pillar of the digital trade ecosystem.” 

 

DBS rolls out blockchain-powered banking for institutions 

DBS has announced the introduction of a suite of banking services that integrate tokenisation and smart contract-enabled capabilities with its banking services. DBS Token Services aims to unlock new transaction banking capabilities and operating efficiencies for its institutional clients.

The solution integrates the bank’s Ethereum Virtual Machine-compatible permissioned blockchain, its core payment engine and multiple industry payment infrastructures. In addition, smart contracts enable programmability for institutions to govern the use of funds according to predefined conditions, enhancing security and transparency. Using a permissioned blockchain provides DBS full control over these services, enabling the bank to harness the benefits of blockchain technology while adhering to compliance standards.

The culmination of several years of industry collaborations and experimentation in digital money innovations, the suite of solutions – Treasury Tokens, Conditional Payments, and Programmable Rewards – exemplifies how established financial institutions can leverage blockchain technology and smart contracts to deliver new client experiences.

DBS recently launched Treasury Tokens, a treasury and liquidity management solution, in a pilot with Ant International. This solution currently supports ongoing intra-group transfers within Ant International. Treasury Tokens aims to help large corporations operating across multiple markets settle multi-currency intra-group transactions instantly on a 24/7 basis, unconstrained by currency cut-off timings and non-banking hours associated with traditional banking systems. The solution is designed to provide corporate treasurers with greater visibility, predictability and control as they navigate the complexities of an increasingly real-time world.

“To capture the massive shift of human and corporate activity to on-demand digital services, companies and public sector entities are reimagining their operating models and customer engagement strategies,” said Lim Soon Chong, Group Head of Global Transaction Services, DBS Bank. “A new generation of “always-on” banking services is essential to support this shift and transformation.”

 

Business activity at UK SMEs fell marginally in September

Activity at small and medium-sized businesses in the UK fell marginally in September, while new work and employment numbers continued to grow, the latest NatWest SME Growth Tracker has found.

The NatWest UK SME Business Activity Index - which measures month-on-month changes in the combined output of SMEs - scored 49.3 in September, down from 50.3 in August. The latest reading was the lowest since October 2023 and signalled a marginal drop in SME output levels. This contrasted with solid growth across the UK private sector as a whole in September (index at 53.0). A reading of over 50.0 indicates growth, while a reading under 50.0 suggests contraction.

Business activity differed widely by sector in September, with the drop in overall SME output largely driven by the service economy. Construction SMEs bucked the trend, with output growth accelerating to its fastest rate since January. These firms saw the strongest rise in new business in two-and-a-half years, in part due to a post-election rebound in clients’ willingness to spend.

Despite the slight fall in business activity, there were positive signs from the survey’s forward-looking indicators as new order volumes expanded marginally and output growth expectations for the next 12 months were relatively upbeat. Job creation remained a bright spot and was maintained for the ninth consecutive month. And while strong margin pressures persisted in September, overall input price inflation was slightly lower than seen in the first half of the year.

While the overall degree of business confidence slipped to a 10-month low, SMEs remained upbeat about their growth prospects for the year ahead. Optimism was attributed to hopes of a sustained improvement in UK economic conditions, alongside a tailwind to business and consumer spending from lower borrowing costs.

“Business activity among SMEs has cooled in line with the change of season,” noted Sebastian Burnside, Chief Economist, NatWest. “However, this slight dip in activity shouldn’t hide what are strong signs of underlying good health. Businesses have maintained a strong streak in new orders for 10 months running and employment has been a strong point for SMEs all year. And while many businesses report their margins remain tight, inflationary pressures have softened since the start of the year.”

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