Global trade could shrink 18% under supply chain relocalisation

Efforts to relocalise supply chains in the name of resilience could lead to an 18% drop in global trade and a 5% decline in global GDP, according to a new OECD report. The Supply Chain Resilience Review warns that such strategies may fail to deliver the stability they promise, and in some cases, could increase economic volatility. The study models the impact of reshoring and local sourcing in response to growing geopolitical and economic uncertainty.

While policymakers and firms are under pressure to reduce reliance on concentrated trade relationships, the OECD finds that relocalisation may offer limited protection against disruption. In over half of the economies modelled, GDP volatility increased when supply chains were relocalised. “This challenges the view that bringing production closer to home automatically enhances resilience,” the report states.

Concentration risk has become a growing concern. The share of global trade considered significantly concentrated has risen by 50% since the late 1990s, driven almost entirely by non-OECD countries. China, in particular, has become a more dominant player in other countries’ import portfolios, accounting for a 25 percentage point increase in significant import concentration over the past two decades. Still, the report notes that only 30% of exports globally are overly reliant on a small number of partners, suggesting a large share of trade remains well diversified.

Rather than dismantling global supply chains, the OECD argues for a shift in how resilience is defined and delivered. Resilient supply chains, it says, are not necessarily short, but rather agile, adaptable and aligned. 

To achieve this, the report recommends targeted reforms rather than blunt reshoring policies. These include simplifying trade and customs procedures, improving digital infrastructure, enabling data flows, and supporting the interoperability of regulatory regimes. Digital tools can enhance traceability and responsiveness, for example, while co-ordinated approaches across borders help ensure continuity and reduce systemic risk.

Sustainability also plays a vital role. The report encourages governments to design frameworks that align economic and environmental goals, with particular attention to reducing compliance costs for small and medium-sized enterprises. The OECD concludes that retreating from global trade is not the answer. Instead, managing risk through smarter design and co-operation offers a more effective path to resilience.

 

New tool helps firms unlock working capital through trade digitalisation

A new calculator has been launched to help businesses identify and release working capital tied up in inefficient trade processes. Developed by the International Centre for Digital Trade & Innovation (iC4DTI), the Cash Conversion Cycle Calculator offers finance professionals a quick way to assess how much liquidity may be trapped due to outdated or paper-based workflows.

The tool is aimed at corporate treasurers, accountants and finance leaders seeking to improve operational efficiency and accelerate cash flow. By measuring how long it takes a business to convert investments in inventory and other inputs into cash from sales, the calculator highlights bottlenecks that could be addressed through digital trade solutions.

Key areas of friction include delays in invoicing, payments and settlement times, all issues that can significantly extend the cash conversion cycle. iC4DTI points to digital trade instruments, such as digital bills of exchange and promissory notes, as underused tools for improving liquidity. These digital negotiable instruments (DNIs), enabled by the UK’s Electronic Trade Documents Act 2023 (ETDA), offer a legally recognised, secure alternative to paper-based transactions.

According to ICC UK, digital versions of negotiable instruments can help firms accelerate cash inflows, reduce fraud risk and eliminate paper-based inefficiencies, with the added benefit of contributing to ESG targets. With shorter transaction cycles and improved transparency, businesses may be able to improve profitability by freeing up cash that is otherwise locked in their supply chains.

Chris Southworth, Secretary General of ICC UK, said digital negotiable instruments remain one of the most overlooked tools in the finance function. “Reborn in digital form thanks to the ETDA, they represent a major shift in how businesses transact and manage their financial assets,” he noted.

To encourage adoption, iC4DTI’s technology partner ETR Digital has pledged to donate £5 to Cancer Research UK for each business that completes a calculation cycle and makes contact using a verified business email.

The Rt Hon. the Lord Thomas of Cwmgiedd notes: “The ETDA provides the legal foundation for trade digitalisation and the benefits that flow from it. However, the realisation of those benefits can only come when traders actually use digital systems. This tool [the Calculator] is a simple, speedy and helpful aid that will enable traders to make an initial assessment of the benefits that can be realised. I am sure that those who use it will quickly see the benefits and thus contribute to the achievement of the objectives of the Act.”

 

Equity fund inflows slow, but UK sentiment turns less negative

Equity fund inflows fell sharply in May as UK investors grew more cautious despite strong gains across global markets. According to the latest Fund Flow Index from Calastone, net purchases dropped to £525m, down from £1.52bn in April and well below the three-year monthly average of £1.03bn. The slowdown reflects growing investor uncertainty around inflation, interest rates, geopolitics and the direction of global trade. While markets rallied in May, driven in part by a de-escalation in US tariff threats, investors were reluctant to commit significant capital.

European equities saw the biggest improvement by attracting £369m, their strongest month since June 2024. Global equity funds also posted inflows of £546m, although this was still only a third of the typical monthly average. US-focused funds recorded just £115m in inflows, marking their second-weakest showing since September 2023. Emerging market and Asia equity funds continued to suffer outflows.

Sentiment towards UK equities, however, showed signs of stabilising. Outflows from UK-focused equity funds slowed for a second consecutive month, reaching £449m in May, just over half the average monthly outflow seen over the past three years. The improvement appears to be driven not by fresh buying, but by reduced selling. The value of buy orders has remained steady, suggesting that sellers are beginning to reconsider their positions amid a modest recovery in UK stock prices.

UK equities remain out of favour with many investors, but the continued easing in outflows may indicate the start of a more neutral stance. Persistent redemptions in recent years have reflected a broad loss of confidence in the UK market. A slowdown in selling could signal the beginning of a shift in narrative, even if conviction remains low for now.

Beyond equities, fixed income funds attracted £328m in net inflows in May, the first positive month since February. Sovereign bond funds saw the strongest recovery, adding £182m, as rising yields encouraged investors to re-enter the market. This renewed appetite for bonds coincided with a decline in allocations to money market funds, which currently offer significantly lower yields than longer-duration assets.

 

Seismic shift in European digital commerce predicted by 2035

Digital commerce in Europe is set for significant expansion, with the total value of digital transactions projected to reach €1.09 trillion across five key markets by 2035, according to a new report by Celent, commissioned by Tietoevry Banking. The study, A Future of European Payments, forecasts rapid shifts in how consumers in Germany, the Netherlands, Poland, Spain and the UK will pay over the next decade, driven by the growth of account-to-account (A2A) services and AI-driven automation.

A2A payments, where funds are transferred directly between accounts, are expected to gain ground on traditional card payments. Celent estimates A2A will rise from 24% of digital transactions in 2025 to nearly 40% by 2035, as consumer trust and infrastructure for instant payments mature. Cards will continue to grow in absolute terms, but their market share is likely to erode. Wallets will remain important, although increasingly integrated with other rails, making them harder to define as standalone methods.

The report also predicts strong demand for pay later options, including credit and Buy Now Pay Later products. Credit extended via A2A transactions is forecast to reach €35.7bn by 2035, representing just over 7% of total delayed payment volume across the five markets.

The most disruptive change, however, may come from the rise of smart AI agents. Celent expects consumers will increasingly delegate purchasing decisions to automated tools that trigger transactions on their behalf. Agent-initiated commerce is forecast to account for €191bn, or 17.5% of total e-commerce value, by 2035. This trend is likely to be most pronounced in sectors such as travel, food and drink, entertainment and digital content.

While speculative in nature, the findings highlight several opportunities for banks and fintechs. These include strengthening instant payment infrastructure, exploring credit-linked A2A products, and integrating with digital identity frameworks. The report suggests that successful players will be those able to collaborate with partners, modernise outdated systems and adopt flexible strategies that position them for growth in a market undergoing rapid change.

 

A third of EMEA-based firms are already using AI for compliance

Financial institutions across Europe, the Middle East and Africa are moving ahead of their North American peers in adopting artificial intelligence for compliance, according to Global Relay’s Industry Insights: Compliant Communications Report 2025. The study finds that while many firms are still in the early stages, AI tools are already being deployed by one in three EMEA-based organisations, with more than 70% of the rest planning to follow suit within the next year.

By comparison, just 43.7% of North American firms intend to introduce AI into their compliance functions over the same period, pointing to a more cautious regulatory and cultural stance. The report attributes EMEA’s momentum to the enabling role of the EU AI Act and support from regulators such as the UK’s Financial Conduct Authority.

The findings also reveal a shift in attitudes towards communications compliance. EMEA firms are more likely to enable and monitor all channels. Over half (52.4%) of those in the region say they do so, while just 31.2% of North American firms take the same approach. Meanwhile, only 31.7% of EMEA respondents believe banning channels is effective, compared to more than half (50.6%) in North America.

Adherence to compliance policies is improving, too. The proportion of respondents who say their staff struggle to follow procedures has dropped to 29.5%, down from 61.5% in 2023.

The report suggests a wider rethink is under way across the finance sector. Rather than prohibiting tools like WhatsApp, more firms are focusing on how to use them compliantly. While AI is not yet seen as a silver bullet for risk detection, uptake is growing as capabilities improve and cost barriers fall.

 

Will rising interest rates derail US stocks?

As concerns around US trade policy ease, investor focus has shifted to the impact of rising interest rates on equity markets. The yield on 10-year US Treasuries climbed 40 basis points in May to 4.4%, up from 3.6% in mid-September, prompting questions over whether higher borrowing costs could curb future stock market gains. According to Goldman Sachs Research, the implications for equities depend less on the level of interest rates and more on what is driving the increase. When yields rise on expectations of stronger growth, equities tend to perform well. But when the move reflects concerns over fiscal sustainability or inflation, stocks are more vulnerable.

In its latest outlook, Goldman Sachs projects a 12-month return of around 9% for the S&P 500, bringing the index to 6500. The team also notes that bond yields holding near current levels could limit further valuation expansion. A 100-basis-point rise in real Treasury yields is associated with a 7% decline in the S&P 500 forward price-to-earnings ratio, based on the bank’s macro model.

That said, Goldman Sachs believes strong corporate earnings, particularly among the largest US companies, should support current valuations. The S&P 500 is seen as trading close to fair value, with little expected change in the forward P/E multiple over the next year.

“We expect continued economic growth and a Federal Reserve on hold will keep yields elevated, sustaining investor preference for companies with strong balance sheets that are insulated from the pressure of interest rates,” writes David Kostin, chief US equity strategist at Goldman Sachs Research.

With the Federal Reserve signalling patience and no immediate rate cuts on the horizon, investors may continue to favour high-quality stocks as they navigate a market shaped by shifting rate expectations and robust corporate fundamentals.

 

Industry concerns about looming US Treasury clearing rules remain

Despite the SEC’s decision to delay its clearing mandate for US Treasuries and repo transactions by a year, market participants are still wrestling with key uncertainties ahead of the 2026 implementation deadline, according to a new report by Crisil Coalition Greenwich. The rule, which mandates central clearing for a broader range of US Treasury and repo trades, has prompted questions over operational readiness and unintended consequences. One major concern centres on the shift from the long-standing “done-with” model where a trade is executed and cleared with the same dealer to the more complex “done-away” model, in which a trade executes with one party but clears with another.

While done-away trading is already in use for Treasuries, extending this to repo requires new technology and workflows that firms are still developing. Meanwhile, 70% of respondents say netting dealer exposures remains the most important benefit of central clearing, making it vital to preserve efficiency even under new models.

Additional worries include the possible unintended inclusion of non-Treasury securities in clearing mandates. “Effectively, baskets containing even a single U.S. Treasury bond could pull all other transactions into clearing - something industry experts aren’t ready to contend with,” says Audrey Costabile, senior analyst at Crisil Coalition Greenwich and author of the report.

Questions also remain around the treatment of trades by foreign branches of US firms, technical processes such as credit checks, and the ongoing responsibility for trades throughout their lifecycle. The inclusion of inter-affiliate transactions, a particularly unpopular feature of the rule, has added further complexity. While the new timeline offers breathing room, the report makes clear that critical issues must be resolved before the rules take effect.

 

Worldline to roll out Wero for ecommerce in Germany this summer

Worldline will begin rolling out the Wero payment method for ecommerce in Germany this summer, with launches in Belgium and France to follow later this year and in 2026. The move marks a new phase in the development of Wero, a cross-border, instant bank payment system created by the European Payments Initiative (EPI). Worldline, one of EPI’s founding shareholders since its inception in 2020, now joins as an official member, enabling its merchant network to accept Wero for online commerce. The payment method was first launched for peer-to-peer use in France, Belgium and Germany in 2024. Customers will be able to pay using their bank’s app and only a mobile number for activation.

Wero includes buyer protection, consent-based payment types, and a built-in dispute mechanism. Backed by participating banks, it aims to offer stronger consumer trust than traditional digital wallets. For merchants, Wero is designed to reduce chargebacks and boost conversion with a frictionless interface. In-store payments will be added in 2026, enabling a full omni-channel solution.

Worldline’s rollout supports EPI’s broader goal of establishing a sovereign European payment system. By the end of 2026, Wero is expected to support ecommerce, mobile, in-store and invoice payments across several core EU markets.

 

Deutsche Bank and Mastercard expand open banking payment offering

Deutsche Bank is partnering with Mastercard to offer account-to-account payments through its Merchant Solutions platform, using open banking infrastructure to support faster and more transparent transactions. The integration will support Request to Pay (R2P), a service that allows consumers to authorise payments directly from their bank accounts, with real-time processing and immediate confirmation. Mastercard’s open banking technology will be embedded into Deutsche Bank’s offering, enabling merchants to bypass traditional card networks and access quicker settlement and improved reconciliation tools.

The move reflects growing momentum behind account-to-account payments in Europe, as both merchants and consumers seek faster and lower-cost alternatives to cards. By embedding “Pay by Bank” functionality, Deutsche Bank will allow merchants to accept bank-initiated payments as part of their standard checkout options.

The bank plans to transition existing R2P users to the updated platform. While open banking adoption is still developing, the partnership aims to position account-based payments as a mainstream method for online transactions.

This latest agreement adds to ongoing efforts by both parties to expand the range of digital payment options across Europe, amid broader shifts in consumer behaviour and evolving regulatory support for open banking frameworks.

 

Rand Merchant Bank takes trade finance to the cloud with Surecomp

Rand Merchant Bank (RMB) has selected Surecomp’s Trade Finance-as-a-Service (TFaaS) platform to support the digital transformation of its trade finance operations and expand its international capabilities, according to an announcement on 3 June. The bank will initially deploy the cloud-based solution in South Africa, with further rollouts planned as it builds out its global trade finance footprint. The move marks a shift toward fully SaaS-based operations, offering cost predictability and reduced infrastructure complexity.

Surecomp’s platform enables straight-through processing for trade finance transactions and is designed to support compliance with global standards, including SWIFT messaging. The architecture is API-first, allowing for integration with external systems and improved client interaction across multiple digital channels.

The adoption of TFaaS is expected to improve transaction speed, reduce operational risk, and enhance visibility for both the bank and its clients. It also positions RMB to scale its trade finance business as volumes grow, without the need for major capital investment.

 

Global Payments and Sage bring AP automation in-house

Global Payments and Sage have launched an embedded vendor payments solution within Sage Intacct, aimed at helping finance teams streamline accounts payable operations without leaving their core software platform. The offering, Vendor Payments powered by MineralTree, allows users to initiate payments directly from Sage Intacct, reducing the need for external tools, third-party platforms or separate logins. It supports ACH, virtual card, and cheque payments, and includes direct debit funding to speed up settlement and reconciliation.

By integrating payments within the accounting system, the tool addresses long-standing inefficiencies in AP processes such as fragmented workflows, limited visibility and manual intervention. Features include real-time payment tracking, cash-back on virtual card spend, and support for multi-entity environments, approval rules, discounts and PO matching.

The embedded model reflects a growing trend in finance software, where automation is moving closer to the operational core. Fast onboarding and minimal disruption to existing workflows are central to the appeal.

Although initially limited to Sage Intacct, the solution lays the groundwork for broader adoption across platforms. As finance teams look to improve control and cash flow visibility, embedded payment tools like this could play a key role in simplifying operations and consolidating financial processes.