There is an estimated $1.6 trillion of untapped demand for trade finance services, while technological innovation has yet to make any truly disruptive impact on the sector. This is according to the International Chamber of Commerce's (ICC's) Global survey on trade finance 2017 – Rethinking Trade & Finance – based on responses from 255 banks in 98 countries.

Overall, the survey's main findings were that traditional trade financing techniques, such as letters of credit, are being used less (despite seeing a resurgence during and shortly after the financial crisis of 2008). Trading on open account is now well established and tools to finance open account trade are developing, although some mature techniques such as factoring and forfaiting are also used for it. The survey's respondents said they are keeping a close eye on technological developments, which are expected to impact global trade financing.

There was division among those respondents who see digitisation having an impact within a decade and those who think it will take 10-25 years to have a notable impact. The report also notes that traditional trade finance offerings have been relatively mature and static and have lacked “any truly disruptive or transformational developments”. And a majority of respondents said that compliance and regulatory requirements are areas of significant concern.

Some of the ICC report's highlights include:

• most trade today is conducted on open account terms, and therefore enabled through supply chain finance (SCF) techniques;
• about 10 per cent of flows are done through traditional trade finance, worth about $1.5 trillion in annual merchandise trade – however, LCs/documentary collections have shown a downward trend for numerous years;
• the trade finance gap estimated at $1.6 trillion represents untapped potential in trade, unrealised economic value and lost opportunity in terms of development impact and economic inclusiveness;
• nearly 80 per cent of survey respondents said that traditional trade finance will exhibit little or no growth, or decline outright year-on-year going forward;
• 68 per cent identified SCF and technology as areas with the highest potential for growth in the context of trade financing, but that growth will quite likely maintain some roots in the traditional trade finance space;
• 44 per cent identify priorities linked to digitisation and technology, including fintech and the development of – or adherence to – fast-emerging platform propositions, as priority areas of strategic focus;
• 50 per cent see high levels of digitisation achieved in less than a decade but an almost equal portion of survey participants expect the evolution to take from 10-25 years;
• only 1.4 per cent of respondents see fintechs as a threat to banks;
• over 68 per cent identify compliance and regulatory requirements as areas of significant concern, while a surprisingly low 11 per cent pointed to capital constraints in the same manner.