Australia and New Zealand Banking Group (ASX: ANZ) and a consortium of six other large banks that include HSBC, Standard Chartered, Santander, BNP Paribas, Deutsche Bank, and Citi have announced a digital initiative called the ‘Trade Information Network’.
The initiative is aimed at allowing companies, particularly importers, to be able to electronically apply for trade financing using verified purchase orders and invoices.
This information is provided to the banks in the network and is expected to unlock funding for more companies and it reduces the risk of double financing and fraudulent applications.
Existing trade financing processes are largely manual and time-consuming.
According to the AFR which quoted a study by Bain & Company, “Global trade finance amounts to more than $US9 trillion ($12.7 trillion) a year. The (new) system will allow banks to provide financing earlier in the supply chain by enabling exporters to easily and securely communicate trade information directly with lenders”.
That’s certainly a large market that the banks have not always been able to take advantage of, leading to the rise of non-bank lenders.
Multi-bank initiatives such as this one have been known to be quite profitable and in the most successful cases, they have produced juggernauts such as Visa and Mastercard.
The rise of the internet is not yet over and there are still many industries that will need to be digitised over the years to come. Trade finance is certainly one of those industries and ANZ will be looking to cash in.
I don’t expect this initiative to be one that will send ANZ shares skyrocketing though as mortgages remain a large portion of ANZ’s business.
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Kevin Gandiya owns shares of Mastercard.
You can find Kevin on Twitter, KevinGandiya.
The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Visa. The Motley Fool Australia has recommended Mastercard. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.