Blockchain technology is transforming many industries as perfect ways to digitally record & perform transactions in an efficient, secure, transparent, and entrenched manner. From manufacturing to healthcare, real estate to government application, the well-adopted use of decentralized ledger technology backed by advanced cryptography has immense advantages for these industries. But one of the industries which are getting higher benefits from this blockchain technology is Trade Finance, lagging behind other industries in terms of digitization.
What Are The Challenges In The Current Trade Finance Process?
There is no doubt that trade finance works as fuel for global trade, and thereby it is not surprising why this sector is experiencing many discussions about the opportunities of blockchain technology. Right now, trade finance is focusing on ensuring liquidity and mitigating credit risks in both domestic & international trade transactions. For example, in March 2021, the global trade finance network Contour joined hands with ThoughtWorks to digitize trade finance in China.
But today, most of the trade finance activities involve a substantial amount of physical paperwork causing further delays, & a lack of transparency for importers & exporters. The currently used system for banks & their corporate clients to handle trade transactions is highly manual, causing overhead costs. This reliance on documents contains several drawbacks, for example, the cost & time required to prepare, transmit & verify these documents. Old & paper-based processes in trade finance services are in crucial need of upgrading, and here, blockchain has a vital role in introducing new digitized solutions.
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