NEW YORK, April 15, 2019 /PRNewswire/ -- BNY Mellon today
released its "Overcoming the Trade Finance Gap: Root Causes and
Remedies" report, which finds that the trade finance gap
remains a significant issue for global trade, according to 100
global, regional, and domestic banks, specialist trade providers
and other market participants responding to its survey. The
$1.5 trillion global trade finance
gap is affecting development and investment flows and financial
inclusion, and businesses appear to be facing an increasingly
uphill struggle in accessing the resources and support needed to
fulfil their trade needs.
The report conducted between April
2018 and January 2019, found
that trade finance rejection rates accelerated in more than
one-third or (33%) of institutions surveyed in the past
year. Additionally, nearly three-quarters or (71%) of
respondents cited compliance constraints and the inability for
applicants to provide quality know your customer (KYC) as a key
factor influencing the volume of rejection rates. As a result,
banks have had to be more selective in who they do business with
and subsequently move away from geographies and sectors that appear
to hold greater risk for less
reward.
"Our survey has shown that a significant proportion of
institutions are increasingly unable to provide trade finance due
to heightened regulatory requirements as well as several other
trends," said Joon Kim, Head of
Global Trade Product and Portfolio Management, BNY Mellon Treasury
Services. "This could have serious implications such as potentially
widening the trade finance gap, compounding the lack of access to
finance already being experienced by many businesses in emerging
markets, and impacting the strength of global trade."
Further, participants identified technology and regulatory
revision as two potential approaches that could help to narrow the
trade finance gap. Specifically, centralized KYC databases could
provide a technology-based solution, according to nearly two-thirds
or (61%) of respondents, while regulatory revision would
most benefit from greater collaboration between banks and
regulators, according to more than half or (55%) of
respondents. Additionally, risk sharing partnerships with
correspondent banks is seen as the most effective way of
encouraging additional financing capability, while educating local
banks and acting as advocates for trade finance are also key roles
for correspondent banks in helping to alleviate the gap.
Paul Camp, Chief Executive
Officer, BNY Mellon Treasury Services, confirms that "addressing
the trade finance gap is a priority for the industry, and it is
important that we work together to find the solutions that will be
most effective in achieving this. There are efforts underway, but
more work is required to ensure significant progress is made. We
hope our survey will serve as a catalyst for driving further
industry discussion and help to identify the areas of focus that
will allow us to make tangible steps towards improving financial
inclusion – and closing the gap."
Note to Editors:
BNY Mellon Treasury Services
offers its clients solutions in global payments, trade services,
cash management, and foreign exchange. It operates in 36 countries,
helping clients optimize cash flow, manage liquidity, and make
payments more efficiently in the currencies of more than 160
countries. Its services help organizations conduct payment
operations, ensure adequate liquidity, and manage risk.
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial services for
institutions, corporations or individual investors, BNY Mellon
delivers informed investment management and investment services in
35 countries. As of December 31, 2018, BNY Mellon
had $33.1 trillion in assets under custody and/or
administration, and $1.7 trillion in assets under
management. BNY Mellon can act as a single point of contact for
clients looking to create, trade, hold, manage, service, distribute
or restructure investments. BNY Mellon is the corporate brand of
The Bank of New York Mellon Corporation (NYSE: BK). Additional
information is available on www.bnymellon.com. Follow us on
Twitter @BNYMellon or visit our newsroom
at www.bnymellon.com/newsroom for the latest company
news.
Contact:
Frank Pinto
+1 917 309 1065
frank.pinto@bnymellon.com
Peter Gau
+1 212 815 2754
peter.gau@bnymellon.com
View original content to download
multimedia:http://www.prnewswire.com/news-releases/institutions-rank-technology-and-regulatory-revision-as-the-two-most-effective-ways-of-helping-to-reduce-the-trade-finance-gap-according-to-bny-mellon-global-survey-300831480.html
SOURCE BNY Mellon