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E-invoicing, SCF & E-procurement

Blockchain to boost trade finance by USD 1 tln in ten years – study

Friday 14 September 2018 | 10:59 AM CET

The World Economic Forum has issued a report saying blockchain could add USD 1 trillion to global trade finance over the next decade.

In a newly released report titled Trade Tech – A New Age for Trade and Supply Chain Finance, WEF and Bain & Company highlight the economic benefits of integrating DLTs into existing supply chains. According to the researchers, an additional USD 1 trillion in financing will be added to global supply chains by 2028 as a direct result of increased DLT integration. This figure represents new capital that would have otherwise been missed out on had DLT never existed.

If achieved, the funding boost could significantly reduce the current trade finance gap, which WEF and Bain place at USD 1.5 trillion. This figure is expected to reach USD 2.4 trillion by 2025. The researchers claim that roughly 30%, or USD 1.1 trillion in new trade volume, will come from DLTs removing existing market barriers. Roughly 40%, or 0.9% trillion of traditional trade, will move to the blockchain for better services and lower fees, study finds.

The report also tackles the fact that, while cryptocurrency and fintech are the most prominent use cases of blockchain technology, a multitude of sectors are integrating DLTs into their business model. In a blockchain environment, trust is no longer governed by a central authority, but rather through collaboration and code, which greatly enhances efficiency, transparency and economies of scale. Businesses that are involved in money transfers, escrow, payments or require detailed audits of any kind have a vested interest in the blockchain.

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