What will 2013 bring?
From my chair the first week of January – 2013 surely has the potential to become a fantastic year. Not just personal – but also if one looks at the trade finance scene. Let’s take a look at what we can expect.
First of all there are many initiatives coming out of the ICC that will impact the trade finance industry. Here are a few:
It is expected that the ICC Banking Commission will approve the ISBP. I have seen Draft 5 which is out for comments right now – and this is very promising indeed. As far as I can see it will really reach a new level. So no doubt 2013 will be an ISBP year – with seminars all around the world. However with ISBP there is the challenge that all ICC publications have: They are expensive – and restrictive! I think that publications like the ISBP contain information that is vital for anyone working with LCs – and therefore their content should reach very wide!
The current version of the ISBP is EUR 25 plus postage and handling. The eBook is EUR 22,50. You save EUR 2,5 (!!!) (and postage and handling) when buying the eBook – but then you also have the challenge that it only runs on one computer – if it is at all possible to install it on the banks computer. I never managed to do that!
In any case: 2013 WILL be an ISBP year – and my hopeless hope is that it will be made available all over the world free of charge! Every corner of the world deserves this great collection of practices.
It is also expected that the ICC Banking Commission will approve the URBPO Rules. This means that there will be much “hype” around this. My personal feeling is that this hype will not create any great flow of TSU/BPO transactions in 2013. I feel a great reluctance in the market to really get on board and try this out. When I attended the “5th Nordic Trade & Export Finance Conference” SWIFT made a presentation of the TSU/BPO – which included a live case study. No doubt this is the way forward. This must be as concrete and tangible as possible. Still the road is long – and my TSU/BPO/2013 prediction is that there will be many words – but only little action.
In many ways 2012 has been a remarkable year. A year where borders have been moved – and paradigms have changed! Here I am thinking mainly about the internet and the social media. The ICC Banking Commission is now on Facebook, Twitter and LinkedIn. During the ICC Banking Commission Meeting in Mexico this fall, here was a “live update” via Twitter. Perhaps not the most perfect and comprehensive update – but still an update – via Twitter!
The Institute of International Banking Law & Practice (IIBLP) are on LinkedIn – with a great site – check it out! …. But most of all: the discussion forums are exploding. There are now many great discussions forums on LinkedIn related to international trade. This activates the users – this expands the discussions – this makes us all wiser! Frankly: I love it!
But – and there is a but; With heated discussions you sometimes need an authoritative voice – to set things straight. Not to decide everything – not to tell the rest of us what to think. But – open social media has a dark side: Sometime the “tone” is not appropriate. I have seen this only too often – and more often than not what is being said is simply wrong! But in the social media anyone is entitled to their opinion … even if it is that 2 plus 2 equals 25! This is of course not helpful – for anyone. Therefore I think that 2013 will create more controlled forums – e.g. where a limited number of experts will answer, or a certain experience is required to take part in the discussions.
But what will happen on the corporate side? Well surely the trade finance instruments like LCs and guarantees will not disappear in 2013. But there are some “trends” that will affect the corporate customers. These are mainly related to the state of the banks. More or less all of the major banks are undergoing huge “cost cutting” exercises. For the major banks in my region the mantra right now is “new normal.” This means that the banks are preparing for increased government control – and strict regulations – followed by increased capital requirements. This means that “cost control” and “shareholder value” are on top of the agenda. For the corporate customer this may mean decreased lines available – e.g. for LC issuances or confirmations – and/or it may mean increased prices. What it also means is an increased segmentation; i.e. the banks will focus more on the few large customers that generate the majority of their income. This is understandable – but it may well result in the end of the times when the banks trade finance experts or advisers went to a small customer to teach about the UCP 600 or the ISBP. These companies may need to take care of this themselves rather soon.
In other words: 2013 will either be the year when the medium or small customers makes even more discrepant presentations – OR the year when the trade finance consultants are extremely busy :-) I hope for the latter – but frankly I believe in the first… :-(
In 2012 I noted another interesting trend; namely that an increasingly number of corporate customers took interest in the so-called multi bank systems; i.e. systems developed by 3rd party providers that allows the corporate customer an overview of the entire trade finance portfolio on one page. Moreover some of the systems that are available allow for functionality that the banks front-end systems do not offer. I think that this “maturity process” will continue during 2013 – and it will put pressure on the banks, as they may be “forced” to communicate with their customer via a channel provided by a 3rd party. They may even need to establish many channels – and must be able to communicate with their customers in a variety of ways!
Last by not least I think that trade finance knowledge – and the sharing of that will start to change. As already mentioned the ICC books do not reach as far as they should, and the ICC eBooks are not perfect either. In general trade finance books do not sell much – event though some of the available titles are crucial for a good and thorough understanding of these instruments.
New ways are needed! One of the first attempts is the iPhone/iPad app “Pocket Guide Series for International Trade.” Of course this one will expand in scope, titles and platforms – but I think and truly hope that this is only a small beginning…
As said – 2013 has the potential to be a fantastic year. I cannot wait to see it unfold!
Take care of each other – and the LC!
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