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!
Kim