TFG are delighted to have partnered with Global Trade Review for their 2021 MENA virtual conference. The longest established trade finance conference in the region saw proceedings take an alternative virtual platform this year, as audiences across the globe attended the event remotely, with those in the UK subject to colder temperatures than they would have expected in the UAE.
Hope for the best, prepare for the worst
Proceedings kicked off with keynote address delivered by Abdulla Bin Damithan, Chief Commercial Officer at DP World.
“2020 was a year like no other. It was heavily defined by the pandemic, which led to social and economic disruption, the after effects of which will be felt for many years to come,” he said.
“The damage caused to global trade will likely last for a longer period. The logistics and maritime industry was not prepared to face such disruption. The pandemic showed the world that no industry is immune.”
The outlook on the whole was gloomy, the UAE remains very much in the heat of its third wave of the COVID-19 virus, still averaging over 3,000 new cases a day.
“This shift opened up ways for changes that we previously thought to be impossible. The key was to accept these changes and adopt a new thought process.”
He added that the pandemic forced nations into “a balance between globalisation and self-reliance.”
There were reasons for optimism, specifically in historic bridges forged between Israel and the Arab world.
“The opening of trade with Israel has lifted the prospects for the UAE. The trade between Israel and Dubai alone is 1 billion dirham from September 2020 to January 2021.”
“The key is to hope for the best, and prepare for the worst. The global shipping industry will be at the forefront of efforts towards a sustainable recovery as a vital enabler of the smooth functioning of international supply chains.”
By the banks, for the banks
The event provided an opportunity to update audiences on how the UAE Trade Connect (UTC) was developing in the region.
The fraud prevention platform went live in June 2019 and is now used by nine banks in the region.
Unlike some other trade finance platforms, UTC does not integrate with core banking, but rather banks use an interface which reads the invoice and extracts the information, before encrypting it. Banks with larger volumes of data are offered APIs, which hook the data and bring it into the UTC system.
“The main benefit is the control,” explains Selima Mehiri-Aouij, Head of Trade and Commodities finance at RAKBANK.
“What UTC does is bring a new level of control to the banks, to avoid three things in the invoice financing area: the duplication of invoices, financing from multiple banks, and fraudulent invoices that do not cover genuine trade.
“We had a lot of bad experiences in the SME segment. Trust is important for growth in the business, between banks and their customers, and the banks themselves. It will bring an overall trust in the environment.”
MENA blockchain spending in the UAE is expected to surge from $21mn to $105mn by 2023. These high rates of investment come in response to a spate of high profile trade finance frauds in the region. The UAE is also facing mounting international pressure to crack down on financial activity.
UTC has already uncovered 3.75 million fraudulent transactions a year since its inception, representing $435 million in potential losses.
Trade in the UAE remains largely paper-based. UTC hopes to digitalise trade on a national level, explains Anirudha Panse, Managing Director at First Abu Dhabi Bank.
“Digitalisation is something we cannot avoid. The digitalisation of the operations of the financial industry from a customer experience and control point of view, the blockchain technology will bring the high security data we need to progress in the trade finance sector.”
With nine banks already under its umbrella, it looks to become the key DLT player in the region.
“We’re already in talks with the next five or six banks to join the platform. We believe if we get up to 16 or 17 banks, we’ll have 99% of coverage across the trade finance area,” adds Zulqaranin Javaid, CEO at UTC. “We’re not far from becoming the national trade platform.”