Today, Sumitomo Mitsui Financial Group (SMBC) announced that it’s joining two blockchain trade finance consortia, komgo and Contour. Both networks currently focus on Letters of Credit.
While open account trade finance gained market share for many years, there was a turnaround in 2019 that saw a 6% growth in documentary trade finance revenues, which include Letters of Credit (LC), according to a BCG/ICC report.
SMBC said it was joining the networks to improve efficiency in trade. It also highlighted staff working remotely as a result of COVID-19, which caused issues with the complex exchange of documents required for Letters of Credit. Because of these sorts of challenges, COVID-19 has triggered a ramp up the digitization of trade around the world.
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