Commerzbank claims that international trade and supply chains have reached a technological inflection point, with emerging technologies in Big data, blockchain, Internet of Things and artifical intelligence set to overturn long-established practices.
A joint research effort between scientists at the Fraunhofer Institute for Material Flow and Logistics (IML), and Commerzbank trade finance specialists indicates that digital advancements are pushing the development of improved business models to meet the need for increased operational efficiency and alignment with more complex sustainability goals.
The report identifies Big Data as an “indispensable” source of technological innovation, but only if implemented in tandem with other technologies.
“Big data analytics can help financial institutions to leverage the wealth of trade data stored in multiple databases across different geographies along the supply chain by identifying data trends and flagging anomalies, banks can detect fraud at an early stage,” states the whitepaper.
With global data set to grow by 500% between 2018 and 2025, the report explains that effectively processing this mass of information will fall to AI and machine learning solutions, automating decision-making processes and forecasting trends in risk management, financial analytics, and portfolio management.
The report further predicts that B2B platforms supported by distributed ledger technology and smart contracts will profoundly alter the way in which international trade is undertaken, pointing to the Marco Polo initiative as a prime example.
The paper forecasts that DLT and blockchain technology could reduce trade finance operating costs by 50 to 80% and improve turnaround times three- to four-fold. The barriers removed could lead to more than US$1 trillion in new trade over the next decade.
Another big technological innovation comes in the form of Internet of Things tracking sensors, capable of supporting the design of fully automated order processing and payments transactions along the entire supply chain.
Prof Dr Michael Henke from Fraunhofer IML in Dortmund comments: “The trick to reach the plateau of productivity quickly is to combine all the technologies we have in our hands today. That’s what we are doing in our collaboration with Commerzbank, where we’re consistently integrating the financial flow with the material- and information flow.”