What Roles Do Banks and Financial Institutions Play in Trade Finance?

Banks and financial institutions play a critical role in facilitating trade through providing specialised financial products and services:

• They offer trade financing instruments to both exporters and importers, such as letters of credit, supply chain finance, export credit, factoring, insurance, etc.
• They provide forex services needed for cross-border transactions, including remittances, hedging products, and forex trading.
• They offer convenient platforms for seamlessly executing trade finance transactions.
• They undertake all compliance requirements related to trade documentation, licencing, customs clearance, etc., on behalf of clients.
• They leverage their networks and partnerships to connect companies to global suppliers, logistics providers, and other trade facilitators.
• They provide advisory services to identify the right trade finance solutions and assist with structuring transactions.
• They leverage their financial strength to offer financing even in challenging markets and sectors.
• They use their expertise in international regulations, sanctions compliance and due diligence to ensure smooth trade execution.
• They partner with export credit agencies and multilateral agencies to make trade finance accessible to businesses.