BIS and HKMA Launch ‘TechChallenge' Seeking Trade Finance Innovations; DLT & IoT Included

Interestingly blockchain, which is among the latest emerging tech featured, has been heralded as the solution to many of the challenges put forward by both BIS and HKMA.

The BIS Innovation Hub (BISIH) has partnered with the Hong Kong Monetary Authority to hold a trade finance digitization competition to spur innovative solutions for the sector, especially in Asia. BIS announced on August 3 that global innovators are invited to submit their applications by the end of the month, after which successful participants will be invited to develop full prototypes in a sandbox environment throughout 2021.

Research conducted by the HKMA before embarking on the ‘Tech challenge' revealed that over 70% of stakeholders in traditional financial institutions believe that most global trade finance needs are yet to be addressed. Notably, the Asian Development Bank (ADB) has, in the past, presented similar facts, highlighting a $1.5 trillion global trade finance gap.

With such stakes in play, the BIS and HKMA have since taken the initiative to find solutions for this potential market. Other prominent stakeholders backing this project include the People's Bank of China (PBOC), International Institute of Finance (IIF), and International Chamber of Commerce (ICC).

Blockchain and DLT Highly Considered

Interestingly blockchain, which is among the latest emerging tech featured, has been regarded as a solution to some of the problem statements tabled by BIS and HKMA. For starters, distributed ledgers can be instrumental in connecting ‘digital islands'; this is where tech becomes akin to specific jurisdictions, or is limited such that every party runs its centralized platform.

The BIS now suggests that blockchain can be used for linking global trade finance platforms for better communication, hence connecting the digital islands from the point of trust and verifiability.

In addition, blockchain can also be considered in delivering efficient B2B or B2C ecosystems for SME's to thrive. According to the explainer materials by the BIS, novel tech such as Artificial Intelligence (AI), Machine Learning (ML), and IoT will further complement efforts towards the SME environment.

Finally, innovative solutions in line with onboarding emerging markets were featured in the BIS and HKMA problem statement. On this one, decentralization, which most actors approach with an open infrastructure perspective, could assist in the integration of developing markets through seamless interface connections. The organizers highlighted,

“To leverage the diversity of innovation and digitization underway on this topic globally, solution providers are free to suggest any technology approaches they consider suitable to address one or more of the problem statements, including decentralized approaches based on blockchain/ Distributed Ledger Technologies (DLT).”

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Edwin Munyui
Edwin Munyui
Edwin is a FinTech enthusiast with a particular interest in blockchain technology and cryptocurrencies. He has worked as an author in the blockchain space since 2017 and enjoys creating content that both crypto veterans and newbies can understand. His simple writing style and financial market knowledge have made him a reputable fundamental and technical analyst with the ability to handle any topic around blockchain and crypto over the years.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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