Trade financing is insufficient, particularly for the millions of small businesses that propel the global economy.

According to a recent Asian Development Bank analysis, the trade financing availability gap would reach $1.7 trillion in 2020, accounting for 10% of global commerce.

The disruptions created by the COVID-19 pandemic are primarily seen as having exacerbated this shortfall, which is expected to persist unless proactive measures are adopted.

These difficulties are especially difficult for micro, small, and medium-sized firms (MSMEs), becoming increasingly significant in global commerce. Financing rejection rates for such enterprises average 40%; according to a 2017 World Bank research, 65 million MSMEs were credit limited.

In the face of the rising digitalization of financial and commercial services, trade finance has been hesitant to upgrade its decades-old procedures. Multinational firms have begun to use digital technologies that promise increased supply-chain efficiency and transparency and establish new digital networks to enable trade and financing. However, due to their fragmented character and small scale, MSMEs find it challenging to capitalize on such possibilities.

All global trade finance system participants must handle this issue. Because the industry accounts for around 6% of global GDP, its performance influences the global economy's health in the future.

Given the complexities of the global trade finance sector, a thorough effort to reimagine the ecosystem may easily take five to 10 years to reach a position where most players receive the full advantages. Some interoperability layer building pieces, on the other hand, might be implemented more quickly by using the work previously done by trade groups, technology companies, and others. A significant commitment, particularly from banks, should produce concrete advantages in two to three years and provide the impetus for the other projects.

The global trade finance community can be motivated to work together, may common aims and equal advantages be realized.