Trade Finance in 2020 – Overcoming challenges and accelerating digitalisation

2020 has been an unexpected and challenging year. In the first quarter we saw the rapid emergence of the COVID-19 pandemic and we moved quickly to support our customers in what was for everybody a difficult and unprecedented time. As national lockdowns were announced, we ensured that we were positioned to support our customers by dispersing our trade finance staff to remote working locations, through close dialogue with our logistics providers and also through daily discussions with our relationship and correspondent banks in order to ensure the continued flow of customer´s trade documents and transactions.

Adapting and responding

As our understanding of the pandemic developed and the impacts of it shifted from the Far East to closer to home, our team of trade experts shared relevant and time sensitive information with our clients and we held a webinar focusing on the interpretation of international trade rules; whether the situation equated to a force majeure and points to consider with regards to logistics and the practical implications of the crisis on the movement of documents and goods. This provided a timely opportunity to answer specific customer queries and provide reassurance and insights.

Throughout this time we remained open as usual, providing a full service whilst working from contingency sites and home. Our trade teams advised city municipalities and other authorities to help structure transactions and provide urgent financing solutions. We also began to ramp up the direct support we were giving to government agencies and departments to help them with the procurement of PPE (Personal Protective Equipment) and other medical equipment. We also reached out to pharma companies and healthcare chains offering them support as well.

Sharing information with the trade network

As the lockdown situation developed from country to country, our emphasis remained on advising our customers and keeping them updated on changes taking place around the world. We held a series of webinars and published articles and a special trade report with the aim of sharing as much of the knowledge as we could gather with the Nordic business community. Contacting partners to share ongoing intelligence, providing updates and discussing new solutions became a regular weekly occurrence with many of our customers. A number of the practices we introduced are still in place today with direct lines of regular communication strengthened and established.

Nordea has a very good dialogue with all national Export Credit Agencies in the Nordics and our trade teams lent very heavily on those relationships to try and gather as much guidance as possible. Weekly meetings were held with each of the ECAs to channel their guidance and programmes towards our customers and to provide feedback from our side on the developing situation. Subsequently we were able to be out very early in the market to share information with our customers about ECA trade guarantee facilities and the support we were going to give them. Throughout the year we have managed to arrange these facilities and pass on the much needed help to our customers.

Driving the recovery and supporting digitalisation

For now 2021 offers promising signs that global trade conditions will gradually improve. At Nordea, our number one goal will be to support recovery and growth by moving in tandem with our customers. We will work with suppliers and buyers to support supply chains as they grow and cover orders that may have been held back in 2020 using supply chain financing and leveraging where needed. Growth will also bring a risk element and we will be looking at receivables programmes to both mitigate risk and free up cash. Our trade experts will also help our customers expand into new areas of business and new markets.

One thing the crisis of 2020 has taught us is that digitalisation is no longer optional for both our customers and Nordea to further strengthen resilience. The adoption of new digital trade technologies is expected to continue at a rapid pace. The move to fully digital and decentralised platforms like we.trade in order to exchange digitised trade instruments such as guarantees, electronic bills of lading or letters of credit, will continue to replace paper trade methods that have stayed the same for many years. Our new year’s promise is to continue to drive the digitisation of trade and supply chain management.