Since the COVID-19 has attacked the worldwide economy, several banks have noticed a disturbance in supply chains during the initial two-quarters of the COVID-19 outbreak. Due to this scenario, the worldwide banks are now considering shifting their paper-based trade finance transactions to the digital platform. Amid COVID-19, Axis Bank, HDFC Bank, and State Bank of India were some of those banks that came forward to help their clients reducing the effects of the global pandemic as per the survey by Greenwich Associates, the analytics arm of rating firm Crisil.
As per the report released by Crisil, “Battered by the COVID-19 crisis, large Indian companies are looking to their banks for digital solutions that can make their supply chains more resilient to pandemic-related disruptions”.
The supply chain disruptions due to the coronavirus pandemic are ultimately introducing the accelerated transformation of trade finance – one of the financial business’s last paper-based holdouts into a digital business.
There is no doubt that the coronavirus outbreak has affected the international trade flows more enthusiastically than the global financial crisis of 2008–2009. Now, the second wave of pandemic cases in the United States and Europe are destroying hopes of early recovery. As per the report, the large Indian corporates are continuing to experience the troubles they faced in the first half of this year including supply chain disturbances due to lockdown initiatives, industrial closures, and the subsequent delays in shipping and transport, etc.
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Gaurav Arora, head of APAC & Middle East at the Crisil coalition Greenwich said, “In the crisis, operational agility and digital solutions are taking precedence over the traditional priorities of financing trades and meeting liquidity needs”.
The scenario of the global supply chain is changing with worldwide corporations re-evaluating their supply chains and repositioning for the “new normal.” In addition to this, trade finance is restructuring its shape, supported by digital interventions and the changing necessities of the corporates. The efficient and deep transformation in the global trade and commerce which is currently in progress will bound banks to boost their digitalization measures and turn end-to-end connectivity into a reality. The existing environment enables the banks to assess their current digitization drive, recognizing the gaps, and reconsider and restructure for the future, as per the report.