• HSBC: Trade Finance Optimization

Abstract

The global economic downturn and sluggish consumption have reduced countries’ demand for exports and imports. Taiwan’s economy is highly reliant on current account surpluses. When imports and exports decline for a consecutive period of 14 months, the trade finance business is also severely impacted. The purpose of this case study is to guide students to understand what challenges overall supply chain and trade finance businesses are facing, and how they can respond to these challenges.

In addition to the traditional competitors in the trade finance business, the banking industries are facing competition from Internet companies. Armed with their existing advantages in the B2B market, the Internet companies are gradually seizing banks’ core business. The use of algorithms to provide lines of credit and the application of big data to understand customer needs are two innovations used by Internet companies that banks should refer to when developing trade finance business.

This study summarizes the trade finance optimization solutions for banks into three system requirements, and analyzes in detail the feasibility, advantages, and disadvantages of the various functions already provided by Internet companies for trade finance. Subsequently, the core concepts of the ABCDE Project directed by the government are used to redefine the short-term and medium-term strategies for the Hongkong and Shanghai Banking Corporation to optimize its trade finance business.

Keywords: Trade Finance, ABCDE Project, Credit Risk Appetite, Fintech