NAVIGATING SIGNAL AND NOISE IN TRADE AT ITFA IN SINGAPORE, September 2025

Written by Katharine Morton, Exile Group (TXF, Proximo, Uxolo)

The 51st International Trade and Forfaiting Association (ITFA) annual conference uses Singapore, one of the principal hubs of world trade, as the vivid backdrop for themes of navigating uncertainty, resilience (and opportunity) amid the ‘rewiring’ of global trade. Is it all about ‘navigating in the dark’, and how can trade and export finance benefit?

Sean Edwards, ITFA’s Chairman, quotes Nicholas Taleb’s 2012 book, ‘Antifragile: Things that gain from disorder’, and reflects that there are things, sectors, and places in the trade finance industry that could benefit from the volatility and change that has been particularly evident in the past nine months.

Global markets are being hit by geopolitics, trade tariffs as a nationalist tool, and regulation. In theory, it should help fast-adapting risk players. In practice, it is a challenge. Throughout the event, members heard how the industry (banks, fintechs and insurers in particular) are responding to the fast-evolving new paradigm.  

“It’s been a long time since we’ve served corporate clients in an environment with as much uncertainty as this,” says Natasha Condon, global head of trade sales at JP Morgan. “We’ve been having the kind of old-school risk and resiliency conversations we haven’t seen since 2008, and not just geopolitics and trade war and generative AI. Everyone is trying to predict what’s going to happen. That is new, and there’s enormous compliance and regulatory risk.”

Navigating in the dark – the backdrop of uncertainty

Edward Lee, chief economist and head of FX, ASEAN & South Asia at Standard Chartered uses the analogy of ‘navigating in the dark’ for the nine months of US trade policy under ‘Trump 2.0’ in his keynote.

Lee asks multiple questions: whether 2025 will be “saved by ‘front loading” of exports to the US early in the year (he says this may be obscuring the export outlook, and while exports to the US from Asia outperformed, they will likely slow down but not fall off a cliff).  He asks whether US economic policy is being viewed as credible, whether labour market softening is worrying (he argues not), whether narrow employment growth is a concern, how tariffs affect inflation and how the Fed hawks and doves will respond in terms of rates. Uncertainty continues and not all assets are pricing it in.

After President Trump will tariffs disappear? Nobody knows, though Lee draws an analogy of the challenge of taking a banana away from a gorilla. Either way, ASEAN reciprocal/effective tariffs with the US will likely stay higher than before. Through an Asian lens, the economies most likely to have their growth impeded in region are the smaller, open, ones – particularly Vietnam, Thailand, Malaysia and Singapore.

Lee says China is moving to tackle excess supply side capacity and providing fiscal boosts to (‘prepone’ (advance)) consumption, though housing weakness continues to weigh on sentiment. If China’s economic tailwinds are abating, its exports are reaching new markets, for example in Africa.

Navigating new corridors – South-South (and Africa) in the spotlight

Financing through new trade corridors is not all about the US. Indeed, some 90% of world trade bypasses the US, and the US is not a major player in Africa. Physical disruptions to global supply chains have had an impact, alongside tariffs and geopolitical disruption, all of which bring uncertainty and opportunity. “Crisis becomes the status quo if it goes on long enough,” says one speaker.

Robert Besseling, CEO of Pangea Risk, says, “The five-year crisis is not just about tariffs. Artificial intelligence has intensified the ongoing process of change.” He notes the speed with which China was able to get Brazil to pivot its supply chain for sesame seeds from the US.

China was also able to reach out to all its diplomatic partners in Africa, drop their tariffs, taking automotives, solar panels etc from China. The country is also starting to re-envision the private creditor debt burden for infrastructure financing in Kenya and local currency debt swaps could be in place before any new IMF programme (for 2027). “If the US only sits on 10% of global trade, what bargaining position do they really have?” Besseling asks. 

Navigating the future of trade finance from the C-suite

Industry leaders say some of the biggest shifts have been those driven by technology (AI in particular), regulation and the rewiring of trade. The reordering of client risk priorities/hierarchies is one big change according to one senior banker – with non-financial risk topping the board over credit and operations risk (though one broker adds credit risk is now very much a C-suite issue). The sheer volume of KYC [know your client] requests banks must deal with has blossomed in the wake of the 2008 global financial crisis.

The sector has been demonstrating agility and resilience as trade finds its way around turbulence and interference. One negative is whether it will fuel more fraud. One fintech says he shivered hearing that some [bad] operators don’t want trade to be as traceable as new technology allows and points out that QR codes alone are not enough to prevent fraud.

But all of this remains against the backdrop of a very ancient practice of financing international trade. “It’s important to keep an open mind, but not so open that your brains fall out,” says Condon at JP Morgan, paraphrasing Carl Sagan. Are these new tools for ancient technologies? “I want people to challenge my thinking as I didn’t grow up swimming in these waters.”

Is this a change from traditional trade routes or the beginning of macro shift? “It’s hard to move your supply chain, especially if you are a manufacturer,” Condon points out. “Trade is a flow, like water, and will flow through a path of least resistance, but it is difficult to make big investment decisions yet with so much uncertainty. It will take a decade to see.”

How are the leaders modelling the changes into their trade finance product strategy and assessment of client risk? Supply chains that had already been exposed as vulnerable by the pandemic are already being remodelled to ‘just in case’ from ‘just in time’, and procurement has changed, which has already had an impact in terms of the kinds of trade finance products offered. “The customer now wants inventory to be closer, but not on their balance sheet as leverage,” adds one senior banker. “We have had to adapt innovative solutions regarding inventory financing within our suite of products.”  Clients want products that support supply chain resilience.

Evolution of trade products, risks and agility, and the Basel elephant

Products offered by banks and insurers are being impacted by the market backdrop. It’s complicated. One speaker notes LC demand is rising, corridors diversifying and intra-regional flows strengthening in Asia, another insurer notes more RMB and rupee financing becoming competitive, though foreign banks dominate single buyer transactions that local banks cannot do.

There is consensus that the nature of demand from end clients is changing, and also because of bank regulation.

 ‘Basel 3.1’ is the regulatory elephant in the room that still impacts bank capital. Capital constraints are changing their approach, particularly to risk participation, and speakers note a change in sub participation versus banks taking a syndication lead. According to one insurer, Basel is influencing single risk requests and increasing demand for portfolio solutions, and capital efficiency solutions for banks.

Banks and insurers that want to stay ahead are having to be more agile and adapt their products. For market makers and larger lenders, it can be a case of evaluating how trade finance products offered are working and if there is a gap in performance, to de-emphasise the product or fix the gap. Trade loans and leveraged finance solutions are having to adapt. Single or multi-buyer versus whole turnover/trade receivables finance programmes and payables financing and their problems/potentials are being weighed.

Demand for longer tenors and structured financial solutions is increasing, and this is coming across the desks of many speakers at an event more traditionally focused on short term trade.

In particular, energy transition demands mean larger syndication guarantee facilities are being called for and ECAs and development finance institutions (DFIs)/multilateral development banks (MDBs) are increasingly key to bring more comfort to support longer tenor deals. For many insurers, ‘the usual suspects’ rather than new or untested exposures are being prioritised.

As one broker says. “For many years we’ve had conversations on funded versus unfunded. It may sound old fashioned, but banks are good at funding and lending, and some areas overlap, but insurers are fundamentally about taking risks and margins need to be hefty. Private credit is inevitably more active and will look at insurance, while banks will continue to do what they do well.”

The same broker notes an interesting development on the funded side where he is seeing increasing use of structures with insurance-wrapped ‘repacks’ [repackaged transactions that are typically structured notes combining a debt security and a derivative] via special purpose vehicles (SPVs). He is also looking closely at the unfunded SRT [Significant Risk Transfer] market, which another insurer says could be a useful tool for trade finance products or those looking at a portfolio or securitised tranche in deals.

In five years’ time though, whether bank and insurers will be offering the same products and structures and working with the same counterparties – or whether there will be more involvement needed from ECAs and DFIs – remains to be seen.

Navigating risk from the insurers’ perspective – back in the weeds

The ITFA Insurance Committee reports on its regulatory advocacy to ensure regulators see the benefit credit insurance makes to the real economy, which has borne fruit in the past – given that back in 2017 the Basel committee didn’t even recognise the impact of credit insurance.

Credit risk insurance (CRI) is an important tool to mobilise finance, and regulators are recognising CRI, showing that the product is relevant for capital relief (seen in the UK PRA credit risk report in September 2024), and in the EBA (CRR2.5, Article 506). Work continues by banks and ITFA to petition regulators (ie at Eurofi) to help facilitate the right capital treatment, which has been relatively effective in improving appropriate prescribed loss given defaults [which, amid a Global Credit Data Consortium (GCD) report on insured exposures, commissioned by ITFA, may result in prescribed LGDs of 22.5%, considerably better than the original proposal for above 40%].

Meanwhile, compiling data and improving methodology helps facilitate appropriate and more beneficial capital treatment, and between 2021-2024, there were 742 claims notified, zero compromised and total claims paid amounted to nearly $2.5 billion.

Navigating digitalisation – it’s not been full steam ahead

The adoption of trade digitalisation is not proceeding at the pace envisioned five years ago. Corporates have not hungrily fallen on adoption, particularly at the SME level, and MNCs have not prioritised it in the way many had thought. “We thought clients would be delighted for enhanced solutions in a world in which technology all pervasive. Clients expect smoothness and a lack of friction,” says one banker.

Adoption is seen as complex and is not high on corporate priorities. “We will continue to see resistance. When we take those barriers to entry down with ERP systems such as SAP and Oracle, that’s when we’ll see adoption.” The challenge is for banks to remove those barriers.

Open account trade is digital, while documentary trade stubbornly remains the last bastion. Mirroring paper-based trade into digital processes is only a halfway house and moving data rather than paper will mark the big shift.

Nonetheless, trade products that are enhanced by technology are reaping benefits. Banks always relied on static data to analyse customers, now digital trade gives real time data and flows, where delays are, where payments are late and real time feedback versus loans where you only know about risk when defaulted, one banker says.

The challenge of getting technology adopted remains – making it accessible, affordable and turnkey, particularly for SMEs – and ITFA has an important role in developments in terms of trust and legality.

Navigating using different metrics for impact

Amid the current ‘de-emphasis’ on ESG evidenced by the US administration, and the challenges of ‘greenwashing/social washing’, and the focus on compliance rather than purpose/people-driven outcomes, ITFA, with Dr Rebecca Harding, CEO of the Centre for Economic Security,has been revisiting ‘Social Return on Investment (SROI)’ as an alternative metric to help quantify social, environmental and economic impacts. “ESG is still here, but it’s not the same as it was two years ago,” says Edwards. ITFA’s working group on ESG has been focused on developing an audit standard in ESG reporting, emphasising the S – social – in ESG. This is to help support its effective measurement and hence improve impact in regions such as Africa.

Harding and Edwards assert that ‘S’ needs to evolve to mean societal/ and security rather than simply ‘social’. “The next steps with SROI will be finalised shortly and we will reach out to selected regulators, starting with the OECD to [have a metric] with the backing of a trade association,” Edwards says.

Steady hand on the tiller for works in progress

Edwards draws three themes from the Singapore event from ITFA’s perspective. Amid the changes of global supply chains which are being rewired geographically for good or bad reasons, trade finance bankers are having to find solutions, which is the first work in progress.

Second is the theme of resilience. Looking through the perspective of Taleb’s things that gain from volatility and change, Singapore and Dubai have both benefitted from the realignments.  “Good and bad things are emerging in Europe in terms of military and defence, and ITFA is getting involved in E, S and G, and military procurement and spending [can feature] as the ‘S’ of social and security.”

Third is the tools available to the industry to achieve all of this. “In terms of our membership, ITFA has the largest fintech cohort of any trade organisation. We come from a background of forfaiting – and digital forfaiting is on the rise, digital negotiable instruments, based on techniques worked out millennia ago [change the way] we deliver it.”

Basel continues to change risk capital [weighting] in banks and how much more is still in play continues to be discussed by Ramadurai Krishnan, global risk & strategy advisor and NED at Global Credit Data Consortium (GCD). “All the tools we need to understand to make [financing trade] more efficient do exist, but there is a bifurcation between rapid geopolitical change and the bank response. The question of bank versus non-bank and which is being more agile/quick remains. Banks are bringing fintechs and non-bank funders into the tent but a difference in cultures remains. ITFA’s mission is to bridge the gap,” concludes Edwards.

All is (not quite) black and white While everything in trade finance is certainly not all black and white, ITFA’s gala dinner on the beach in Sentosa Island is – at least in theme. Looking out over the swath of container ships and the port lit up in the night sky by celebratory fireworks (dressed in stripes a little bit like a zebra) did give the solid impression of world trade doing what it does, simply carrying on regardless (and sailing forward to next year’s event in Split).