HSBC revamps trade finance with strategic collaborations and client-centric solutions

Aditya Gahlaut, Asia Pacific co-head of global trade solutions at HSBC, emphasised the bank’s strong market presence and extensive network as key factors in navigating the changing trade finance landscape. By leveraging these strengths, HSBC is well-positioned to adapt to the reconfiguration of supply chains and trade flows across the region.

HSBC, recognised as a leading trade finance bank in Asia, claims a market-leading position in the region. By leveraging its extensive network across 19 Asia Pacific markets, the bank captures 90% of its customers' regional trade flows. The bank highlights that its trade finance revenue is significantly higher than its closest competitors, with Global Trade and Receivables Finance (GRTF) annual revenue reaching $2.7 billion in 2023. 

HSBC’s strategic shift from product to solution centricity

HSBC has rebranded its GTRF business to Global Trade Solutions, signalling a shift from a product-centric model to a solution-oriented approach. This new shift in strategy is built on three pillars: connecting buyers and suppliers, co-creating tailored solutions, and acting as a strategic partner. Gahlaut emphasised, “This new approach involves co-creating solutions with our clients that we can look to replicate in the same sector.”

As trade flows shift between key corridors such as China and ASEAN, India or Mexico, these changes are driving new investments and capital expenditures in these regions. Bolstered by local infrastructure spending and installation of new manufacturing facilities, these are expanding the demand for trade and working capital financing.

With shifts in supply chains, smaller and mid-market players are being increasingly integrated into global value chains. This is particularly evident as the US and Europe diversify from China to ASEAN and India, creating new opportunities for smaller businesses to engage in global trade.

“Given our network, we are well-placed to tap into all these trends," added Gahlaut.

Leveraging fintech partnerships and real-time data to drive innovation

Rising digital e-commerce in the region is creating significant opportunities for banks to service the merchant solutions space. As both traditional businesses and new digital marketplaces seek partners to support and enhance their transaction flows, banks are forging partnerships with fintechs to better understand the digital and lending needs of their merchant customers.

In a collaboration, banks contribute their payments infrastructure, balance sheet strength, and lending expertise, while fintechs offer agility and advanced technology to improve customer experiences. Outlining HSBC’s partnerships and investment in fintech, Gahlaut said, “HSBC is actively partnering with and investing in fintech companies to drive innovation in trade finance”.

HSBC’s collaboration with Dowsure Technologies, a cross-border e-commerce platform, exemplifies how collaboration can transform trade finance. Traditionally, trade finance requires extensive financial documentation and collateral, which could be a barrier for smaller businesses to access capital. Through this partnership, HSBC utilises real-time transaction data, such as inventory sales, refund records and customer ratings to determine credit limits in real time. This data-driven approach allows HSBC to expand access to financing efficiently and quickly, without the need for traditional financial statements or collateral.

“The beauty of these data points is they are real-time. The fact that a lot more information is made available to us in real-time allows us to lend to these e-merchants more effectively," Gahlaut explained.

HSBC has invested in digital platforms and emerging technologies to enhance its trade solutions business. Such investments have enabled the bank to build a new credit risk framework and expand ecosystem financing in the region. “In the past 2 to 3 years, we've invested a lot of effort in digitalising the lending journey, automating processes such as data ingestion, account opening, credit assessment and ongoing evaluation monitoring,” Gahlaut emphasised.

Global trade finance outlook

While Gahlaut is optimistic about the future of global trade finance, he noted that macroeconomic data can be misleading. Despite strong trade volumes, higher interest rates have led to a decline in trade values, disrupting the usual correlation between trade volume and financing. This has resulted in decreased trade financing.

Looking ahead, the increasing demand for seamless and hassle-free financing is driving banks to innovate. Corporates now expect integrated solutions that connect them with banking partners and suppliers through digital platforms. Gahlaut emphasised that HSBC aims to position itself as a trusted advisor, helping clients navigate new markets and strengthen their broader ecosystems.