Automated Finance: How Fintech Speeds up Trade

When thinking of trade automation, the first thing that comes to mind for most people is probably manufacturing automation or supply chain automation. However, one area that most people don’t immediately think about is finance, even though it has a significant impact on trade.

Automated Payments 

Every business in the international trade industry has dealt with slow international payments. This is especially an issue for small and medium-sized enterprises (SMEs) that do not have enough cash reserves to wait for delayed payments. Moreover, the cost of exchange rate fluctuations and the cost of using the banking systems does not make things easier.

Fortunately, fintech and payment automation can significantly lower the costs of international payments while also increasing speed. For example, cryptocurrencies make it possible to send payments overseas within just a few seconds. While cryptocurrencies have not been adopted as a mainstream means of payment by the corporate world just yet, it will likely happen in the coming decade. Fintechs like TransferWise have also made international payments faster and cheaper for SMEs, enabling them to send money around the globe without having to pay an exchange rate deduction to banks.

Blockchain-based Trade Finance 

Blockchain technology has made it possible to automate trade finance transactions as well. While traditional trade finance instruments involve massive amounts of paperwork and are cumbersome and error-prone, blockchain-based trade finance instruments can process trade transactions securely through smart contracts, eliminating the need for paperwork, banks, and long waiting times.

Blockchain-based cryptocurrencies may also enable machine-to-machine payments, meaning one machine pays another without any human involvement. A prime example would be a self-driving car paying at the gas station. In trade, it could be an autonomous cargo drone receiving payment once the shipment has been delivered. 

Nowadays, the flow of money is almost as crucial as the flow of goods for trade efficiency. Therefore, the changes that fintech automation will bring will make trade faster, cheaper, and safer. 

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