Reflections on uncertainty, digitalisation, and cooperation at the BAFT Global Annual Meeting 2025 - Trade Treasury Payments

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Reflections on uncertainty, digitalisation, and cooperation at the BAFT Global Annual Meeting 2025

Estimated reading time: 10 minutes

BAFT (the Bankers Association for Finance and Trade) held its Global Annual Meeting last week in Washington, DC. Over four days of panels and networking, certain themes surfaced again and again. 

In general, the mood was one of cautious optimism underpinned by uncertainty. The industry is grappling with a volatile global environment, pushing ahead with digital transformation on multiple fronts, striving for better coordination in compliance, and keeping an eye on emerging fraud threats. 

Here are my personal takeaways from the conference.

Uncertainty clouds the global trade finance outlook

If I can say one thing for certain, it’s that the biggest theme to come out of this year’s GAM was uncertainty.  It’s no secret that the global trade environment is in flux with high interest rates, geopolitical tensions, and unpredictable policy shifts  (especially tied to tariffs) making forecasting extremely difficult. In fact, the WTO recently cautioned that the unprecedented volatility in trade policy has made projecting future trade growth “virtually impossible”. 

This prevailing uncertainty is reflected in the data as well. Global trade growth has slowed from its post-pandemic spurt. The WTO’s latest figures project only about a 2.7% rise in goods trade for 2024, and institutions like UNCTAD warn that world economic growth could decelerate to roughly 2.3% amid trade tensions.  

These tensions are also leading to conversations around currency diversification. Some markets are struggling to access US dollars easily (due to sanctions or tighter Federal Reserve policy), prompting a search for alternatives. 

Could we see a more fragmented multi-currency trading system? It’s already happening at the margins. The US dollar’s dominance, while still strong, has eroded slightly over the past decade. At the end of 2024, about 58% of global foreign exchange reserves were held in USD, down from 65% ten years earlier. The speakers on this session discussed whether currencies like the euro, Chinese renminbi, the Unit (the potential BRICS currency), or even digital currencies might take on larger roles in trade finance. 

The consensus seemed to be that the dollar isn’t being dethroned anytime soon, but trade is slowly diversifying, and the shift could have profound implications. Will alternative currencies improve financial inclusion for countries outside the US sphere, or will they introduce new inefficiencies and risks? Opinions varied, but everyone agreed that we’ve entered a more uncertain currency landscape than we’ve had in years past. 

Overlaying these discussions was a sober recognition that global trade thrives under stability and open markets, two things that have been in short supply lately. At the conference, there was palpable concern about the decoupling of major economies into rival blocs. Whether it’s US-China trade tensions or regional blocs forming separate financial systems, trade financiers are having to weigh scenarios that seemed remote a decade ago. 

On a more optimistic note, a few speakers pointed out silver linings. Slower growth in trade volumes has been accompanied by record trade values (helped by higher commodity prices), and many emerging markets are finding new South-South trade opportunities. BAFT is also starting a Tariff Working Group, open to members, to discuss the tariff situation on a bi-weekly basis starting at the end of May. The overall tone, however, remained cautious. Uncertainty isn’t going away in 2025, so we will need to get comfortable operating in the fog. 

Digitalisation is a journey, not a single technology

If uncertainty was the cloud hanging over the event, digitalisation was the shining light many were looking toward, but it’s important to remember that digital transformation in trade finance is a holistic, long-term journey. In other words, there is no single magic technology that will revolutionise trade overnight; rather, sustained progress will come from incremental, cumulative change across many processes and tools. 

Of course, that didn’t stop conversations around Artificial Intelligence (AI) from taking place. The discussions around AI took a big-picture look at how far we’ve come (from early automation to today’s generative AI models) and how these tools can reshape trade finance. Importantly, the tone was pragmatic. Yes, we heard about AI-driven efficiencies, such as automating invoice processing or enhancing risk modelling, but we also heard discussion of AI’s limitations and risks. 

Panellists emphasised that AI is only as good as the data and human guidance behind it. In trade finance, data can be messy or scarce, and an algorithm does not easily replicate the expertise of relationship managers and risk officers. It seems that the industry still needs to find that sweet spot in balancing human-machine collaboration. 

The theme of digitalisation also extended to customer experience. Technology is ultimately about serving people, which in the case of trade finance, refers to the importers, exporters, and treasurers who rely on trade finance services. Customers now expect the same speed and transparency in trade transactions that they get in consumer apps . For banks, this means rethinking legacy processes and moving away from paper documents so they can provide real-time updates for clients. 

Fintech entrants showcased solutions like digital trade platforms and supply chain finance marketplaces that make it easier for companies to access credit and manage risk. Rather than viewing fintech as a threat, the vibe at the conference from many of the banks was that partnership is the way forward. Banks bring scale and trust, fintech brings agility and fresh ideas, and together, they can give customers a smoother experience.  

A key insight for me was how all of these digital threads tie together. The new ISO 20022 standards (also discussed in detail at the event) provide better data; AI and machine learning provide better analysis of that data; and fintech collaboration yields better user interfaces and delivery. When combined, the result could be a fundamentally more efficient trade finance ecosystem, one that might even help close the persistent $2.5 trillion trade finance gap by reaching underserved segments.

The overarching message is clear. The path to digitalisation cannot hinge on implementing one shiny new software; what the industry needs is to transform the whole digital value chain of trade and transaction banking step by step. 

Coordination is crucial, but still a work in progress

The third major theme I noted was the growing push for industry-wide coordination in areas like standardisation and interoperability. Nearly every panel I saw touched on the need for better alignment among banks, regulators, and other stakeholders. However, there was also a frank acknowledgement that we’re not quite there yet. 

Take financial crime compliance. A recurring point was how banks operating across borders face a patchwork of AML rules, and how this complexity can actually hinder the fight against illicit activity. Misalignment between regional and global AML standards forces banks to satisfy the strictest common denominator, sometimes at huge cost, without necessarily closing the gaps that criminals exploit. 

There also seemed to be a consensus around the need for greater international coordination on Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT). Initiatives like the Financial Action Task Force’s guidelines and multilateral information-sharing agreements are steps in the right direction, yet, even with those, banks often end up erring on the side of caution (to avoid penalties), which can mean excluding legitimate customers or markets. 

Many correspondent banks have pulled out of regions due to these compliance costs and risks, a phenomenon known as “de-risking”. If each bank acts alone to reduce risk, collectively we may be increasing risk by pushing transactions outside the formal banking system. Indeed, the decline of correspondent banking relationships was a worrying trend mentioned throughout the event. 

According to the Bank for International Settlements (BIS), the number of active correspondent banking ties fell by around 25% globally between 2011 and 2020. This is largely because several respondent banks have been de-risked to simplify compliance. The problem is that those smaller institutions often serve frontier markets and niche corridors. Losing those links can hurt financial inclusion and even local economies. 

Unfortunately, the coordination challenges extend beyond correspondent banking. Trade-based money laundering (TBML) can be very complex (involving fake invoices, over- or under-invoicing goods, etc.), and no single bank often sees the whole picture. By the time a pattern is identified (say, a certain commodity route being used repeatedly to mask illicit transfers), the criminals may have moved on. 

One avenue to address this is through public-private partnerships where banks and authorities collaborate to spot trends earlier. There are some forums for this (for example, FinCEN in the US issues alerts on patterns like deepfake media fraud, and in the UK, the Joint Money Laundering Intelligence Taskforce (JMLIT) brings banks and law enforcement together), but more trust and data sharing are needed globally. 

On the technology front, interoperability and standardisation were recurring motifs, too. ISO 20022 is a prime example of a technical standard that requires industry coordination. Another area is the push for digital trade documents (e.g., electronic bills of lading or digital letters of credit). Here again, the technology isn’t the hard part; aligning everyone to use it is. 

One takeaway for me was to keep an eye on these standard-setting efforts. As trade professionals, we can’t afford to operate in silos. Whether it’s fighting financial crime or digitising trade, collaboration is increasingly vital for this industry.

Fraud threats are evolving fast, but remain manageable

The final theme that rounded out the conference was about fraud and cybersecurity in trade finance. The general sentiment was that fraud in trade finance is becoming more sophisticated, but it still represents a relatively small portion of overall activity (thankfully). 

It was intriguing (and a bit unsettling) to hear how fraudsters are embracing technology. For example, there were mentions of criminals using AI-generated deepfakes and forged documents to trick bank employees. Cyber experts have noted a 700% increase in reported deepfake incidents in the financial sector in 2023. In trade finance, this might translate to fake videos or audio supporting a bogus transaction, or AI-synthesised shipping documents that look eerily authentic. 

It is important, however, to put fraud risk in perspective. The vast majority of trade finance transactions are legitimate and executed without incident. According to industry studies, fraudulent transactions account for only a tiny fraction of global trade finance volumes. Banks have multiple layers of defence, from the structure of products (e.g. letters of credit requiring document checks) to insurance and guarantees that mitigate losses when fraud does occur. ICC Trade Register data showing low default and loss rates provides evidence that trade finance, as an asset class, remains quite safe. The takeaway for me, however, was that we must stay vigilant. Even if industry-wide figures are reassuring, bad actors are always probing for new weaknesses. 

So, how to tackle the new era fraud risks? Classic approaches work well. These include measures like rigorous KYC (Know Your Customer) and KYCC (Know Your Customer’s Customer, especially in correspondent banking), checks on transaction logic (does this trade make commercial sense?), and maintaining a healthy scepticism (the human “gut check” if something feels off). Modern, technology-driven methods can also help. These include things like AI-driven fraud detection systems that can spot patterns humans might miss and blockchain-based trade platforms that create immutable records to reduce duplicate financing. 

Another promising approach is greater information sharing about fraud incidents. Banks are sometimes reluctant to disclose when they’ve been defrauded (for reputational reasons), but forums exist where anonymised case studies are shared so others can learn. 

The International Chamber of Commerce’s Financial Crime Risk initiative, which collects typologies of trade finance fraud and money laundering schemes, is one such example. The more we all know about known schemes, from simple duplicate financing of the same invoice to complex multi-jurisdictional scams, the better we can train staff and calibrate systems to catch them. 

In sum, the general sentiment was one of guarded confidence. Yes, fraudsters are innovating, but so are the legitimate actors. The arms race will no doubt continue, but as long as the industry keeps its defences layered and stays informed about emerging threats, trade finance will remain a secure financing channel. 

The key is not to become complacent. 

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Walking out of the conference, I felt a mix of concern and encouragement. While trade finance is facing formidable challenges, the industry is clearly sharing ideas on how to overcome these and stay one step ahead of emerging risks. 

Perhaps my biggest takeaway was the importance of keeping these dialogues going beyond the conference centre. The themes of uncertainty, transformation, cooperation, and resilience are the daily reality for everyone working in trade and transaction banking. 

By staying informed and by leaning on our professional networks, we can better anticipate what’s coming next.