Resilience, defence, and the future of trade finance
At the International Trade and Forfaiting Association (ITFA) 51st Annual Conference in Singapore, Trade Treasury Payments (TTP) spoke with Sean Edwards, Chairman of ITFA, to reflect on the association’s priorities and the themes shaping trade finance today.
Edwards said, “Banks, trade finance banks are very good at resilience.” That quality is being tested across multiple fronts, from shifting ESG regulation to heightened geopolitical risk.
On sustainability, Edwards pointed to ITFA’s work on developing a cost-effective way to measure impact. “We’ve been doing a lot on the SROI model – social return on investment. ESG is not going away, but it is changing. Regulation is being diluted, deferred, delayed, but none of it is disappearing.”
Defence is another area where Edwards sees supply chain finance playing a growing role. With NATO countries ramping up spending, the pressure to rebuild Europe’s defence production base is intensifying. “The scale of what we need to do is so huge that you’re going to have those classic situations where supply chain finance makes sense,” Edwards said. “Big buyers, small fragile suppliers – it’s critical from a security point of view that those suppliers remain in operation.”
Partnership is also at the forefront. ITFA’s Trade Finance COP initiative, launched in Washington last year, will reconvene in both DC and London this autumn. “It’s really about partnership between public and private – MDBs, DFIs, insurers, banks – to come up with the most effective approach to reducing the trade finance gap,” Edwards explained.
Another form of resilience front and centre at the conference, especially with bottlenecks and new trade corridors reshaping flows, is supply chain resilience. “These shocks are unexpected but predictable,” Edwards said. “We need to make sure those chains are resilient, that they’re properly financed.”
To round out the conversation, Edwards spoke on the ITFA Emerging Leaders initiative, a programme designed to support and showcase the next generation of trade finance professionals through mentorship, networking, and recognition, including its annual Emerging Leader Award. “It’s the leading programme of all the trade associations,” he said, noting the award ceremony as one of the highlights of the conference.
Key Topics
- Trade finance is increasingly shaped by the need for resilience across both financial systems and physical supply chains.
- There is also a clear shift in how sustainability is approached, with ESG evolving into more practical models such as social return on investment.
- Another growing area is the role of trade finance in supporting defence and military supply chains, particularly in Europe.
- Collaboration between public and private institutions remains central, especially in tackling the global trade finance gap.
- Alongside this, changing trade patterns, including the rise of South South flows, are reshaping how finance is deployed.
Key Insights
Expert Analysis
Trade finance is entering a period of adjustment shaped by geopolitical pressure, shifting regulation and changing trade flows. The focus on resilience reflects a broader move away from efficiency at all costs towards greater security and stability. The transition from ESG to more outcome driven models suggests that institutions are looking for approaches that are easier to apply in practice while still delivering measurable impact. This could lead to wider adoption across the industry. At the same time, the growing importance of defence supply chains marks a notable expansion in the role of trade finance. Supporting these networks will require careful structuring, particularly where smaller suppliers are involved. Efforts such as the Trade Finance Conference of the Parties underline the importance of coordination. Addressing large scale challenges like the trade finance gap will depend on aligning public and private sector priorities in a more structured way.— Sean Edwards
Key Findings
- The global trade finance gap is estimated to exceed 2.5 trillion dollars and may be larger in reality.
- Regulatory pressure around ESG is easing in some areas, but the overall direction towards sustainability remains.
- Supply chain finance has significant potential within defence, where it has not been widely used to date.
- Geopolitical disruption continues to reshape trade routes and sourcing decisions.
- Developing new talent through emerging leader programmes is seen as important for the future of the industry.
Implications
- Financial institutions will need to rethink how they assess and manage risk in a more uncertain global environment.
- Sustainability frameworks are likely to become more practical and focused on measurable outcomes rather than broad reporting requirements.
- Trade finance is set to play a larger role in supporting strategic sectors, including defence and infrastructure.
- New trade routes and partnerships, particularly across emerging markets, will continue to develop and require tailored financing solutions.
- Closer cooperation between public and private institutions will become essential in addressing systemic challenges.
Key Takeaways
- Resilience now sits at the centre of trade finance decision making.
- Sustainability is evolving towards clearer and more measurable impact.
- Defence and security related supply chains are becoming more relevant to the sector.
- Collaboration across institutions is critical to tackling large scale funding gaps.
- Supply chain finance remains a vital tool for supporting smaller businesses within global trade networks.
