Bank of China (BoC), the leading financial institution in China, has launched new services based on SWIFTNet Trade Services Utility (TSU), enabling TSU-based initiatives that will extend the open account supply chain financing services it provides to corporate customers.
The debut of SWIFTNet TSU enables Bank of China to provide services to corporates trading on open account by standardising and matching trade-related transaction data. By developing services using SWIFTNet Trade Services Utility (TSU), BoC and other Chinese banks can now extend services throughout the supply chain, taking advantage of the trend towards open account financing in international trade, and thereby attracting additional customers.
The SWIFTNet Trade Services Utility is a collaborative centralised matching utility provided by SWIFT and designed to help banks meet the supply chain challenge. TSU went live in April this year ,globally there are already 53 trade banks including 4 Chinese banks that have actively adopted TSU. Banks can build individually on the core functionality of the TSU to offer competitive services that will be complementary to their existing offerings to their corporate customers.
Bank of China will initially offer SWIFTNet TSU services for purchase order financing and invoice discounting. As demand for nationwide and global cash management services in the corporate sector increases, BoC will introduce enhanced services in more branches throughout China according to the requirements of its customers and the market.
“As a new tool for both the banking industry and their customers, especially in China, SWIFTNet TSU has a bright future in the banking industry as it can help banks find more opportunities in supply chain financing while achieving more efficient risk mitigation,” said Wang Guosheng, General Manager of Global Trade Services Department, BOC.
“Bank of China will not only be able to provide better services in purchase order financing and invoice discounting, but also develop further services such as cash management, document insourcing, and more in the future.”
By volume and value, China is the world’s largest exporter, with exports accounting for more than a third of the country’s economic growth. To date banks have not been able to leverage this opportunity. Open account trade financing, which is more convenient and less costly, is approaching 80 percent of all trading transactions. In recent years, however, banks around the word have faced a challenge in developing new trade finance products in open account transactions in comparison to letter of credit and collection transactions.
By combining SWIFTNet TSU with existing factoring services, banks will be able to explore open account market opportunity with more flexible offerings and certainty for services. SWIFTNet TSU also enables banks in China to consider similar value-added services to support domestic trade..
“SWIFTNet TSU provides a platform for Bank of China to develop supply chain solutions for their corporate customers, through a highly secure financial messaging platform and common standards for sharing information and matching data from trade counter parties,” said Michael Cheung, China head of SWIFT.
“The enhanced transparency on open account transactions delivered by SWIFTNet TSU helps banks to increase the value they can add in their services to corporate customers, whilst improving the management of risks, costs and operational efficiency.”
Bank of China is the second largest lender in China overall, and the 8th largest bank in the world by market capitalisation value. |
