Blockchain could significantly reduce paperwork for banks and corporates, which accounts for 20 percent of cost of global trade, according to DMCC Regional financial centers are competing to attract fintech entrepreneurs in a bid to help modernize financial services LONDON: Technology innovations such as blockchain could help cut the costs related to financing global trade by as much as 20 percent, according to new research compiled by the Dubai Multi-Commodities Center (DMCC). The free zone’s report — released on May 15 — said that the cost of global trade stands at approximately $1.8 trillion, and 20 percent of that cost is related to paperwork processed by banks and corporates. Blockchain — which acts as a digital public ledger that records transactions — could cut out the need for much of this paper-based documentation. The DMCC-commissioned research claims that these kinds of technological advancements could help bridge the $1.5 trillion global trade finance gap, with many small and medium-sized companies still struggling to access finance needed to support their international trade operations. The report — which gathered views from 250 industry leaders and academics in major commodity trade hubs including Dubai — said that 50 percent of funding applications submitted by small-to-medium sized companies are rejected by banks. The emergence of new fintech firms setting up their own digital lending platforms could mean that SMEs have more funding options available to them, reducing their reliance on banks. “Alternative trade finance solutions are becoming accessible to a much larger extent than previously,” the report said. Dubai, alongside other trade hubs such as Singapore, Hong Kong and London, are exploring the use of new technologies such as blockchain, as well as collaborating more closely with fintech companies, according to the research. Global venture capital investment in fintech firms rose 18 percent to $27.4 billion in 2017, according to research by consultancy.uk, with digital payments and lending services attracting the most investment capital. “Just as the shipping container revolutionized trade in the 1950s, sweeping advance in tech will reshape trade and how we move goods across borders,” said Gautam Sashittal, DMCC’s Chief Executive Officer. “Our research helps us all understand how global trade will evolve, and how we can prepare, over the next decade.” Dubai announced plans last year to launch emCash — the first state-sponsored cryptocurrency. Using an emPay wallet, emCash would allow UAE residents to make payments with a secure digital currency in real time without the need to go through intermediaries. The Dubai International Financial Center (DIFC) also works closely with fintech firms, running 12-week FinTech Hive programs to support new companies. Similar initiatives have been launched by financial centers in Saudi Arabia, Abu Dhabi and Bahrain.