There's certainly no shortage of technology promising to make life easier in trade, treasury, and payments. And this week, we've got some interesting examples of it starting to do just that. Visa, BILL, and Billtrust are testing AI agents that can complete invoice payments through supplier portals, while BRAC Bank in Bangladesh has gone live with a new AI-powered trade finance platform.

But turning PR’s announcement to something that works out here on planet earth is rarely as straightforward as it might seem on paper. Our treasury coverage this week takes us back to Rome, where corporate teams shared what it actually takes to build an autonomous treasury. There's an awful lot of work involved in getting data, systems, and people ready before the machines can start taking over. We also look at why improving working capital requires a change in thinking across the entire business.

Our slow read takes us back to the ITFA Annual Conference in Split for a closer look at the changing world of trade credit insurance. Despite everything happening in the world, insurance capacity is still out there. The question is increasingly where insurers are willing to put it, how banks can access it and whether the industry can find better ways to support newer structures like inventory finance.

Elsewhere, the WTO, IFC and multilateral development banks are looking at how to expand supply chain finance for smaller businesses. And from the studio, we've got a triple helping of conversations on measuring the social impact of African trade finance, getting more capital into emerging markets, and why banks can no longer take their cross-border payments customers for granted.

As always, there's plenty to read, watch, and learn.

Until next time — mind the robots.

— Carter Hoffman, Deputy Editor

Country of the Week: Cambodia

Did you know that Cambodia's famous Angkor civilisation was connected to international trade networks nearly a thousand years ago? At its height, the Khmer Empire was one of Southeast Asia's great powers, exchanging goods with merchants from China and neighbouring kingdoms. Chinese ceramics, for example, have been discovered at Angkor, offering evidence of commercial links stretching far beyond the empire's borders.

Cambodia trade stats (2024):

Slow Read

What is changing in trade credit insurance?

The collaboration between banks, insurance companies and insurance brokers is a delicate balance that oils the wheels of trade by bridging financing and risk mitigation. When their interests align, the relationship unlocks bank credit through insurance products, such as trade credit insurance (TCI), which effectively derisks transactions for financial institutions.  

At the ITFA Annual Conference in Split, Croatia, a panel brought together banks, insurers and brokers to discuss how the current geopolitical environment is impacting risk appetite, distribution and capacity.

Clearly, there has been a shift in insurers’ risk appetite in the past year, but perhaps not as much as expected given recent geopolitical strife and international trade rows.

According to an insurance broker on the panel, risk appetite can’t be described simply by sector or geography, but must be defined by transaction type, tenor and the trade itself. They drew an important distinction between appetite and capacity.

“Underwriters help with capacity, but their existing risk concentrations may limit the incremental capacity they are able to deploy,” they said. “I haven’t seen a broad reduction in risk appetite nor available capacity. There is still capacity out there, but underwriters are becoming more selective.”

An insurer representative reported seeing increased volumes across the board on TCI and sovereign and political risk insurance side – and much greater demand.

However, the insurer representative confirmed that their organisation would be more selective going forward, particularly in the face of mounting insolvencies. “The risk exists. We need to adapt to that as credit insurers and be selective where we play,” the insurer representative said. “But there are many versatile credit insurance products in the market that can adapt to the crises the world is facing today.”

Both bank representatives on the panel agreed that insurance capacity was still possible to find, but the degree of concentration in the sector has meant greater competition for available capacity as insurers become more discerning as to the type of risk they’re taking and who they’re covering.

One bank representative said their bank had managed to find capacity on several transactions, although its geographical footprint presented particular challenges. “We have quite a large exposure across Latin America, Central America, and Turkey, so sometimes we’re looking for risk that isn’t for everyone,” they explained.

The first bank representative reported seeing more diversity in the available insurance cover, depending on geographies and currencies. “On the whole, it’s been well supported. Obviously, there are capacity constraints in certain sectors – we often struggle in the automotive sector following several notable fraud cases,” they added.  

A second bank representative reported a boost in trade finance distribution demand, but stressed that it wasn’t due to an increase in risk perception. Instead, the demand is driven more by the rise in the price of cargo, which means that banks are needing to finance a higher value of cargo than previously.

“Insurance premiums are up, freight costs are up, and, as a result, the value of the cargo is going up, despite the reduction in volume, which means the trade finance demand is going up,” they said. “We are needing to distribute more, because we can only hold what we can hold.” They also pointed out that, while insurance is critical as one of the distribution tools, there are other tools, including development finance institutions and other investors.

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