Regulatory

These takeaways are drawn from the following sessions: 

• ‘Beyond Buzzwords: Supporting a Fair and Inclusive Workplace’, featuring Shannon Manders, Editorial Director, GTR (moderator); Leigh Amaro, Head of North America, Swift; Priya Raghavan, Managing Director and Head, US & Canada Financial Institutions, BBVA; James Rausch, Managing Director, Head, Global Transaction Banking, Royal Bank of Canada; and Nick Smit, Head, Financial Institutions Americas, ING
• ‘AI: Leading the Way in the Future of Finance’, featuring Manuela Veloso, Head of AI Research, JPMorgan; and Mike Katergaris, Head of North America Financial Institution Sales, JPMorgan
• ‘Meaningful Collaboration for Enhancing the Client Experience in Supply Chain Finance (SCF)’, featuring Wouter Hazenberg, Managing Director – Head of VCF Supplier Finance North America, Rabobank; and Flav Pop, Director, Financial Partnerships, PrimeRevenue

1. Banks and fintechs are choosing collaboration over competition

The traditional rivalry between established banks and fintech disruptors is giving way to partnerships which leverage each other’s strengths; banks can typically provide deep client relationships and multi-currency funding capabilities, whilst fintechs handle complex supplier onboarding and electronic time drafts.

This shift reflects mounting client expectations for real-time analytics, automated payment execution, and comprehensive supply chain visibility, a demand so large it is impossible to solve alone. The approach is proving commercially successful: joint responses to client RFIs are becoming commonplace, with customers explicitly requesting collaborative solutions that neither party could deliver independently.

2. Geopolitical tensions are accelerating supply chain localisation

Samarium is a rare-earth metal used in military-grade magnets, and its supply is entirely controlled by China. This should serve as an emblem of the wider inefficiencies in the geopolitical ecosystem, where skyrocketing tariffs (from the US and in response) are forcing companies to rethink global dependencies.

The rhetoric around this is largely politicised. Returning to Samarium, the magnets which it produces are critical components in missiles, smart bombs, and fighter jets, making it clear that whoever controls such resources has a large stake in military capabilities and strategy. 

But rethinking has created new opportunities for trade finance providers. The renewable energy sector and the data centre supply chain particularly illustrate this shift. The rapid expansion of the data centre sector has led to streamlined procurement and modular construction, but has also exposed an over-reliance on a small pool of suppliers, contractors, and standardised components. As such, massive data centre projects exceeding two gigawatts require localised supply chains to ensure resilience. Tesla’s ‘Gigafactory Nevada’ battery facilities and in-house lithium refining operations represent the future that many corporates are moving towards.

3. Gender diversity in trade finance remains stubbornly poor despite business benefits

In GTR’s first comprehensive gender diversity survey, 47% of respondents reported women hold just 0-5% of C-suite positions in trade finance organisations; 45% of employees don’t know whether their organisation has gender pay parity policies, suggesting fundamental communication failures around diversity initiatives.

There’s a business case for inclusion which extends beyond the ethical one. McKinsey data shows that companies prioritising diversity achieve a 39% greater likelihood of outperforming peers on profitability. Yet the sector appears to have embraced technological partnerships more readily than workplace inclusion. As the industry transforms through artificial intelligence (AI) and embedded finance, diverse perspectives will become increasingly valuable.

4. Human-AI collaboration is essential, but scale demands AI-to-AI verification

The integration of AI across trade finance operations is moving beyond experimental phases into practical applications. Fintech providers are leading this adoption, using AI to optimise supplier onboarding programmes and enhance real-time analytics capabilities that clients increasingly demand.

Deep-tier supplier finance – extending credit down the supply chain to suppliers’ suppliers – exemplifies AI’s potential impact. While still in its infancy, this approach can unlock significant value by financing entities that might otherwise pay 6-7% interest rates. As AI capabilities mature and processes become increasingly automated, industry leaders predict this will enable financing of entire value chains more efficiently, making supply networks more resilient while reducing overall borrowing costs.

While banks have traditionally focused on data analysis and pattern recognition, AI agents can understand policies, execute rules, and take actions based on business knowledge, and could present a space to watch in the future. This could render the ‘human in the loop’ approach redundant when dealing with systems that can process hundreds of sources: ‘AI checking AI’ could be implemented, with humans performing random spot checks to build trust over time. 

This approach mirrors how we learned to trust GPS navigation systems like Waze. Banks need to develop systematic verification processes where different AI models cross-reference results, and humans validate randomly selected outputs to maintain quality control while leveraging AI’s scale advantages.

Whether agentic AI or otherwise, the competitive consequences of avoiding AI adoption could be fatal, all the while maintaining data security and regulatory compliance.

5. Accounting transparency requirements are unexpectedly boosting market adoption

The introduction of IFRS and FASB disclosure requirements for supplier finance programmes initially sparked industry concern about potential market contraction. Rating agencies like S&P began scrutinising programmes more closely, with blanket rules such as treating anything over 90 days as debt regardless of industry context.

However, the opposite effect has materialised. Increased transparency has actually attracted new corporates to consider supplier finance: the global supply chain finance market is projected to grow at a compound annual growth rate of 8.8% from 2022 (the year the new standards took effect) to 2031.

While some programmes with excessive payment terms or disproportionate balance sheet dependency have scaled back, the clearer regulatory framework has provided confidence for new entrants. Industry participants now argue for more nuanced rating agency approaches that consider sector-specific norms, recognising that 30-day terms suit perishable goods like dairy, whilst 360-day terms may be appropriate for capital equipment like wind turbines.

Try to conceptualise the financial landscape of 1921. In the direct aftermath of the First World War, many European economies were burdened by war debts and reparations, particularly Germany under the Treaty of Versailles; the US emerged as the world’s leading creditor nation, shifting the financial centre of gravity from London to New York; global trade and investment were disrupted; and the gold standard, though still influential, was under strain as countries struggled to stabilise their currencies.

Also in 1921, the Bankers’ Association for Finance and Trade (BAFT) was established, uniting 10 banks in midwestern US to expedite business transactions of their international trade customers.

After more than two decades under the American Bankers Association (ABA) umbrella, the Bankers’ Association for Finance and Trade (BAFT) is charting a new course as an independent organisation. The separation, effective September 2025, will be in response to an increasingly fragmented global financial landscape.

“When we started talking about this separation, some maybe 30 months ago, we looked at it from a theoretical construct. The events of today tell us how right we were,” explained Suresh Subramanian, outgoing BAFT Chair, in the opening remarks of the BAFT 2025 Global Annual Meeting in Washington, DC. With 70% of BAFT’s membership coming from international institutions, the need for geopolitical neutrality has become paramount.

Neutrality in a polarised world

The challenge was clear: how can an organisation truly serve global banking interests while remaining a subsidiary of an association chartered specifically for US banks? The ABA, by design, focuses on US-chartered institutions. For BAFT to maintain credibility as a neutral voice in international trade finance, independence became not just desirable but essential.

BAFT is expanding its engagement beyond traditional boundaries, recently electing its first Americas Council co-chair from Mexico’s Banorte—the first time this position has been held by someone outside the US or Canada. These partnerships mirror broader industry trends toward collaboration in an increasingly complex environment. Just as Swift works with banking associations worldwide to navigate regulatory frameworks while maintaining global connectivity, BAFT is positioning itself to serve as an independent bridge between diverse financial jurisdictions. Local partnerships will enable BAFT to provide more relevant, jurisdiction-specific support while maintaining its global perspective.

Managing transition risks

The separation won’t be without challenges. Moving from the infrastructure support of a large, well-funded parent organisation requires significant operational restructuring. All HR, finance, IT, and customer systems must be migrated to new platforms—a complex undertaking that could disrupt member services if not executed flawlessly.

The re-onboarding requirements that many member organisations will face represent perhaps the biggest immediate challenge. As banking institutions implement increasingly stringent vendor management processes, BAFT’s change in legal structure may trigger lengthy approval procedures, so the organisation is actively working with members to streamline this process, emphasising continuity despite structural changes.

As Tod Burwell, President and CEO of BAFT and Trade Finance Global (TFG) Editorial Board Member, emphasised, operational continuity in the transition will be important.

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BAFT’s upcoming independence reflects broader themes reshaping international finance: as geopolitical tensions intensify and regulatory frameworks diverge, financial organisations must balance global reach with local relevance. The ability to maintain neutrality while serving diverse stakeholders becomes increasingly rare and thereby increasingly valuable.

Strategic independence doesn’t mean isolation—it means having the flexibility to build the partnerships that best serve members’ evolving needs, and also stands as an experiment in organisational agility.

The separation from ABA was conducted on amicable terms, with expectations of continued collaboration where beneficial.