Digital technologies such as blockchain can help improve inefficiencies in trade and supply chains, especially for small businesses and developing countries. Thomas Olsen, who leads Bain's Strategy practice in Asia-Pacific, discusses the benefits of blockchain in trade finance, and reveals why it's an important topic at this year's annual meeting of the World Economic Forum.
Read the transcript below.
THOMAS OLSEN: There's a lot of focus on the impact of new technologies again this year at the World Economic Forum. And despite all the snow, there's still more talk about blockchains than snow chains. There's multiple different sessions on different use cases ranging from medical applications to financing.
This year, we developed a white paper, together with World Economic Forum, focusing on the impacts of new technology on trade and supply chains, and specifically on trade and supply chain financing. Trade and supply chains are a very important driver of economic growth. And therefore, anything we can do to improve efficiencies benefits economic growth. And in fact, a lot of the inefficiencies most impact small companies and developing countries that have less access to financing and suffer more from the inefficiencies.
Blockchain trials and trade finance have shown that they can reduce the amount of costs, time and effort related to paperwork and other processes fivefold, and also reduce fraud and other risks. This is an important topic at the World Economic Forum, first, because of the impact on economic growth; second, because of the differential impact it can have on small companies and developing countries; and then third, because it takes an ecosystem and a range of participants to have the actions and coordination required to make change. Governments, financial institutions, companies and shipping—all those need to work together in different ways to make that happen.
This is being discussed at the facilitation of trade session, the digitizing trade session, and a lot of other different side sessions on trade and supply chain. This will raise exposure and we're hoping to advance the debate here today. But also, we get a lot out of that discussion because of the understanding that the different constraints and barriers that governments, companies—as well as other technological obstacles—that they're facing there as well.