Digital technologies – in particular the combination of Big Data, new algorithms and cloud computing – have been driving the rise of platforms and what is now referred to as the platform economy. The platform economy is reshaping global trade. Many of the most valuable companies globally are now based on a platform business model, such as digital marketplaces that enable groups to interact and transact. When it comes to MSME financing, in particular trade finance, many projects take the form of platforms. These platforms often leverage several of the digital technologies depicted above. The platform economy opens vast new opportunities but also raises considerable new challenges. A detailed explanation of the platform economy is beyond the scope of this article.

Digital technologies in trade

The eight technologies emphasized here can be thought of as existing within the framework of a technology stack. Each layer can be used to facilitate and enhance the layer(s) above. The stack is depicted below. The following sections will introduce the layers in this stack beginning from the foundation and working upwards. 

*Note: This framework attempts to illustrate the interplay between the different technologies. We have chosen to display these categories from a business perspective – with emphasis on what each technology is used for – rather than from a purely technological perspective. For instance, from a purely technological perspective, DLT is a trusted database. However, from a business perspective, it is used to connect parties directly, on a person-to-person (P2P) basis, in a trusted environment. As such, it has been categorized as part of the connectivity layer. 

Infrastructure technologies

Infrastructure technologies enable other technologies and software systems to interact with external data sources. They generally refer to an organization’s technological environment and can include cloud computing. 

Data input technologies

Data input technologies are those that are able to provide data to a system. This can consist of digitally native data, such as those gathered by IoT sensors, or the conversion of non-digital data into a digitized format, such as those generated by the use of optical character recognition (OCR).

Connectivity technologies

Connectivity technologies are technologies that allow various systems and/or actors to connect, facilitating the exchange of data. Application Programming Interface (API) and DLT allow firms, networks, technologies, and applications to communicate with one another, sharing data and enhancing the services available to all parties involved.

Analytical technologies

Analytical technologies are those that take large amounts of collected data and convert those data into actionable insight. 

Once data are gathered, there is still the issue of making sense of it. Developing practical solutions requires that the people working on them have strong trade industry expertise and data analysis skills. Unfortunately, this skill combination is not always readily available. Furthermore, as a traditional industry, trade finance suffers from a reluctance to adopt new technologies or processes. There is always the likelihood that companies will stick with the old, ineffective ways with which they are comfortable, rather than trying something new and innovative. Education will be a crucial step to develop trust in analytical technology, in order to foster adoption and trickle benefits down to MSMEs. 

The new technologies in question include big data analytics, AI and quantum computing.