ITFA: Nurturing the next generation of trade financiers

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Sean Edwards is Head of Legal and Special Adviser to the Trade Finance Department at Sumitomo Mitsui Banking Corporation Europe. Since 2015 he has also been the Chairman of the International Trade & Forfaiting Association (ITFA), which represents the interests of banks, financial institutions, insurers and service providers involved in trade risk and asset origination and distribution.

In this interview he talks about ITFA’s evolution and its Emerging Leaders programme, and why he believes that a career in trade finance is a lot more creative than it used to be.

Q: What is ITFA and who runs it?

Edwards: ITFA, firstly, is a big community covering the broader trade finance market both in terms of specialisms and geographical location. It operates at multiple levels: personal, professional and product-wise. It’s a fantastic community through which to understand the whole spectrum of trade finance.

ITFA is run by a voluntary board, of which I am the chair. There are 10 board members, each of which represent regions, or are in charge of technical areas, such as insurance, market practice or fintech. Our most recent addition is a board member to represent the Americas.

Q: What does ITFA offer its members?

Edwards: As a member, you have access to all of the increasing number of ITFA events in an increasing number of locations. You also have access to ITFA’s library and body of standard documentation that we produce, together with guidance on all aspects of the market, from insurance to fintech and compliance, all of which are available on our website. 

But in terms of the people it’s a great networking opportunity because there are members of all ages, from those like me, who have been in the market for years, to people in their 20s.

Q: Tell us about ITFA’s Emerging Leaders programme, the association’s initiative aimed at the next generation of trade financiers?

Edwards: This is a programme we started because we saw that there was a shortfall in the number of people coming into the market and a real gap in financial institutions for trade finance professionals. The reason for this is because after the financial crisis there were not been enough people being trained up and going into trade finance. Trade finance was a victim of its own success in that it was short-term and self-liquidating and therefore easy to exit for distressed banks facing long-term problems elsewhere.

So we saw the need firstly to tell people what an attractive career trade finance is, but also to help them develop the knowledge and skills that they need if they are interested in that career. That training has not been provided by banks and other employers in this space for quite some time. 

Our programme helps the next generation to understand trade and trade finance, to progress their careers. But it’s also an opportunity for us to learn from them what it is they want. So, we’ve done a couple of events where we have talked about things that are actually non-technical, such as maintaining work-life balance, and the softer skills that you need. We’re also trying to add a little bit of a recruitment angle to things. The mentorship programme has been very positive. A couple of people have either found jobs or changed jobs because of that.

Q: Coming back to networking, what is the value in having a robust network when working in international trade finance? 

Edwards: Trade, obviously, is cross border, it’s international. And there are also specialisms within trade. So if you are a trade financier, you need to understand the spectrum of techniques. You need to understand the different markets and where they’re relevant and applicable to your particular needs. You need to know who can help, who to call on, who to have a chat with over a pint or a cup of tea. Because there is this diversity of the market, it’s important to have a network. 

I guess, more prosaically, especially where ITFA comes from originally as an association – with forfaiting being about origination and distribution – it’s also important to have a marketplace that you can go to to distribute to and place your assets with, and increasingly buy your assets from.

Q: How can young trade professionals establish – and grow – their network?

Edwards: Certainly by coming along to ITFA’s Emerging Leaders events, but also to our bigger events. At ITFA’s annual conferences we offer special rates for young professionals and it’s important that they go along and meet the the full age range and skills range of all the attendees – it’s really diverse geographically, age-wise and experience-wise. We are always trying to encourage participation from our younger community within ITFA by meeting their particular needs. 

Q: ITFA was previously known as the IFA: what is forfaiting? Is it still relevant? 

Edwards: Originally we were established around a single product. Forfaiting is the origination and distribution of payment obligations, traditionally in the form of either letters of credit or negotiable instruments, like bills of exchange and promissory notes – the point being that these are unconditional payment obligations. These are independent, abstract payment obligations that could be easily traded because those kinds of instruments are easily either assigned or endorsed. There was a primary market which was designed to feed into the secondary market. 

Traditional forfaiting has been less popular for a while now, because some of these instruments are seen as being a little archaic. They are too paper based, so they’re cumbersome to use. But the underlying ideas and objectives are as relevant and useful as ever. 

A lot of what’s going on with the digitalisation of trade finance is really the search for a simple payment obligation, and what that looks like in digital form. Technically, in terms of software development, digitising a ‘promise to pay’ is easy to do, but it’s the legal mechanisms that need work, and ITFA is engaged in a number of exciting initiatives around this. 

The interesting thing about fintechs in trade finance is that they’re very often not revolutionary, they’re about evolution. They are really interested in having a product that’s got the blessing of centuries of law and practice. So that’s why we’ve had tremendous interest in our digital negotiable instruments initiative project, for example, because there are a lot of banks, as well as alternative financiers and fintechs, who want to create or, actually, recreate a market in those but don’t want to do so shifting around bits of paper.

Q: Have you seen ITFA’s membership grow and diversify in line with these market changes?

Edwards: Most definitely, yes. Our members now include fintechs and alternative financiers, but we’ve also got non-bank investors who primarily exist in the secondary space, and are looking to invest in trade assets. A lot of Emerging Leaders actually come from these organisations. The fintech sector in particular is attractive to the Emerging Leader community because it’s usually fast moving and doesn’t have a lot of the bureaucracy of big banks.

Q: What piece of career advice would you give to a young professionals working in this industry?

Edwards: I would say that trade finance is a fascinating career, that it’s not all about checking documents, and that is actually extremely creative. I think that the people going into it today are maybe better placed than some others to see what these new opportunities are. So, for example, using new technologies with old instruments and older techniques – this is something that Emerging Leaders for one are extremely well placed to do.

I would also say listen to people who have experience, but then think about how you can reposition these ideas and concepts and do them your way with what you know, with your understanding of new technologies and new techniques, using your imagination and fearlessness.