The figures will make comforting reading for Swift and the ICC, which have championed the new instrument, although only 2% of banks are already using it.
The Bank Payment Obligation is effectively an electronic replacement for Letters of Credit (LoC) and should help speed up trade finance transactions.
“The BPO represents a fresh entry to trade finance,” said report author Enrico Camerinelli, senior analyst with Aite Group and a Transaction Banking Academy tutor. “Its current, lukewarm acceptance by banks and corporations will turn into full endorsement only after real examples prove its use as a payment instrument and risk mitigation tool for trade transactions in any part of the trade lifecycle.”
The report is available from Aite Group: http://www.aitegroup.com/Reports/ReportDetail.aspx?recordItemID=930