The role of e-finance in supporting international trade
Electronic finance, or e-finance is changing the way financial services are used in international trade. E-finance refers to financial services offered electronically, for example, via Internet. It includes Internet banking and payments, e-brokerage, e-insurance, e-trade, and other related services (Purcell 2003, pg 1). As more financial services are becoming available in electronic format, they are becoming popular for international trade, even among developing countries. Trade-related financial and insurance products are being adapted to customers’ needs. Loan requests, credit insurance, letter of credit confirmations, and other documents can be transferred electronically. E-finance is forcing standardization, adding speed, and reducing costs. These advantages can help countries stay competitive in the international trade sector (Cattani 2000, pg 13).
Banking and insurance services are not new forms of services offered electronically. A large segment of the financial sector has gone digital years ago and private electronic networks have been used for years to transfer funds. Service providers such as VisaNet, SWIFT, and FedWire have been used for years before the Internet. However, the Internet has proved to be both a facilitator and a barrier for e-finance adoption (Cattani 2000, pg 13).
E-payment is vital to the e-trade cycle because it is the purpose of any transaction. However, e-payment as well as other financial services requires the latest and finest security and encryption. The Internet is an open highway for information sharing which currently serves as a barrier for e-f ...