THE RISE OF SMART CONTRACTS IN TRADE FINANCE: AUTOMATING PROCESSES AND REDUCING DEPENDENCY ON INTERMEDIARIES

Abstract

The global trade finance ecosystem, long characterised by manual documentation, multi-layered intermediation, and protracted settlement cycles, is undergoing a profound structural transformation through the adoption of blockchain-based smart contracts. This article examines two principal objectives: (1) the extent to which smart contracts automate traditional trade finance processes, and (2) the degree to which they reduce systemic dependency on financial and documentary intermediaries. Drawing upon peer-reviewed scholarship, institutional reports, and empirical findings published between 2022 and 2025, the study undertakes a critical analysis of the operational, economic, legal, and societal dimensions of this technological shift. Findings indicate that while smart contracts demonstrably compress settlement cycles, reduce transaction costs, and enhance transparency, significant challenges persist concerning legal enforceability, regulatory fragmentation, and cybersecurity vulnerability. The article concludes with implications for policymakers, financial institutions, SMEs, and society at large.