As we see different industries exploring how digitisation can improve their business practices, it’s particularly exciting to consider how innovative technology can enhance global trade practices. However, the complex nature of the industry creates unique
challenges that will require the global community to come together to effectively drive a frictionless and inclusive digital trade economy.
Across trade finance, we are seeing a collective push for legislative reform to build the necessary capacity for implementing digital trade. The Model Law for Electronic Transferable Records (MLETR) is a prominent example, which seeks to create a legal framework
for paperless trade that would facilitate alignment on laws and enable the use of electronic transferable records – both domestically and across borders. While this is an excellent step in the right direction, with some major positive developments in recent
months, the reality is that global acceptance and adoption around a common legal framework is still a work in progress.
With so many new frameworks, products and services being introduced in recent years, some organisations may feel like they’ve burnt their fingers (and pockets) reaching to invest in emerging technologies. While this may lead to an inclination to hold off
and see how things shake out, it’s important that innovation and investment in emerging technologies continues to keep momentum. Successful digital trade is being conducted right now – and stakeholders should continue to understand and explore the options
for inclusion within their business models, in a sustainable and responsible way that futureproofs for an increasingly fragmented world.
Unlocking the Benefits of Trade Digitisation
Progressing digital trade has a plethora of benefits, including operational efficiencies, reduced manual entry, new data-led reporting, improved cash flow management and enhanced fraud mitigation. In fact,
the International Chamber of Commerce (ICC) and the Boston Consulting Group found that digital trade could boost trade revenues by up to 20%, cut processing times by 60% and save global trade banks up to USD 6 billion annually. Not only that, but there
are environmental benefits, including promoting sustainable supply chains through improved visibility and transparency in production.
To truly unlock the power of these benefits, we need to bring the entire global industry along for the ride. But while arriving at smooth adoption is the goal, there is no singular, simple path for everyone to get there. Major organisations, big banks and
large corporates may have deep pockets for facilitating trade, but they also have extensive operational and technological challenges to overcome – and shareholder value to preserve.
Overcoming Challenges Together
Banks and corporates alike must navigate existing technology stacks, which may be large and not easily geared towards new frameworks. This could give new market players a leg up, as they are not tied down by legacy technology and are more easily able to
adopt new methods of innovation. Additionally, although digitisation may create opportunities for suppliers to get paid faster, the other side of the coin is that buyers may need to pay earlier. These new dynamics may require re-evaluating commercial terms,
leading to new financing challenges across businesses.
And, in addition to the challenges impacting large organisations, SMEs may not have the bandwidth or knowledge to adopt these new terms or frameworks. Given that SMEs are responsible for nearly
70% of the global GDP, it is critical that we clear a path for easy and cost effective adoption for all business – no matter their size, status or location.
One other unintended consequence of the digital journey is the potential impact on people. As we move to a digital world, there is an expectation that time consuming and manually intensive roles can be automated or semi-automated, which could potentially
result in a reduction or redistribution of headcount. Companies will need time to reflect on this and to strike a balance of providing employment to people and revenue to families, while keeping the bottom line and shareholder value front of mind as we navigate
the journey onwards.
Paving the Way Forward
Luckily, there are already many strong players working to pave the way forward. That said, if these groups work in silos, it could risk further industry fragmentation. Again, some may feel inclined to hold and see how things shake out. But we need to once
again remember that we all lose when playing the waiting game.
Instead, our current focus needs to be on empowering interoperability between global organisations to allow for true success throughout the entire industry. This is why Swift is working with its community of over 11,500 financial institutions to explore
applying global standards between emerging platforms and prevent unconnected ‘digital islands’.
Now is the time to move forward to the next phase of digitisation. This journey is not a sprint, it’s not a marathon – it’s a triathlon. There will be many paths, with various and challenging areas to overcome. And while success will look different to everybody,
the only way to reach our destination is to travel there together.
- SEO Powered Content & PR Distribution. Get Amplified Today.
- PlatoData.Network Vertical Generative Ai. Empower Yourself. Access Here.
- PlatoAiStream. Web3 Intelligence. Knowledge Amplified. Access Here.
- PlatoESG. Carbon, CleanTech, Energy, Environment, Solar, Waste Management. Access Here.
- PlatoHealth. Biotech and Clinical Trials Intelligence. Access Here.
- Source: https://www.finextra.com/blogposting/26335/putting-an-end-to-the-trade-digitisation-waiting-game?utm_medium=rssfinextra&utm_source=finextrablogs
