We, in the global trade and trade finance industry, are nearing an inflection point. We will either embrace digital platforms en masse, or we will return to discussions about a future held back by seemingly endless challenges, as pockets of digitisation progress.
For the most part, the technical challenge of digitisation has been solved through progressive approaches and technological innovation over the last few years. Through decentralised and other types of technologies – together with meaningful industry collaboration – there is now an opportunity for substantial advancement of the digital agenda. Contour, amongst others, is now in production and has built an organisation capable of supporting a global network of banks and corporates through unparalleled user experience, security, privacy and scalability. Barriers to entry have never been lower in terms of cost and ease of use. Banks and corporates across many geographies and industries recognise this value and are eager to join, but we can do more – and faster.
So what do we need to accelerate this adoption to a ubiquitous scale? Standards seems to be the consensus answer, and for good reason.
The need for global standards and common infrastructure
Standards for digital trade are being created and adopted at an impressive rate, mirroring the progress of digital platforms. I am encouraged by initiatives such as the International Chamber of Commerce’s Digital Standards Initiative, which has proven to be a talented arbitrator of collaboration and action. Standards such as UNCITRAL and DSCA are starting to emerge and the response has been encouraging. This important work of private and public collaboration on shipping, logistics, legal and customs standards will continue to progress in a symbiotic relationship to digital infrastructure such as Contour. But just as the success of one will feed the success of the other, so will delays. After all, a digital standard has limited value without digital infrastructure in place. There is a way forward to increase momentum, and indeed there are areas of trade ready to digitise today with standards already in place.
“Consensus amongst banks would prompt an unstoppable wave of trade digitisation.”
Existing trade finance products are the natural place to start. There are global process standards in place such as eUCP as well as data, risk and capital standards. Trade finance can also accelerate digital adoption with a relatively small participant group, as most trade finance processes require only banks and corporates. In fact, we could lower the bar further, and we could start with just banks.
Consensus amongst banks would prompt an unstoppable wave of trade digitisation. If banks are aligned on a standard platform/network, corporate trade finance customers will feel confident adopting that platform knowing it will be supported by their financiers and will become a new standard for existing and future trade finance product innovation. This will lead to volume, which will lead to an increasing demand for further digitisation in the wider trade ecosystem, which will accelerate adoption and standardisation efforts as mentioned earlier across the globe.
Moving the industry forward
In the excellent Euromoney article asking top trade banks if 2021 will be the year we see adoption of platforms like Contour, responses varied from unbridled enthusiasm to guarded pessimism. Evidently, even the shock of the COVID-19 pandemic bringing operations centers to a halt and blocking the movement of paper documents was only strong enough to mildly stir some banks to embrace digitisation.
This must change if our industry is to progress, and this is why Contour exists. The forward thinking of innovative trade finance banks created us. Acting not just for themselves, these banks invested their time and money to create infrastructure for the entire industry. Built by trade banks for the industry – without distortion from detached 3rd parties or a narrow focus on one specific industry or product – Contour exists to be a new standard for digital trade.
Just like the history of containerisation, the standard will emerge from innovation, collaboration and adoption leading to transformative progress.
Come and join us, and we can make 2021 the year digital trade finance becomes standard.
Listen to my recent panel discussion at Sibos on the importance of adopting global standards and building common infrastructure in order for trade digitization to scale. Access replay here.