SWIFT and BCG issue report on progress of digitisation in international trade
Trade finance is at the core of growth in the world economy, but its digitisation has lagged behind many other sectors. To take stock of this process, SWIFT has collaborated with BCG (Boston Consulting Group) to produce a major new piece of research.
The white paper, which can be downloaded here, takes a ‘pulse check’ of the thinking in banks, corporates and facilitators as they confront digitisation on a mass scale.
And there are many challenges: trade finance is highly complex, with a single transaction involving up to 5,000 data fields. Even less complex trades involving more than 100.
The paper-based procedures to handle this data still in place in many markets around the world can lead to inefficiencies, errors, discrepancies and delays. Digitisation promises to alleviate many of these problems, but implementation and standardisation still present significant obstacles.
However, it also offers the opportunity to leverage several key value drivers. These include:
- Optical character recognition, which can automate the move from paper to digital and offer significant efficiency savings.
- AI and RPA, which can streamline processes that require real-time decision-making and the analysis of diverse data streams
- The Internet of Things, which has the potential to aid risk management and fraud prevention
- DLT – or Distributed Ledger Technology. There are serious research efforts in many institutions exploring this technology’s various use cases, which may allow fast, transparent and secure remittances across borders once mature.
As mentioned above, these new technologies can create new challenges, in particular around regulatory alignment and the clashing of legal jurisdictions that can characterise international trade finance. Cybersecurity, also, is an issue that requires aggressive efforts to mitigate the new risks digital can create.
However, there are also great opportunities arising from the exciting new capabilities these technologies are delivering; for more information, please download the white paper.