ICC Working Group on Digitalisation in Trade Finance

October 29, 2018

London, 29th October 2018

By David Meynell, Senior Technical Advisor to ICC Banking Commission

In June 2017, the ICC Banking Commission launched the “Digitalisation in Trade Finance Working Group”. The aim of the Group is to identify strategies to overcome the constraints of digitalising trade finance - such as a reliance on paper-based practices, a lack of recognition of the legal status of electronic documents, uncertainty over standards, and a general lack of clear legal and regulatory framework.

A key focus for the Working Group’s activities is to help the trade finance industry realise the many benefits of digitalisation - including transparency, time and cost savings, reduced errors, and reduced compliance and operational risk.

The paper processing required to obtain settlement under instruments such as Documentary Credits is highly manual and time-consuming for all practitioners engaged in the supply chain. Emerging technologies such as Distributed Ledger Technology (DLT), Internet of Things (IOT) and Artificial Intelligence (AI), as well as more established digital platforms may facilitate straight through processing, increased transparency and a deeper understanding of risk.

The digitalisation and subsequent electronic management of data for the purpose of processing trade presents a major benefit for banks and their clients. Such improvements in trade finance offerings is likely to reduce the overall cost of trade finance and, as a consequence, the availability and inclusiveness of global finance, particularly to small and medium enterprises (SMEs).

It is recognised that there are major constraints to the wider adoption of digitalised trade, which include:

  1. Tendency to default to traditional paper-based practices
  2. Recognition of legal status of electronic documents
  3. No single standard for each type of trade e-document
  4. A lack of a clear legal and regulatory framework to eradicate uncertainty
  1. Challenges to adoption by stakeholders in the wider supply chain.
  2. No internationally agreed legal status of dematerialised trade instruments and their processing.

The Working Group will be the coordinating body on all work by the ICC Banking Commission related to digitalisation of Trade Finance with a mandate to identify ways to overcome the obstacles mentioned above. Its main objectives include:

  • Evaluating existing ICC rules to ensure they are ‘e-compliant’
  • Developing a set of minimum standards for the digital connectivity of service providers
  • Examining the legal and practical issues related to the validity and value of data and documents in digitised form

 

 

 

 

 





Leave a comment

Comments will be approved before showing up.


Also in Press releases

Handing over to the next generation: John Beechey CBE steps down as Chair of ICC’s Arbitration programme and hands over leadership to Ania Farren, Managing Director at Vannin Capital.

June 24, 2019

John Beechey, one of the biggest names in international arbitration and former President of the ICC International Court of Arbitration, is retiring from his position as Chair of the International Chamber of Commerce's (ICC's) Arbitration programme in the UK, passing the torch on to his successor, Ania Farren, Managing Director of Vannin Capital. Ania will take up the reins, supported by Iain Quirk from Essex Court Chambers and Guy Pendell from CMS, whom we welcome as a new Vice Chair in the UK leadership team.

Read full article →

ICC United Kingdom partners with The London Institute of Banking & Finance to promote trade finance

February 27, 2019

London, 19 February 2019

ICC United Kingdom and The London Institute of Banking & Finance are pleased to announce their exclusive partnership for 2019, with the aim of endorsing skills pathways in trade finance education. Promoting specific trade finance skills is becoming increasingly important in protecting the future of trade finance, as more focus is needed to enhance the workforce that will ultimately be involved in the move towards paperless trade – a critical transformation period.

Read full article →

CALL TO ACTION; LET’S MAKE DIGITAL TRADE WORK FOR EVERYONE

February 26, 2019

There are 76 countries, including the EU, China and USA, now negotiating a WTO Ecommerce Agreement in Geneva - together covering over 80% of the global trading environment. It is the first time in over 20 years that we have had a major breakthrough in modernising the global governance of digital trade and one area of policy where there is a consensus, so let’s grab the opportunity and make it work.

Read full article →