ICC Working Group on Digitalisation in Trade Finance
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:
- Tendency to default to traditional paper-based practices
- Recognition of legal status of electronic documents
- No single standard for each type of trade e-document
- A lack of a clear legal and regulatory framework to eradicate uncertainty
- Challenges to adoption by stakeholders in the wider supply chain.
- 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
Private sector action to reverse the loss of biodiversity is “absolutely fundamental” to the UK’s post-pandemic economic recovery, a new cross-business forum will warn today.
bp plc, Barratt Developments plc, Skanska, and Balfour Beatty are among the founding companies of the UK Business & Biodiversity Forum (UKBBF), which has been set up ahead of the United Nations’ COP26 climate change conference in Glasgow this November and the UN COP15 Biodiversity conference in Kunming, China in May.
SENIOR DIPLOMAT AND TOP CAMERON ADVISER AMONG APPOINTMENTS TO INTERNATIONAL CHAMBER OF COMMERCE (ICC) BOARD
SWIFT’s KYC Registry will become the first global utility to integrate the International Chamber of Commerce’s (ICC) Sustainable Trade Finance Guidelines, making it easier for financial institutions to identify environmental, social and governance (ESG) risks in their supply chains.
By integrating the ICC’s Sustainable Trade Finance Guidelines into the KYC Registry, which has more than 6,000 users...