Realising the potential of digital transformation through blockchain, the Internet of Things (IoT), Artificial Intelligence and other digital developments is benefiting and challenging banks and their client bases worldwide. These improvements in trade finance offerings have the potential to reduce costs and promote greater economic inclusion in global finance – particularly for small- and medium-sized enterprises (SMEs).
Despite advantages, digitalised trade faces constraints to wider adoption. To overcome these barriers, ICC launched a Working Group on Digitalisation in Trade Finance in 2017 to serve as a coordinating body for all work related to digitalisation in trade finance undertaken by the ICC Banking Commission.
The main workstreams of the Working Group are:
1. ICC Digital Rules & Practices
a. eRules – eUCP version 2.0 and eURC version 1.0 (Stream Lead: Dave Meynell)
- Objective: Evaluate all existing ICC rules to ensure that they enable banks to accept electronic documents and data
- Achievements to date: Released in July 2019 eUCP version 2.0 and eURC version 1.0, together with supplementary guides
- Next steps:
- 1. Complete. Review again if further updates are necessary at end of 2021
- 2. SWIFT will shortly publish an enhanced user guide that talks to the commercialization of eUCP leveraging the co-operative platform.
- 3. Extend guidelines and awareness activities in order to support an enhanced adoption strategy of the rules, particularly eUCP.
b. URDTT (Stream Lead: Dave Meynell)
- Objective: Develop a high-level framework for rules and obligations covering the use of Electronic Records to process Digital Trade Transactions.
- Achievements to date: A number of drafts have been distributed to ICC National Committees. Draft 4 is with National Committees. Mid-November is timeline for comments.
- Next steps: Envisaged that draft 5 will be the final draft and distributed for approval by end of 2020 / beginning 2021.
c. Automation of Document Examination under documentary credits (Stream Leads Uzair Bawany & Merisa Lee Gimpel)
- Objective: Produce a set of clear guidelines on how trade finance document checking can be automated using new technologies (i.e. Artificial Intelligence, Machine Learning etc).
- Achievements to date: Guidance Paper in development with first draft to be shared by end of October.
- Next steps:
- 1. Planned for publication late 2020/early 2021.
- 2. Adoption and communication plan to be completed by year-end.
2. Accelerating Digital Adoption
a. Roadmap & communications (Stream Leads: Chris Southworth & Alisa DiCaprio)
- Objective: Develop guidance for digital advocacy. The digital trade roadmap provides a framework to articulate concrete policy changes required to promote the global digital agenda. Additional actions include monitoring and influencing progress.
- Achievements to date:
- Digital trade roadmap updated – Version 1.0 and 2.0 published & circulated to ICC network;
- Published rapid response measures by trade finance banks to keep trade finance and trade flowing in the face of COVID-19 paper in collaboration with ITFA & BAFT
- Roadmap referenced in B20 Saudi Arabia Trade & Investment Taskforce recommendations
- Roadmap promoted to audiences in over 60-100 countries – for example at IBM conference, IBM events at Sibos, City & Financial Conference, Africa Digital Currencies Conference hosted by Global Policy House, Trade Finance Global-Mastercard webinar, ICC International Trade & Prosperity Conference, The Commonwealth B2B Cluster, ASEAN Business Advisory Council
- Supporting UK government in its collaboration with Singapore, Bahrain, Australia to align digital reforms
- Drafted paper on Digital progress in 2020 (for circulation Oct 28)
- SWIFT supporting through:
- produced insights video with UNCITRAL MLETR and Singapore Government to promote awareness of the need for legal harmonisation & the Singapore progress – distributed to over 200,000 contacts
- rapid response measure to keep trade moving – provided free access to the fileact product that moves scanned documents to over 200 countries in seconds.
- Announced partnership with Singapore Government to develop a new industry standard for legal title transfer, underpinned by MLETR adoption
- Issuing a paper to over 200 countries – echoing the ICC digital trade roadmap call for standards and legal harmonisation
- BAFT recommending amendments to the E-SIGN ACT in the US to include other forms of negotiable instruments
- Roadmap led to reforms to English law to digitise BLs, BoE, PNs scheduled for early 2021 – business case for reforms due to publish Feb 2021
- Next Steps:
- Comments will be requested on Digital progress paper until November 11, final publication mid November
- Twice yearly progress reports to be released in conjunction with advocacy efforts by region.
- Update Version 3.0 of Roadmap with DSI by year end. Set up NC call with DSI with top 10 countries to scale up roadmap promotion activities. Transition ownership of roadmap to DSI
b. Legal adoption (Stream Lead: Sean Edwards)
- Objective: Accelerate the adoption of legal frameworks to enable digital trade.
- Achievements to date: 1. Report on the legal status of electronic bills of lading. 2. ICC e-Commerce Issues paper based on work of the group 3. ITFA and BAFT have developed payment commitment solutions with ITFA’s EPU Electronic Payment Undertaking and BAFT’s DLPC Distributed Ledger Payment Commitment.
- Next Steps:
- 1. Creation of legal resources database/library.
- 2. Assistance to UK Law Commission in drafting new laws on electronic documents.
c. Fintech adoption (Stream Leads: Hari Janakiraman & Jacco De Jong)
- Objective: Issue guidelines that parties in the trade finance digital ecosystem can use to connect with each other digitally.
- Achievements to date: first draft of guidance paper completed and ready for circulation.
- Next Steps: Planned for publication late 2020/early 2021 followed by communication across various platforms to create awareness.
d. APIs Standards for Trade Finance (Stream Leads: Valeria Sica & Ali Ansari)
- Objective: Develop catalogue of Trade Finance APIs to be leveraged in the industry.
- Achievements to date:
- 1. Identified two business use cases, Bank-to-Bank Guarantees re-issuance and Bank-to-Corporate Export LC Advising as the pilot cases to set the base of API standardization.
- 2. SWIFT support secured to help with standardization and scale – both in terms of their role as a standards authority and via the platforms API gateway.
- Next Steps: Issue first use cases by end 2020.
3. Streams under consideration
a. Neutral Entity (Stream Leads: Parm Sangha & Michelle Chivunga)
- Objective: Identify alternative ways to connect digital islands
- Next Steps: Initial concept paper outlining problem statement and potential solutions to be discussed.
Open trade and technology standards
ICC’s evaluation of the wider trade ecosystem’s requirements has also demonstrated a need for the creation of open trade and technology standards to promote interoperability among the numerous blockchain networks and technology platforms that have entered the trade and trade finance space over the past two years.
To correspond to this market need, ICC has launched the ICC Digital Trade Standards Initiative (DSI) – a collaborative cross-industry effort to enable the standardisation of digital trade. Find further information.