The global trade and trade finance industries are nearing an inflection point where we will either embrace digital platforms en masse, or will return to discussions about a future held back by 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. 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 in, but we can do more – and at a faster pace.

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. The International Chamber of Commerce’s Digital Standards Initiative 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. 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.

Finding the best place to start

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 start with just banks.

Consensus amongst banks would prompt an unstoppable wave of trade digitisation. If banks are aligned on a standard platform or 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, accelerating adoption and standardisation efforts across the globe.

Moving the industry forward

In a recent article asking top trade banks if 2021 will be the year we see adoption of trade finance platforms, responses varied from unbridled enthusiasm to guarded pessimism. Evidently, even the shock of the COVID-19 pandemic bringing operations centres 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. Just like the history of containerisation, the standard will emerge from innovation, collaboration and adoption leading to transformative progress.

By building global standards and digital infrastructure, we can make 2021 the year digital trade finance becomes the standard.