Banks and the transition to digital trade finance
Scenes from last year’s Sibos panel discussion “Progressing the digital trade agenda: Are banks on board?”
Recently banks have been severely rebuked for not moving fast enough to digitize or adoption FinTech solutions.
I have a slightly different view.
As we sit here during the middle of 2016, 32 trade finance banking groups have signed up to CargoDocs electronic presentation solution and/or combined eDocs and bank payment obligation solution (BPO+). With both solutions, the bank agrees to accept digital documents including electronic bills of lading instead of paper originals for trade finance purposes.
From the first time that CargoDocs was used to electronically present original eDocs to banks for an iron ore export cargo at the end of 2013, banks have signed up to CargoDocs at an average rate of one per month. And we expect that rate to increase during the second half of this year. Indeed, the fastest banking group completed their first live eDocs transaction in just three months from our first discussions.
For those of you who work closely with banks, you understand the complexity of their organizations, the significant regulations they deal with, the number of teams who are involved with documentary process changes as well as the technical, legal and other signoffs required to adopt new technology.
With 32 banking groups now using CargoDocs in just a few years, banks have made it one of the fastest growing FinTech solutions, for which everyone at essDOCS is extremely grateful.
In my mind, that is a phenomenal transition to digital trade finance.
Now, I am not saying that both essDOCS and banks can’t do better. Of course we can both do significantly more. And we still have much to (jointly) do. Such as, developing eDocs centers of excellence and creating centralized teams to handle eDocs, which will significantly reduce the time to adopt compared to a branch-by-branch rollout.
Yet despite the work to be done, my point is that CargoDocs uptake is proof that banks have the desire and capability to digitize faster (and further) than many people give them credit for.