By Megan Doyle
To improve the availability and inclusiveness of international trade finance, the International Chamber of Commerce (ICC) Banking Commission’s Digital Roadmap was launched in 2018.1 Specifically, the roadmap aims to help the international business landscape efficiently adopt digital trade finance technologies that can reduce costs and make trade finance more efficient and more accessible. The roadmap aims to act as a way for all stakeholders—businesses, the ICC, and governments—to collaborate on the most effective solutions.2
At a meeting in April 2019, the ICC’s Banking Commission reported progress on the roadmap, detailing the thinking behind the it, as well as what a digital trade finance revolution could mean for international businesses.
Digital advancements and the massive growth of e-commerce have opened up a world of opportunities for SMEs looking to play on the international business field.3 However, with many current global trade policies still based on 20th-century practices, opportunity might not necessarily equate to ability. Today’s trade rules typically match the needs of large, containerized B2B shipments, whereas the growing SME e-commerce sector tends to rely on a higher frequency of smaller shipments, sent directly to the consumer.4
In other words, trade policies that worked in the past could be hindering future developments, especially for SMEs. According to the ICC, specific factors preventing efficient and seamless international business include:5
Improving and modernizing rules, processes, and systems to enable digital-led trade growth is at the core of the ICC’s Digital Roadmap.6 What might it mean for international businesses? Cost savings and efficiency, to start.
According to the ICC’s 2018 Global Trade: Securing Future Growth report, one trade finance transaction can require more than 100 pages of documentation.7 This means there are about four billion pages of trade finance documents currently in circulation. Such manual processes tend to be costly, inefficient, and error-prone. Replacing paper documentation with technology-driven e-documents promises to minimize unnecessary bureaucracy and cut costs. In fact, the Boston Consulting Group (BCG) estimates trade finance digitization could cut costs by up to $6 billion within three to five years, potentially making it easier for smaller businesses to establish themselves in the global market.8
In addition to saving time and money, digitizing trade finance can reduce errors and operational risk, and even improve transparency among all stakeholders—all of which could further enhance the availability and inclusiveness of global trade finance, according to the ICC.9
The ICC Digital Roadmap is centered on creating a digital ecosystem that enables connectivity and collaboration between all stakeholders, specifically businesses and financial institutions, the ICC itself, and governments and intergovernmental organizations.10 The ICC will also seek feedback from its members, as well as industry and public-sector experts.11
For businesses and finance institutions, the ICC Digital Roadmap outlines a framework to standardize internal processes and documentation, develop interoperability across systems, adopt e-bills of lading and other digital trade finance documentation, and test new technologies such as blockchain and internet of things (IoT). The ICC further lays out plans to automate trade and develop one-stop shops that integrate solutions for customs, documents, and trade finance.12
Meanwhile, the group, itself, aims to establish, review, modernize, and introduce new digital trade finance rules and standards, establish best practices to promote paperless trade, and establish a forum for all non-bank stakeholders to voice their ideas and concerns.13
Finally, the ICC developed an eight-point action plan to guide governments and intergovernmental organizations in developing laws and regulations, standardizing digital import-export document processes, and making systems more efficient. Guidelines include developing and providing a common rulebook to drive innovation, going paperless across the board, and implementing the single window.14 According to the ICC, government engagement is crucial—93 percent of respondents to the ICC’s 2018 Global Trade survey said regulation and compliance are potential obstacles to future growth in the trade finance industry.
To help ensure governments enact regulations and standards that are in the best interest of all stakeholders, the roadmap aims to maintain transparency. This way, businesses, the ICC, ICC members, governments, and other industry experts can see and understand what their individual roles and responsibilities are, as well as the big picture objectives.15
As with all of the ICCs standards, the Digital Roadmap will be continuously updated and adapted to reflect the rapidly evolving trade finance and international business landscapes.16
Digital advancements in the international business landscape are contributing to the rapid growth of e-commerce. However, most trade finance guidelines are still based on pre-internet practices, replete with paper documentation and devoid of standards for the digital era. In response, the ICC has developed a Digital Roadmap to help businesses and governments work together to efficiently adopt the new technologies and standards needed to enhance the availability and inclusiveness of digital trade finance for all.
Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.
1. “Five highlights from the ICC Banking Commission’s 2018 Technical Meeting in Tbilisi,” ICC; https://iccwbo.org/media-wall/news-speeches/five-highlights-icc-banking-commissions-2018-technical-meeting-tbilisi/
2. “ICC launches industry-wide plan for digital trade,” Global Trade Review; https://www.gtreview.com/news/global/icc-launches-industry-wide-plan-for-digital-trade/
3. “Digital Trade,” ICC; https://iccwbo.org/global-issues-trends/trade-investment/digital-trade/
5. “ICC Working Group on Digitalisation in Trade Finance,” ICC; https://iccwbo.uk/blogs/press-releases/icc-working-group-on-digitalisation-in-trade-finance
6. Driving a future for digital trade in finance services, ICC; https://cdn.shopify.com/s/files/1/2992/1976/files/ICC_Digital_Trade_Roadmap_1.0.pdf?1158851529834671592
7. 2018 Global Trade – Securing Future Growth, ICC; https://iccwbo.org/publication/global-survey-2018-securing-future-growth/
8. “New ICC survey shows pace of trade finance digitalisation,” ICC; https://iccwbo.org/media-wall/news-speeches/new-icc-survey-shows-pace-trade-finance-digitalisation/
9. “ICC Working Group on Digitalisation in Trade Finance,” ICC; https://iccwbo.uk/blogs/press-releases/icc-working-group-on-digitalisation-in-trade-finance
10. “Five highlights from the ICC Banking Commission’s 2018 Technical Meeting in Tbilisi,” ICC; https://iccwbo.org/media-wall/news-speeches/five-highlights-icc-banking-commissions-2018-technical-meeting-tbilisi/
11. “ICC launches industry-wide plan for digital trade,” Global Trade Review; https://www.gtreview.com/news/global/icc-launches-industry-wide-plan-for-digital-trade/
12. Driving a future for digital trade in finance services, ICC; https://cdn.shopify.com/s/files/1/2992/1976/files/ICC_Digital_Trade_Roadmap_1.0.pdf?1158851529834671592
15. “ICC launches industry-wide plan for digital trade,” Global Trade Review; https://www.gtreview.com/news/global/icc-launches-industry-wide-plan-for-digital-trade/
16. “Five highlights from the ICC Banking Commission’s 2018 Technical Meeting in Tbilisi,” ICC; https://iccwbo.org/media-wall/news-speeches/five-highlights-icc-banking-commissions-2018-technical-meeting-tbilisi/
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