Digitizing an economic stronghold for Dubai

The story of trade is closely related to the story of human civilization, and trade finance has played a significant role in most of the trade’s history. The first letter of credit appeared in the 3rd century B.C. in India, ancient Romans had something akin to a cheque in the 1st century B.C., and the first promissory note appeared in 118 B.C. in China.

From leather-made trade instruments over 2,000 years ago to digitized ones now rising across the world, the shape of trade finance has changed. Its importance, however, has not. Today, 80 to 90% of world trade relies on trade finance, including trade credit and insurance or guarantees, mostly of a short-term nature.

Foreign trade is an economic stronghold for Dubai and the total value of the Emirate’s merchandise trade in 2017 accounted for over three times its GDP.

However, trade processes have their challenges, and businesses in Dubai continue to be stuck with friction caused by manual processes and high usage of paper across transactional cycles.

Paper complicates trade

The document processing costs can be as much as one-fifth of the physical transportation costs.

Traditional trade is paper-intensive. More paper means more processing time and a slower flow of goods. The document processing costs can be as much as one-fifth of the physical transportation costs. The typical cost-to-income ratio in traditional trade finance is 50% – 60%, which means more than half the price of trade finance is used to cover operational costs according to World Economic Forum. Digitalization of documentary trade finance can eliminate these complexities by giving businesses a single window to operate using advanced technology and insightful analytics.

Leveraging trade finance digitization

The trade finance sector is moving towards the digitalization of its processes and banks in the Middle East are positive about the sector’s potential. Almost 70% believe it will grow in the next year, according to the 10th Global Survey on Trade Finance by the International Chamber of Commerce. The Dubai government (through Smart Dubai) is also driving digitalization as it builds its future without paper. In 2021, it will go completely paper-free, eliminating more than 1 billion pieces of paper used for government transactions every year.

Emirates NBD is helping businesses manage their trade cycles more effectively in this environment with its innovative and intuitive trade finance platform – smartTRADE.

smartTRADE is set to digitize trade finance in a hyper-connected world

smartTRADE allows businesses to manage all their trade finance requirements on the go. Over the past four months, the number of new subscriptions on the platform have grown at a rate of more than 20% per month.

“smartTRADE allows us to view all overseas customer documents, including those related to transport and inspection as well as third-party certificates,” says Lynda Ihenacho, Head of Treasury at Easa Saleh Al Gurg Group LLC. “This expedites our decision making process. Visibility throughout the cycle and reduced turnaround times on transactions are major benefits to us as an organization.”

smartTRADE has been able to achieve this by focusing on two things:

1. Client led innovation: Its user-friendly interface enables rapid facilitation of transactions, reduces time-to-cash, and allows everything to be managed electronically. Its consistent user experience across devices and channels also offers the single sign-on feature, making the entire process smoother for Trade Finance clients. The application form for accessing the smartTRADE portal is available online, saving on lengthy paper-based forms. Invoices and transportation documents like the bill of lading can be submitted online using the bulk upload option to save time. A highly intuitive dashboard gives businesses complete transparency while real-time updates provide transaction status taking all the guessing out of the game.
2. High Client Adoption: Sumit Aggarwal, Executive Vice President and Group Head of Transaction Banking at Emirates NBD, says, “smartTRADE is digitizing paper-dependent processes and reducing a high operational footprint. It increases agility across teams and eliminates errors and redundancies inherent in manual intervention. We are helping our clients access Trade Finance more efficiently, and gain competitive advantage in challenging global markets.  Since the soft-launch a few months back, the response from our clients has been impressive.  Sectors as diverse as Retail, construction and industrials to name a few are actively using our smartTRADE platform.”

The way forward

Maryam Bahlooq, Chief Executive Officer, Tanfeeth adds: “We are supporting the Dubai government’s vision of going paperless.

“Facilitating trade in the future calls for innovative technology and digitalization. Emirates NBD is helping our clients take a step in this direction – we are supporting the Dubai government’s vision of going paperless,” says Maryam Bahlooq, Chief Executive Officer, Tanfeeth. “The team at Tanfeeth processes documents using an image-based system resulting in faster transactions and considerable reduction in usage of paper. This means saving resources, time and the environment by eliminating paper.”

The Emirates NBD team has co-created the smartTRADE platform with its clients and plans to introduce new benefits and features continuously, including real-time updates by partnering with international counterparties and trade facilitators. Establishing such seamless processes will form the digital backbone to defend and enhance one of the economic strongholds of Dubai – Trade.