Regulators need to do more to implement cross-border trade finance standards, according to panelists during this year’s Sibos 2020 conference.
“There is a risk and recognition issue. What do we recognise as two transacting parties? In the case of trade, it’s going to be two parties who might be sitting in two different jurisdictions,” said Choo Wan Yee, director in Singapore’s ministry of finance.
“Intellectually, I think all of us understand the benefits of digitalisation. The question then comes down to how do we calibrate the benefits, who needs to bear that burden of change. Government needs to come in to set ‘rules of the road,”
To better coordinate digitalisation within trade finance, the International Chamber of Commerce (ICC), in 2017 launched a working group to help coordinate digitalisation in trade finance. Oswald Kuyler, managing director at the ICC said their goal is not to create a platform but a set of standards.
“A lot of these platforms are digital islands not because they choose to be but because of the enormous challenges required to actually open them up. What we’re fundamentally going to do is not produce a new platform but the standards required for interoperability.”
“If someone out of university wants to contribute into this landscape, they can pick up a set of standards and say, ‘this is how I communicate, this is how I exchange information’. I can participate in creating innovation because it’s open and transparent, as opposed to closed and siloed as it is today.”
Choo said the Singaporean government’s Networked Trade Platform (NTP) has one such standard in the form of a ‘corporate pass’.
“[The corporate pass] ties the identity of the corporate entity and pairs it with the identity of an individual. We have an audit trail to be track the digital identity of the [business] and the individual who is now authorised to transact on the business’ behalf. Those are hugely important foundation pieces.”
The panelists were in agreement about the importance of digitalisation but also stressed the need to have a clear end goal in mind.
“What is very important is that digitalisation in itself is not necessarily the Nirvana. We need to be very clear about what problems we are trying to solve or what we are trying to create as a result of that digitalisation”, said Ebru Pakcan, global head of trade at Citi.
“As an industry, we probably also need to galvanise our energy around a few shared objectives. Sustainability could be one of them as well as others, then try to build our digitalisation path towards those objectives, so that we are achieving some higher goals and not only just automation.”