The digitisation of trade finance is delivering significant benefits to corporates, banks, carriers and other Bolero trading partners. In addition to reducing the time, cost and risk of trading internationally, digitisation provides connected parties with greater visibility and transparency of the whole end to end process.

For corporates, the reasons to go digital are driven by the need to reduce costs through increased efficiencies and working capital improvements by employing faster payment processing methods. Additionally, the increased visibility, along with the ability to audit and track all transactions, reduces the risk of fraud and regulatory non-compliance. Digitisation also provides Corporates with the opportunity to acquire quicker and easier access to finance.

For banks and other financial institutions, digitisation offers similar benefits and advantages, from increasing efficiencies to reducing the risk of fraud. Banks also have greater visibility over the end-to end physical and financial supply chain, enabling them to offer more enhanced value added services.

To make the most effective transition into the digital world, it is important to find a company with the right knowledge and expertise.

For the past 18 years, Bolero has been a global leader in the electronic settlement of contracts between buyers and sellers. From initial purchase orders to final payments, including supporting trade financing and the documentary control of goods, Bolero helps organisations to improve cash-flow and working capital whilst increasing efficiency, control and visibility as well as mitigating risk and fraud. This is all accomplished through the Bolero exchange, which allows exporters, banks, carriers, importers and other trading parties to connect and transact seamlessly over a common digital network irrespective of message format or protocol.

Bolero provides a wide range of solutions in different vertical sectors designed specifically for the electronic management and communication of trade finance documents and related instructions, including open account, letters of credit, guarantees, standbys and documentary collections.

Bolero is leading the way in driving the digitisation of global trade transactions, bringing the industry's first electronic Bill of Lading solution to market, and its innovative cloud-based messaging services eliminate the need for paper trade documents. Today, we power trade across 5 continents and deliver in excess of $80bn worth of global trade transactions per annum, connecting buyers, sellers, financiers, credit underwriters and payment providers & networks.

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Ian Kerr ImageWhy is the financial supply chain still stuck in the digital dark ages?

In the world of logistics and the physical supply chain, digitisation is now at the heart of everyday operations.

Everything from routing to planning is conducted on a digital platform, delivering big gains in efficiency and security.

Technologies such as RFID, GPS and the Internet of Things, have opened the door to better-informed decision-making and more agile and collaborative organisations.

Process automation and centralisation have made staff more efficient, while visibility, through the application of sensor technology, has given greater overall control, reducing risk and manifestly boosting productivity. If a shipping container is moved on the dockside of a major port, for example, it is very likely its sensor will alert its owner to the fact.

In fact digitisation is advancing across all fronts in the physical supply chain. Coca Cola has automated its warehouses and Amazon is now well-advanced in its adoption of drones for delivery.

Dark ages

However, when it comes to the financial supply chain that keeps the wheels of international trade turning, the picture is one of patchy uptake and a reluctance to embrace the digital future.  Many institutions fail to see all the immediate advantages, remaining stuck in what we might term the digital dark ages.

The adherence to paper-based processes, produces vastly complex trails of documents for each of the thousands of transactions a bank, for example, must handle. Bills of lading and letters of credit are two extremely important documents, but in a paper system they have to be couriered, manually checked, updated and stored. When banks and trading partners are handling thousands of transactions, keeping track of this stack of paperwork is extremely difficult.

Not only will paper documents go astray, they are prone to errors, remain inaccessible to those who need to see them for much of the time and are costly to amend, keep and administer. Establishing where they are and authenticating them often proves frustratingly difficult, while security is a constant concern.

Paper documents are also extremely vulnerable to forgery, either through the creation of bogus replicas or fraudulent amendment.

Switching is overdue

Switching to digital alternatives, such as Bolero’s Xchange platform, that eliminate paper is the obvious answer.  The advantages in terms of visibility, efficiency and security are almost immediate. 

The benefits of digitisation also help to reduce operational overheads such as staff costs as well as accelerating cash flow and slashing handling fees. Even so, uptake has been very tentative.

Digitisation no-brainer

When there are such gains on offer, digitisation of processes in international trade does not require some great leap of faith.  But we can see that it will require a critical mass to develop before the conservatism of large institutions is overcome.

Admittedly, trade finance involves multiple participants, from established banks to shipping companies, insurers, regulators, customs and governmental bodies. Achieving consensus when there are so many interests to protect, is perhaps not easy.

Yet banks are waking up to the massive opportunities in efficiency and security that digitisation offers, having regarded it as a topic that can be put off until another day. We can also see that the current downturn in commodity prices will force everyone involved in trade finance to consider how to cut costs and drive greater efficiencies from their processes.

It makes a very compelling case for digitisation.

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