Sibos 2014: Commerce Goes Digital – Can Your Bank Support Your Business?

The growing digitisation of commerce and finance is obvious. According to Andre Casterman, global head of corporates and supply chain markets at SWIFT, organisations are telling the financial messaging services provider of their wish to eliminate as many of the inefficiencies of paper-based trading as possible through digitisation.

SWIFT itself has identified the growing need for intelligent applications and is working with the trade finance vendors at the forefront of advancing digitisation, while accepting that a small number of activities will not be able to dispense completely with paper. Its three-stage plan to digitise trade flows wherever possible is focused on the three areas of documentary trade, where the Bank Payment Obligation (BPO) aims at digitising both bank-to-bank flows and corporate-to-bank flows; digital trade, where the primary aim is to make banks more agile in trade finance; and business networks, which encompasses initiatives such as electronic shipping documentation and purchase-to-payment platforms.

“Our role is to combine business networks with SWIFT’s digital trade solution in the bank-to-bank space; enabling corporates to benefit from fully digitised trade solutions,” said Casterman.

Reality Check

Not for the first time at Sibos 2014, the polls conducted among audience members revealed a marked degree of scepticism on whether this mostly, if not fully digital world can be quickly or easily achieved. ‘Accepting that paper will always remain for certain types of business, how soon do you think it will take trade to become mostly digital?’ they were asked. A mere 8% saw this goal being accomplished within the next one or two years, while 21% expected a period of two to four years and a hefty 66% predicted between four and 10 years. A sceptical 5% responded ‘never’.

More stinging for banks was the response to the question ‘How are banks approaching the digitisation of trade?’ with only 26% judging it as proactive against 74% opting for reactive. This attitude was further reflected in the next question ‘Will digitisation confront banks with more competition from alternative sources?’ Sixty-nine per cent responded ‘yes’, against only 14% for ‘no’ and 19% for the fence-sitters, who responded maybe.

A session panel, which included Vivek Gupta, global head of trade and supply chains at ANZ Banking Group and Chris Bozek, managing director, global trade and supply chains at Bank of America, took the results squarely on the chin. Bozek said that BofA was helping clients go digital by adopting the policy that “one size does not fit all” and asking companies to identify the key business problem that they wished to solve.

“We take a pragmatic approach and offer pragmatic solutions,” said Bozek. “BofA is BPO-enabled and we regard it as a tool and a means to an end, rather than a product.

According to Gupta, both sides must recognise that digitisation is “forcing both banks and their clients up the value chain”. Banks had to ask some hard questions on how they could remain relevant to their clients through adding value.

And what exactly do corporates believe is adding value? The final poll asked attendees which of four options they regarded as the most important recent development in trade. The voting was as follows:

  • Electronic bills of lading: 26%
  • Bank Payment Obligation: 35%
  • (Corporate-to-bank SWIFT message type) MT798: 26%
  • Approved Payables Financing: 13%

As session moderator, Jacco de Jong, senior adviser for TradeWiz noted, corporations went digital some time ago “and the treasurers who traditionally handled money now handle data.” This has resulted in a mismatch in how corporates now connect with their banks. In addition, organisations such as the Chinese site Alibaba and others have come to market and driven innovation in the physical supply chain.

“Why do we see faster adoption of digitisation in the physical supply chain, while it lags in the financial supply chain?” asked Gupta. If it does indeed take up to 10 years for the majority of trade to go digital, that question might still be asked at Sibos 2024.

For more Sibos 2014 coverage…

Are the Costs of Regulatory Reform Too High?
Apple Pay, Cyber Risk are Game Changers
Is Corporate Transaction Banking Almost Here?
Will Banks and Businesses Embrace Bitcoin?
SWIFT Chief’s Three Key Lessons about Payments


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