the United Arab Emirates (UAE) has forged ahead with digitisation across various areas. For example, Dubai aims for all government transactions, where possible, to be digital by the end of next year. Meanwhile, Saudi Arabia has pledged to become one of the world’s top-20 digitally innovative nations, positioning digital transformation as one of the four pillars of its Vision 2030 programme. Other GCC markets like Qatar, Bahrain and Oman have also set out their vision and strategy to leverage digital transformation.
Why now is the time to digitise trade Trade is an extremely complex ecosystem, involving not only an importer and an exporter but also a myriad of other actors across physical and financial supply chains, covering multiple countries and industries. This gives rise to differing standards, rules, regulations and legal frameworks. Digitisation has been at the heart of some of the most significant changes in our lives in the last decade. With high-speed broadband, ubiquitous smartphones, smart offices, smart homes and cars, and the proliferation of apps for every aspect of our lives, this
digital way of life is growing exponentially, and so is the appetite for seamless and convenient customer experiences. Trade digitisation and its potential benefits have long been discussed by the industry, and while the banking sector has made significant progress in digitising customer interactions, trade remains one of the few areas that still rely heavily on manual and paper-based processes. Advancements in technology have already sped up supply chains and brought down the cost of doing business. With better connectivity, richer data and new technology, there has never been a better time to digitise trade.
How the pandemic acted as a catalyst to trade digitisation Our recent paper “Digitising trade: the time is now” outlines how the pandemic has magnified the vulnerabilities of manual and paper-based processes in global trade and suggests how efforts to digitise trade could reduce friction in global commerce and support economic growth. T h e C OV I D -1 9 p a n d e m i c h a s accentuated the friction, inefficiencies, risks, and control challenges associated with paper-based processes, and demand
for digital solutions in trade shot up as businesses and banks across the world looked for ways to keep international trade in motion. By late April 2020, documentary trade finance substantially declined by as much as 49% week on week as documented by SWIFT Watch. However, despite a substantial drop in global trade in the past year, the usage of SWIFT’s Digital Trade Channel solution (MT 798) grew by 72.4% in 2020. This highlights the appetite for digitisation among corporations. As the world emerges from the pandemic, trade is paramount in enabling the global economy to recover and digitisation has an essential role to play, removing the frictions that ultimately impair access to liquidity and optimisation of financing, with knock-on ramifications for business and growth. The conversation is now shifting beyond operational efficiency to become a matter of business continuity and risk management. The question of trade digitalisation is no longer ‘if’ or ‘when,’ but simply ‘how’ and ‘how fast?’
Rising to the challenges of trade digitisation For trade to be truly digitised, some mea-finance.com mea-finance.com
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