Trade digitalization is now gathering pace. As COVID-19 lockdowns impact face-to-face trade deals, governments and private organizations are looking to accelerate digital enablement.
The MOI will set the framework to offer SWIFT's community of more than 11,000 financial institutions and corporates in over 200 countries and territories more efficient and cost-effective cross-border paperless trade, without the need for multiple bilateral linkages and siloed systems.
Both companies see the moving manual processes to digitally-enabled ones creating opportunities to shorten trade processing times and open up possibilities for innovation such as new trade financing offerings to the trade community.
Through this MOI, both parties will work to combine TradeTrust, an interoperability framework that connects various platforms for the exchange of digital trade documentation, with the SWIFT community. TradeTrust provides proof of authenticity of documents and offers title transfer through open-source software. This functions alongside legal harmonization to recognize these digital documents.
“International trade is the lifeblood of Singapore's economy. Singapore is working with various partners internationally to develop an interoperability framework, TradeTrust, for the seamless and efficient exchange of digitalized trade documentation across different communities. We are pleased to partner with SWIFT to further develop a trusted, interoperable and global digital trade ecosystem,” said Jane Lim, assistant chief executive at IMDA.
When paired with SWIFT's ability to securely transport industry standardized electronic trade messaging, scanned hardcopy documentation, and digitally signed assets, TradeTrust will pave the way for the seamless exchange of electronic trade documents around the world.
“DBS continues to engage in game-changing initiatives with like-minded partners such as IMDA and SWIFT to break new grounds. For instance, DBS worked with SWIFT and IMDA to conceptualize a solution to facilitate the digital transmission of trade documents, including title transfers of electronic bills of lading on the SWIFT network leveraging TradeTrust. Such efforts will not only help generate the momentum needed to effect a global shift from analog to digital trade systems but also build on Singapore's ambition to become a global digital trade hub, facilitating trade flows between businesses and industries across an extensive network of countries,” said Sriram Muthukrishnan, group head of trade product management at DBS Bank, one of the participating banks.
“An interoperable industry framework coupled with the SWIFT ecosystem could accelerate recent gains that the industry has seen in digitization through a harmonized digital flow. We are excited to work on this initiative that could scale the digitization of trade, delivering better working capital management and efficiencies for our clients,” added Vinay Mendonca, global head product in propositions & structuring at trade and receivables finance in HSBC, another participating bank.
This MOI further builds on IMDA's effort to bring in new partners to join this global trade digitalization effort. Earlier this year, IMDA signed a cooperation agreement with the International Chamber of Commerce (ICC) and 17 multinational firms to move from existing paper-based processes to digitally-enabled ones.
“The trade ecosystem faces digital disruption and requires open standards, legal harmonization, and coming together as a community to address fragmentation, friction, and risks. Our collaboration with Singapore's global TradeTrust initiative allows us to play a central role in this effort, and we look forward to working together towards a shared vision of a frictionless, dynamic, global trade ecosystem,” said Alain Raes, chief business development officer at SWIFT.
Participating banks see the MOI giving a boost to trade digitalization, and setting the foundation of related initiatives.
“We are excited to see SWIFT and IMDA coming together to provide a further boost to the digitalization of documents in trade transactions. Standard Chartered, being a leading trade bank, has been at the forefront of the usage of emerging technologies including distributed ledger, to move from paper-based trade transactions to digitized transactions with more resilience, efficiency, and transparency. We welcome such an effort and are delighted to join the initiative which promises to make paperless trade accessible to many more enterprises globally,” said Michael Spiegel, global head of trade at Standard Chartered Bank.
“We're looking forward to collaborating with TradeTrust and SWIFT. There's still work to be done to digitize trade documentation globally but we're optimistic given the successful testing of SWIFT FileAct and integration into our trade processing system at J.P. Morgan,” added Merlin Dowse, global product manager at J.P. Morgan.
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