The pandemic has pushed the trade finance industry over the digital tipping point and transformed the business forever. Marie-Laurence Faure-Lepetit, Head of Digital Trade at BNP Paribas’ Trade Finance Competence Centre, outlines the progress made in the digitalisation of trade, and why there’s no turning back.


Q: It has often been said that the pandemic has moved trade finance banks to focus more on the strength of their own core technology capabilities. How has the situation impacted BNP Paribas’ digital journey?

Faure-Lepetit: Given BNP Paribas’ historic commitment to, and involvement in, the digitalisation of trade, the pandemic did not have much impact on our own digital strategy. We had already made good headway on investing in new solutions and advancing existing ones to improve the client experience.

Nevertheless, the pandemic certainly brought new momentum to some of these efforts, many of which were reinforced and accelerated – such as our work on improving our client user journey on guarantees. At the same time, the situation drove clients to realise the importance of evaluating their own processes and bringing them up to speed, which added to this impetus.

During this period we also maintained our commitment to more disruptive innovation. As part of this, we continued to collaborate with, and help develop, our chosen distributed ledger technology consortia: Marco Polo Network for supply chain finance and Contour for traditional trade.


Q: Over the last two to three years, there have been a number of industry initiatives to accelerate the digitisation of trade, including efforts focused on legislation and standardisation. In your opinion, as head of digital trade, which of these has moved the needle on digital trade the most?

Faure-Lepetit: Among the most notable developments has been the commitment by nations around the world to adopt electronic transferable records in international trade, and specifically the actions taken by countries such as Singapore and Bahrain to go one step further and fully align themselves with the UNCITRAL Model Law on Electronic Transferable Records (MLETR).

In the UK, very recently, we have also seen the introduction of draft legislation to allow for the legal recognition of electronic documents, such as bills of lading and bills of exchange. If implemented, this will really revolutionise global trade, given the widespread use of English law in trading contracts.

The progress being made on the legislative front has been critical. At the same time, we’ve seen trade-focused fintechs advance considerably in developing and adapting electronic bill of lading and e-presentation solutions. The fact that these measures are now happening simultaneously, driving down costs and ramping up implementation, means that as an industry we can really start to embrace the era of digital trade.

Standardisation efforts are important, too, but will be more critical further down the line when it becomes necessary to automate data exchanges or facilitate interoperability between platforms – it is not a crucial factor for driving the initial take-up of digital solutions.


Q: What have been some of the most recent and biggest improvements in BNP Paribas’ own digital trade offering?

Faure-Lepetit: We have an evolving corporate journey, and targeted goals such as increased centralisation and improved visibility and control for our clients continue to be central to what we do.

In the bank guarantees space, we launched our Connexis Guarantee solution in France and Italy about a year ago. This solution, which enhances the issuance and reporting capabilities of business guarantees, is now being used by more than 450 clients. We’re in the process of rolling it out in other European countries – and hopefully soon to other continents as well.

We’ve also made good progress on the delivery of digital guarantees (e-guarantees), which we’ve initially introduced in France and the Czech Republic, and which have been very well received by the market. The extension to other European countries is ongoing.

On documentary trade, we have been working for some time on OCR implementation, combined with an artificial intelligence solution, for document checking. We’ve identified the savings that can be made, and the next step will be to scale this up across the business. Elsewhere in documentary trade, we continue to explore paperless letters of credit for non-maritime transportation as well as e-presentation solutions.

In addition to developing and reinforcing our own offerings, we remain committed to accompanying our multibank clients in other industry initiatives, such as SwiftNet, to ensure their end-to-end efficiencies. We also continue to closely monitor and engage with market utilities. For example, over the last few years we have been collaborating on a European initiative known as Guarantee Vault, led by Digital Vault Services in Germany. It brings together a working group of corporates, sureties and banks to ensure the issuance and safe-keeping of digital guarantees by means of a central register, and we already have a few clients live on the platform.

We believe that all of these initiatives are going to provide a real boost to trade digitalisation across many different markets.


Q: What other new and promising technologies are you evaluating in the trade space?

Faure-Lepetit: Rather than new technologies, I think what we’re seeing is existing technologies becoming increasingly mature.

For example, one of the early constraints with Contour, which uses blockchain technology, was that each blockchain node could only support one legal entity. This made it expensive and time-consuming to roll out across banks’ multiple jurisdictions to achieve a good geographical spread, which is obviously necessary in international trade. However, thanks to a recent major improvement, it will soon be possible for Contour to manage as many as 20 legal entities on a single node. This is a good illustration of how technology is maturing and adapting to the use cases within the industry. With the same set-up cost one can now have a much greater scope. It’s still the same technology, but it’s far more productive to the business and the market.

Another example is with application programming interfaces (APIs). Like blockchain, this technology has also been in existence for some time, but what we’re seeing now is a greater and more comprehensive use of APIs by the trade finance ecosystem.

I think we will start to see similar maturation in OCR combined with machine learning as and when more players start leveraging this technology, leading to an important decrease in the cost-to-serve of documentary trade.


Q: BNP Paribas is renowned for being at the forefront of sustainability efforts in the trade finance industry; how can the bank’s commitment to digital trade enhance this work even more?

Faure-Lepetit: There are two parts to this. Firstly, we need end-to-end automation of every step of the internal process, so that everything from the client request all the way through to our reporting takes place on digital channels. Eliminating paper-based processes is a tangible way to fulfil sustainability commitments, bringing obvious environmental benefits and reducing inefficiencies. We have different work streams tackling that.

The second aspect is related to the measurement of sustainable transactions. BNP Paribas’ sustainability teams have been making good progress on rolling out sustainability-linked solutions and frameworks for our clients – a lot of which relies on data aggregation and harmonisation. The bank is still working on the definition of its own sustainability criteria, relying on data provided by the suppliers, the beneficiaries, the carriers, the jurisdictions, and so forth. It is absolutely critical that all of this data is digital. There’s just no way it can be done manually.

Recently, we’ve started to see an increasing number of fintechs positioning themselves in this space, offering a range of new instruments, such as ESG scoring tools, to measure and consolidate data on behalf of financial institutions so that they’re able to assess and prove compliance with sustainability standards. We are keeping a close eye on these solutions, which might be integrated into BNP Paribas’ digital channels further down the road.

The power of digital technologies and data to advance the sustainability transformation is what is going to ensure that progress continues to be made in digitalisation efforts. Because of this increased focus on sustainability, the digitalisation of trade is only going to gain even more momentum – there’s no turning back.