In June 2017, the ICC Banking Commission launched the digitalisation in trade finance working group to identify strategies to overcome constraints to digital trade finance. Four years on, and after a global pandemic that transformed the concept of digitalisation from a nice-to-have to a business continuity issue, GTR speaks to Michael Vrontamitis, co-chair of the working group, to learn about the progress made so far, and the roadmap ahead.


GTR: What is the focus of the working group, and what challenges have you faced?

Vrontamitis: There is a lot of noise in the trade digitalisation space, and it has taken time to identify what we are actually solving for and what needs to change. We got some quick wins off the bat, such as the electronic supplements to the existing Uniform Rules for Collections (eURC) and Uniform Customs and Practice for Documentary Credits (eUCP), but then it took nine or 12 months just to figure out the digital trade roadmap, which we published in 2019.

The past two years is when things really started moving, due in part to the impact of Covid-19, which really accelerated the digitalisation conversation.

We have kept the focus on two key areas: ICC digital rules and practices, and accelerating digital adoption. What we are seeing is the execution of the roadmap and also the next stage of looking at what else needs to be done. There is now really good momentum.


GTR: What is happening within the digital rules and practices area?

Vrontamitis: Within ICC digital rules and practices, we are moving from rule writing to rule execution, which is the big shift.

The latest workstream is around the Uniform Rules for Digital Trade Transactions (URDTT), which is led by Dave Meynell, senior technical advisor at the ICC Banking Commission. This has been through five drafts, and there have been lots of comments and feedback. We are now getting towards the finalisation of it, and the sixth draft is currently with national committees to be voted on.

The key area that we have added to this group is a commercialisation workstream, because while it is great to have eUCP, eURC and URDTT, the question remains on how we promote and drive adoption of these rules. To tackle this, Sam Mathew from Standard Chartered and Merlin Dowse from JP Morgan have pulled together a group of industry players from different regions to understand how this is going to be practically implemented in banks and corporates. We are expecting that group to come up with a few ideas in terms of how to execute and they are having some pretty robust conversations.

Another workstream we have is the automation of document examination under documentary credits, which is being led by Uzair Bawany from Traydstream and Merisa Lee Gimpel from Lloyds Bank. This is really about last-mile digitalisation, with corporates and financial institutions using artificial intelligence in their back office, for example. This group has mapped out the levels of automation in a bank back office from not automated to highly automated and shown what the journey looks like, providing guidance and information on how this will work.


GTR: What progress is being made on the second area, accelerating digital adoption?

Vrontamitis: There are several subgroups in this space. The first is the roadmap and communication stream, which is led by Chris Southworth at ICC UK and Alisa DiCaprio at R3. They are developing guidance for digital advocacy. The original roadmap in 2019 laid out what needed to change, and it has subsequently been adopted by the ICC more broadly. Our efforts, among others, have led to the G7 digital ministers adopting trade digitalisation as a priority and one of the cornerstones of the roadmap – the adoption of the UNCITRAL Model Law for Transferable Electronic Records (MLETR) has got excellent traction. What’s really positive about this is that it started as part of our group, but it’s now at the top of the house within the ICC and beyond.

As an adjunct to that, the legal adoption stream, which is being led by Sean Edwards at the International Trade and Forfaiting Association (ITFA), has developed a legal resource library that brings together all the things you need to know about if you are going to implement digital trade, and this provides developing countries a one-stop shop for all the resources that are required for this.

Another exciting area is the fintech adoption group, which brings together expertise from both fintechs and banks. One of the key challenges is that a lot of fintechs come into the marketplace with a great idea, but when they approach the banks to be onboarded things fall down. In this stream, we are creating a guidance paper that basically explains what fintechs need to know in order to work with banks. This covers areas such as the security standards and the legal frameworks you need as a fintech and how a bank can accelerate that adoption process.

The final stream is focused on developing a catalogue of trade finance APIs to be leveraged in the industry and was set up by Ali Ansari when he was at HSBC and Valeria Sica from Citi. This solves for the current issue we have where every bank and every technology company is developing their own API store, and there’s no competitive advantage there. Mulesoft and Swift have shared their views on best practices, and this group is trying to get into the principles of standardisation and develop APIs for guarantees and standby letters of credit and export LCs with national committees and the members. The next step will be to publish these, get feedback from other members in the value chain, and then endorse once there is positive feedback.

We are open to new ideas. For example, Parm Sangha from IBM and Michelle Chivunga from the Global Policy House are exploring new ideas such as the need for a neutral entity to facilitate execution.


GTR: Last year, the ICC launched the Digital Standards Initiative (DSI). How does the working group co-ordinate with other groups? Is there overlap?

Vrontamitis: When we constructed the ICC digital trade roadmap, we highlighted the need for the production and implementation of digitally enabled trade standards across multiple industry sectors, the need for governments across the world to adopt the UNCITRAL MLETR, and the need to deliver a mechanism to simplify access to this information to a diverse group of stakeholders.

The DSI enables us to expand beyond the banking commission’s borders into other industries that are required to help digitise supply and trade-related processes.

It also enables us to engage with entities outside of the traditional standards landscape. In addition to engagements with this broad group of stakeholders on standards production, it’s also about moving towards execution and ensuring these standards are being leveraged.

We work closely with the DSI on these topics to ensure synergy between the large portfolio of work at the commission, while also engaging with other groups such as the Bankers Association for Finance and Trade (Baft) and ITFA to ensure alignment on key global initiatives. Our working group includes representatives of those organisations, which ensures we are all working towards a common goal in our members’ interests in various jurisdictions around the globe.


GTR: What is the thinking behind having so many areas of work, and why does this matter?

Vrontamitis: There are a lot of people in the engine room offering their time pro-bono alongside their day jobs, and it’s all connected. A lot of the people that come through the working group in one shape or form are actually executing in other places. This is a movement: it’s not about one person or one working group; it’s about a collective realising that trade finance digitalisation makes sense not only for their own business but also for the economy. The reality is that it will ultimately help reduce friction, and reducing friction increases productivity, and increasing productivity leads to GDP growth and jobs. That is really what it’s about.

The biggest challenge is making people realise that they are not going to lose. Currently, a number of companies make money out of paper processes, so we need to communicate to them that they are not going to lose when it becomes paperless. Banks are desperate to digitise because it reduces costs, and the same goes for corporates. The Covid crisis made it about more than just costs; it made digitalisation into a business continuity issue.