Société Générale and Lloyds have completed a fully digital trade transaction between the UK and France, using Enigio’s technology, in what the French lender describes as a first-of-its-kind deal.
The transaction involved a purchase of machinery and equipment by importer BOBST Lyon-France from UK manufacturer Board24, supported by a Lloyds-issued letter of credit (LC) that was confirmed by Société Générale.
The LC was issued under electronic provisions in the Uniform Customs and Practice for Documentary Credits, known as eUCP, while Enigio’s trace:original technology enabled the issuance and transfer of all digital documents.
Société Générale said the transaction “is the first, real-world trade finance operation to rely entirely on digital documentation throughout the process completed in France” and represents “a new milestone” in digitalisation.
Christian Cazenove, the bank’s group head of trade oversight, told GTR that a standard paper-based LC transaction between France and the UK “would have taken 10 days, minimum”.
“Here, we confirmed the transaction to the beneficiary within a minute, and documents have been exchanged close to instantaneously,” he said. “If you look at the whole ecosystem, this is not only an advantage for banks’ processing times and costs, but the advantages for clients are huge.”
For Alex Waites, chief sales officer at Enigio, the transaction demonstrates the potential for using eUCP to support digital trade.
“Across the board, eUCP is massively underutilised,” he told GTR. “eUCP provides a framework for electronic presentation under a letter of credit: the default is paper, but you can add a line or two that say parties can present it digitally instead. It’s only a simple update to the LC that’s needed.
“I’d love to say it’s groundbreaking on a technical level, but it’s really simple.”
Jon Boran, head of future trade product at Lloyds Bank, said the combination of digital presentation with the eUCP is “particularly noteworthy”, showing “how legally transferable trade documents and established trade finance rules can work together in a fully digital environment”.
Participants in the transaction said its successful completion has attracted further interest from other lenders and corporates.
“We are already having interesting discussions with large French clients,” said Cazenove.
“The next challenge is to convince other companies, mainly small and medium-sized companies, that it works, and trade finance is accessible to them. Today, many of those companies consider trade finance as an archaic and complex world, so they trade on open account. Our purpose is to secure their flows with these updated capabilities.”
Enigio’s Waites added: “We are seeing a growing appetite to digitalise these types of flows, and we’ve had interest in this transaction from several banks already, in different parts of the world.”
Although this transaction involved a shipment by road rather than sea, so no electronic bill of lading was required, GTR understands that other transactions based on similar frameworks are also being undertaken for seaborne exports.
