In a world of rapid technological advancement, global trade seems to be an anomaly, still deeply anchored in antiquated, paper-based processes of the past. For a cargo owner in 1450, a bill of lading – a piece of paper stating the goods, their origin and their destination – was the essential tool for trading across the world. Astonishingly, this same document is still applied to roughly 40% of today’s containerized trade transactions, according to a McKinsey report in 2022.
Over the years, the quest to modernize trade finance has been persistent. Two decades ago, Asia-Pacific Economic Cooperation leaders envisioned a future when member countries would achieve domestic paperless trading by 2010 and extend this paperless approach across the region by 2020.
However, today’s reality is strikingly different. Approximately 30% of time is still spent processing documents in the global trade system, according to the Bankers Association for Finance and Trade. As a result, $150 billion is lost annually to the manual activities of trade finance operations.
Can trade finance ever be digitalized?
The future
Trade is an extremely complex ecosystem, involving not just importers and exporters but a wide array of actors across physical and financial supply chains, spanning multiple countries and industries.
