UK exports and growth

Digitisation aiming to break the cycle of inefficiency.

Building on Barclays’ partnership agreement with the Department for Business and Trade, a new trade digitisation task force, co-chaired by Barclays and ICC United Kingdom, was established this year to promote the digitisation of trade. The UK’s minister for exports, Malcolm Offord, officially launched the group at the House of Lords in mid-July.

James Binns outlines the objectives of the task force, the broader implications of the recent establishment of a legal framework for electronic trade documents in the UK, and the importance of collaboration and standardisation to maximise the benefits of digitisation.

James Binns

Global Head of Trade & Working Capital, Barclays

Task force targets

A major impetus for this initiative is the Electronic Trade Documents Act (ETDA), which became law in July and took effect in the UK in late September. The Act presents a significant opportunity, and the time is right to bring together stakeholders to harness its benefits. In doing so, we’re able to consider other elements of trade associated with being able to digitise trade documents and address the obstacles that are holding the industry back from being able to provide finance more deeply into supply chains.

We assembled this task force with a view to making recommendations to the UK government on specific areas where we think it can help make trade easier, more efficient and more cost-effective, and therefore not only help UK exports but also drive benefits globally to trade.

The ultimate goal of this initiative is to increase access to trade finance, which plays a really vital role in driving trade and economic prosperity and the desired growth at the SME level.

Supporting growth, exports and access to trade finance

According to a recent survey of around 1,000 businesses by ICC United Kingdom¹.

35% of respondents cite paper and bureaucracy as major trade barriers.

45% of companies expressed interest in digitising documents.

65% businesses will go digital upon legal changes.

These kinds of findings underscore the burdens on trade imposed by outdated processes, which have remained unchanged for centuries.

The beauty of trade, whether in documentary or open account form, is that everything we do is connected to the underlying exchange of goods and services. This linkage significantly mitigates risks, spanning credit, fraud and ESG considerations.

However, the challenge arises from trade’s paper-intensive nature, rendering it costly for banks to provide trade finance to small companies.

Digitising trade processes and solutions, including open account options, can break this cycle. It will enable banks to offer more SME funding, alleviating risk and cost barriers. This transformation holds the potential to truly revolutionise the trade landscape.

James Binns

Global Head of Trade & Working Capital at Barclays

Transitioning to digital trade

Companies can take a number of practical steps, as they prepare to leverage the opportunities provided by switching to digital trade:

Engage with counterparties

This includes banks like Barclays, trade bodies – such as the International Chamber of Commerce – plus the Department for Business and Trade. There’s a robust support network available for UK businesses.

Tap into various resources

Understand the changing requirements and facilitate dialogue. Communication and leveraging available expertise are crucial for navigating topics like trade digitisation.

Time to go digital

Regardless of a company’s starting point, the time to take advantage of digitisation is now and the easiest way is to begin by eliminating paper.

Create a digital identity

Exchanging electronic trade documentation is efficient, but if companies don’t have digital identities, or there isn’t a broader, more applicable digital identity standard, they’re simply not going to realise the same level of benefit.

The emergence of new tools and innovations

Updating core technologies for better connectivity is a priority, and Barclays is actively working on this in our trade business. It’s probably another 12 months before we’ve completed that process, but already, this year, it will make a huge difference in terms of being able to connect to different systems and platforms, which will then enable us to exchange that electronic documentation.

A big part of that is a much greater level of standardisation around API calls. It’s all very well having legal interoperability, but you can’t exchange electronic documentation unless you have technical interoperability as well.

Being able to standardise API calls globally is a way of solving that. As a banking industry, we can then start offering our clients solutions for traditional services like documentary trade, for example, which will no longer involve physical documents. It’ll enable us to reduce the costs and the processing times around those instruments and therefore time to money for our clients and their supply chains.

I believe our clients are already experiencing – and will continue to experience – a higher level of digital interaction with Barclays. Hopefully, they are seeing the same trend across other banks as well.

James Binns wishes to thank additional contributor:

Chris Southworth, Secretary General at ICC United Kingdom

¹https://iccwbo.org/news-publications/policies-reports/icc-2023-trade-report-a-fragmenting-world/^

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