Trade and trade finance were already going through a digital transformation prior to the COVID-19 crisis, but this trend accelerated as digitisation of trade flows became essential to the continuity of the business. The crisis could be a catalyst to reshape the industry more quickly and profoundly than could ever have been anticipated, with implications for entire trading ecosystems.
Initial crisis response
As the crisis struck, corporations - but also banks, supply chain partners and governments focused on digitisation of key activities across the trade cycle, such as digital signatures. Secondly, they sought to shore up their supply chains whilst also optimizing their working capital, often by setting up or expanding supply chain finance and receivables financing programmes.
Adapting to the new normal
As homeworking and remote access has become the new ‘business as usual’, the nature of client discussions has shifted, from efficiency and data analytics to business continuity and resilience. Having addressed their initial digital needs, clients are now reflecting on the experience, exploring connectivity with their trading partners, and preparing for a new normal with digitisation at its core.
87 percent of clients surveyed believed that the pace of digitisation in trade and trade finance will accelerate as a result of the crisis.
As companies refine their digital plans, we therefore expect to see a strong and prolonged second wave of digital adoption.
However, digital transformation is unlikely to take a single pathway, with point-to-point connectivity (e.g. banking platforms), third party platforms and consortia that bring together multiple investors all part of the mix. With multiple platforms emerging, interoperability will be critical. Furthermore, potentially conflicting investment priorities, variable levels of digitisation across supply chains, and the pace and degree of government digitisation efforts all need to be addressed.
The next 90 days
Once the speed and direction of recovery from the pandemic becomes clearer, we expect to see digitisation initiatives rebound. Once companies have achieved ‘quick wins’, such as digital supply chain and billing of lading documentation solutions, they are likely to embark on longer term thinking on how their supply chains might change, how best to diversify and increase resilience, and what new business models they should engage.
