Sibos 2024: From paper to pixels – the future of international trade

Global trade appears to be stuck in the paper-based era. In a digitally led world, it is almost impossible to imagine a paper-based system where around 28.5 billion trade documents, including bills of lading and bills of exchange, are physically printed and flown around the world daily.

The move towards digitalisation in global trade is not just a trend but a necessary evolution

To retrieve traded goods, one must physically visit ports with paper documentation in hand, because electronic forms of trade documentation can’t currently be used in the same way as their paper equivalent. This creates an inefficient process with huge potential for delays, errors and fraud, as well as creating a substantial carbon footprint.

In the lead up to Sibos 2024, where global finance and fintech leaders are coming together to explore this year’s theme, connecting the future of finance, there has never been more of an impetus to enact this vital change. Simply put – without it, trade will continue to be costly, complex and time-consuming.

Trade has formed the foundation for HSBC since 1865, and we firmly believe that the future of international business banking should be digital and sustainable. A shift from paper-based to electronic documentation would drastically improve the way businesses trade globally – making the process more efficient, transparent and cost effective. Long-term benefits of switching to a digital-first approach significantly outweigh any immediate costs incurred while moving away from legacy processes.

So, how do we get there?

Efforts to digitalise trade are underway globally. For it to fully take shape, there are four building blocks that need to be addressed: common standards, a legal framework, reliable systems and ecosystem adoption.

Common standards

Firstly, a key focus remains on developing a common data standard that will allow for consistency and interoperability, connecting players and platforms in a unified way. Today, we have multiple competing standards that are confusing and create digital islands.

The International Chamber of Commerce (ICC) has developed a working group focused on developing a unified digital standard through the Digital Standards Initiative (DSI), which HSBC is closely involved with. Last month, the Digital Container Shipping Association published an inaugural report showing nearly three quarters (74%) of data attributes used in international container transportation have been standardised – enabling 92% of data flows to be standardised, should supply chain parties implement them.

Legal framework

Legislation and the recognition of electronic transferable records across jurisdictions is also essential to unlock the benefits of trade digitalisation. The United Nations’ Model Law on Electronic Transferable Records (MLETR) provides a legislative framework for jurisdictions to impose. We have already seen major economies such as the UK, US, Singapore, UAE (ADGM) and France enact digital laws, and others such as Germany and Australia are making steady progress towards adoption.

Reliable systems

Once we have the standards and legislation in place, we need reliable systems that can issue, endorse, present and manage negotiable instruments in a trustworthy manner.  Technology and platforms must be qualified as reliable systems and be prepared to adopt file and data standards.

Ecosystem adoption

Lastly, all stakeholders need to support the adoption of these new standards to ensure that we all benefit from the opportunities paperless trade will create. Governments are well-positioned to provide incentives by removing regulatory hurdles and driving digitalisation of government services.

The public-private sector should provide initiatives to encourage collaboration and innovation, change antiquated business practices and scale up the ecosystem. In the first half of this year, close to 5% of all ocean bills of lading are digital – almost double the number witnessed at the start of 2023 – and bulk shippers pledged 25% of electronic bills of lading by 2025. There is progress being made, but the need for scale is crucial.

The move towards digitalisation in global trade is not just a trend but a necessary evolution: one that promises to improve efficiency, reduce costs and contribute to sustainability efforts. Sibos 2024 presents a crucial opportunity to mobilise the relevant stakeholders, develop proactive strategies and take collective action. Through a unified approach, we can unlock the full potential of digitalised global trade.