When COVID-19 hit, economies all over the world needed to adapt to the ever-changing new normal. While most progressive countries such as Singapore take the lead in technology and its advancements, trade digitization continues to face challenges in its adoption rate. The key challenges, especially for those in international trade are trust, transparency, and automation. As we ride out the challenges brought about by the pandemic, we find out how trade digitization champions and mitigates risks in a digitally-dependent new normal.
What is trade digitization and why is it important?
Trade processes require the physical movement, recording, and storage of documents, which increases lead time. Trade digitization replaces these time-consuming activities with electronic versions, streamlining the workflow to reduce time and opportunity costs. The simplification of these processes also translate into better accuracy and more efficient data exchange.
Trade digitization also plays a critical role in mitigating risks involved in the traditional lending process. Banks and financial institutions have risk and compliance departments to identify risks in transactions and implement policies to mitigate threats. Examples include credit, foreign exchange and even ethical risks. However, these client data sets are often not updated in real time, resulting in an information gap when making crucial financial decisions. Trade digitization, alongside the use of blockchain technology overcomes these issues by providing transparent and up-to-date information of all stakeholders within the system, making trade financing a seamless process.
Blockchain technology plays a critical role in reducing the constraints of the traditional lending process, particularly in the verification of identities. Distributed ledger technology (dlt) is a key advancement in trade digitization in terms of optimizing data exchange — primarily because of the security it may give, but also because it enables end-to-end visibility in the supply chain. This enables a more collaborative working method between companies and financial institutions.
#dltledgers has developed #dltledgers 2.0, a platform that streamlines communication between supply chain parties by automatically collecting data from multiple tiers of the supplier network and validating it by using blockchain technology. The tamper-proof blockchain network encourages collaboration between partners who can view and edit their actions, as well as to authenticate data. This allows for real-time tracking of events across the entire supply chain network, making it easier to secure financing.
Conclusion: Championing in a new normal
#dltledgers helps improve operational efficiency in trade digitization through close collaboration with banks and financial institutions to offer better solutions for their customers. Some of the services we support include Digital Trade Finance, Accounts Receivable Purchase (ARP), Interbank LC processing, Accounts Payable Financing (APF), and Trust Receipt Financing.
Discover the world’s largest digitalization platform and champion in the new normal with #dltledgers. Contact us today!
