The sudden outbreak of coronavirus has made the world more digital. The requirement of social distancing, historical lockdowns, and remote work conditions have quickened international trade digitalization. For example, until now, the global traders have to go through the complex, time-consuming, and boring paper-based procedure, as well as there were discrepancies of professional standards, government protocols, and guidance manuals. As for now when the world is facing vulnerability, economical disruptions, and instability, the survival of global trade finance depends on its capability to become digital. The process of restructuring trade finance in the post-COVID-19 will require an extreme amount of investment in suitable technologies. These digital solutions are enhancing the supply chain and bringing interactivity within the trade ecosystems.

1. Quickening Digital Trade Legislation

At the time when the global health emergency was on its heights, the International Chamber of Commerce (ICC) recommended the government to take the necessary steps for sanctioning the use of electronic trade documentation. Now exporters across the world are waiting for the new suitable policies in this regard. The United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) is also supporting paperless transactions by setting up universal data reference models. The necessary step of electronic trade documentation is surely to bring effective improvements in the global economy while continuing the use of physical trade finance documents would significantly disrupt the market recovery. These are some of the digital capabilities that can help improved trade processes:

1. E-signatures and digital bills
2. Easier manageable e-documents and electronic payment systems for taxes, duties, and fees.
3. Paperless trade transaction documents.

2. Decreasing Use Of Physical Documents

One of the biggest yet common issues that have been solved by the digitalization of trade finance is the elimination of complex paperwork. For example, Digital Economy Agreements (DEAs) in Singapore are helping small and medium enterprises through access to digital trade opportunities. Digitalization of trade finance documents also brings a myriad of benefits including global data protection, e-invoicing, and digital IDs, etc. In short, it is allowing SMEs to execute global business with efficiency with improved productivity and decreased expenses. Digitalization of several types of digital trade finance instruments such as Bank Guarantee and Letters of Credit has also brought multiple benefits. For example, e-documentation ensures less-exposure to fraud and manipulation. Transparency of transactions is an added benefit especially in the case of financial documents. It is surely expected to decrease credit risks, improve cash flow, and working capital availability.

3. Boosting Digital Economy Worldwide

The COVID-19 outbreak has made millions of people across the world go more digitized. Whether it is working from home, or buying groceries online, and spending quality time with family via video, these aforesaid changes have boosted up the digital economy in many ways. Some of these changes are here to stay for longer with sustained implications for society, economy, and government globally. For example:

Digital Consumptions And Online Purchasing - Thanks to the gradual shifting of consumer’s personal habits, taste preferences, demographic and recent technology changes, there was an increased and efficient use of buying goods and services online by the younger generation in comparison to the older ones. The global pandemic has undoubtedly pathed its way through the accelerated trend.
Working From Home - Working remotely, whether full-time or part-time, has given birth to a flexible working culture and brought a more suitable and convenient working environment to people across the world. With the increased productivity and extra time due to cut-down travel time, people get the opportunity to bring creativity in their fields as well as spend more time socializing and on leisure.
Shift to Virtual Entertainment Sources - The global outbreak of the pandemic has made people shift to online entertainment sources due to the inability to go to cinemas, sporting events, and shopping malls for entertainment activities. Virtual reality allows users to experience better games without leaving home.
Mobile Banking - Cash payments were totally shattered during the global health crisis and it has given an accelerated boost to the faster adoption of bank accounts, and mobile banking. Saved costs on commuting, contract-less money transfer, more security, and faster processing are the added benefits.

4. Improved Participation of SMEs In The Global Market - SMEs are one of the most essential players in the global economy but they face a struggle in executing transactions globally due to lack of funds. Ultimately, many companies are on the edge of bankruptcy especially during quarantine when banks closed their branches to avoid physical contact with customers. The best and one & only solution is Digital Trade Finance that facilitates global trade for SMEs by improving their working capital requirements. The companies can secure additional financing within a few minutes as well as come up with a base for economic growth.

Digitalization is the future of trade finance and exporters/importers across the world are preparing themselves since they have started recognizing the benefits of adopting technology-based trade finance documents. It is expected to support the post-pandemic economical disasters and ensure the vulnerability of trade to future crises.

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