Swift is supporting the industry-wide digitisation journey with a number of initiatives to enhance API standardisation, scale the use of digital trade documents, and ultimately enable the interoperability of trade transactions globally.
While the need to digitise trade is well understood across the industry, the complexity of trade processes means that achieving this vision is less than straightforward. Trade transactions involve numerous participants in the physical and financial supply chain, who have different priorities and are digitising at different speeds.
At the same time, the proliferation of digital platforms, standards and proprietary APIs means there is a significant risk of fragmentation. Other obstacles include the lack of recognition of electronic trade documents in some major trading nations. As such, trade digitisation will require not just technology, but also legal harmonisation, the adoption of common standards, and collaboration across the industry.
Yet, despite these challenges, the benefits of digitisation are clear. Digitising trade will not only deliver efficiencies, reduce costs and boost global trade, it will also provide the rich and structured data needed for ever more critical activities such as ESG, compliance and risk management.
Supporting trade digitisation
Trade is a key focus area for us, accounting for over 50% of cross-border customer payments made over the Swift network. As such, supporting the broader trade digitisation journey is integral to our vision of delivering instant and frictionless transactions and an interoperable future state.
We are currently working on two notable projects to support trade digitisation and reduce fragmentation in the industry: Standardisation of the Corporate to Bank (C2B) communication through the development of Trade APIs, and the electronic presentation of trade documents, including electronic bills of lading.
Introducing the Corporate-to-Bank Guarantee API
A few years ago, we asked our community which specific pain points presented the greatest opportunity to digitise trade and improve operational efficiency. We found there was a particular appetite for streamlining the processes involved in the trade guarantee lifecycle.
Guarantees are used around the world to provide certainty of payment in the event of a breach of contract. Applying for a guarantee can be a time-consuming process, with densely written documents typically exchanged via paper or email. Swift already provides a solution that helps corporates manage guarantee interactions using MT 798 messages, effectively by putting semi-structured messages into an envelope. But the community can benefit from further innovations.
To meet this need, we have collaborated with the International Chamber of Commerce (ICC) to develop a new Corporate to Bank Guarantee API. The resulting open API solution streamlines the corporate-to-bank processes involved in both guarantees and standby letters of credit, has a light footprint, and provides ISO 20022-ready structured data.
Banks, corporates and platforms are currently taking part in a pilot to validate the effectiveness of this solution. Seven banks are already in the process of implementing C2B Guarantee APIs, and two further trade platforms – Komgo and Surecomp – are using the APIs to allow corporates to better interoperate with banks via their platforms.
“The new Swift/ICC APIs enable the industry to leverage ISO standards in the trade space for the first time – delivering richer, structured data right at source for better tracking and reconciliation. When deployed on Swift, all parties involved in trade transactions can use the APIs to benefit from the standardised identity management, security and resilience that we can offer,” says Avanee Gokhale, Global Head of Trade Strategy at Swift.
Digitising trade documents
Another area of focus is digitising the bill of lading – a physical document issued by a carrier to a shipper that serves as a receipt, a contract of carriage, and a document of title. While the trade industry has already developed a digital version of this document – the electronic bill of lading (eBL) – its adoption has been limited to date.
One of the key factors behind the currently limited take-up of eBL is the lack of technical interoperability between platforms that host these documents, and the numerous participants involved in any given trade transaction. And this is something Swift can help with.
To this end, in 2023 we successfully tested an interoperability model that uses APIs to speed up the exchange of eBL between different trade platforms in collaboration with our FIT Alliance partners and eBL platform providers. Our interoperability model isn’t limited to bills of lading – other trade documents, such as invoices, certificates of origin and packing lists, can likewise be packaged into a PDF or digital form.
That’s why we’re now building on the success of our initial collaborative innovation trials last year.
We recently worked with the trade platform, WaveBL, on a proof of value project to demonstrate how Swift can support the end-to-end electronic exchange of eBLs and other related shipping documents in the near term, using our digital file transfer service, FileAct. The tests proved successful, enabling the end-to-end transfer of these documents that are maintained and managed by approved IGP&I club platforms, such as WaveBL.
Building on this initiative, we are now working with a number of banks and trade platforms to validate the feasibility of exchanging a full set of trade documents in PDF form using FileAct and FIN messages, with the platforms joining Swift. As banks already use FileAct and FIN on a daily basis, the solution is easy to implement, with little impact on end users.
As we progress, our goal is to enable banks, corporates and our broader community to leverage their existing Swift infrastructure without incurring significant development costs. We believe this will significantly lower the barriers to entry for players to use digital trade documents and will support the broader trade digitisation agenda.
“We see this as a stepping stone on the path to true digitisation,” notes Miguel Suarez, Trade and Consumer Payments Innovation Lead at Swift. “It may not be the end goal, but it gives us an opportunity to get people started on the digital journey relatively quickly. We can then move onto different forms of digitisation over time.”
Moving digitisation forward, today
Trade activities are highly interconnected, and there are opportunities to digitise every aspect of these activities, in alignment with technology development, legal reform, and the acceptance of standards. We believe this work represents an important step forward in supporting the global trade industry as it moves towards a digital future.
"In a world in which the cost of economic fragmentation can cost us up to 7% of the GDP according to the IMF, interoperability is not an option but a requirement,” concludes Gokhale. “Success will be driven by incremental adoption of solutions, standards and legal harmonisation. We all need to collaborate and be on this journey together to set us up for a secure, frictionless and digital future.”
As we continue to deliver on our vision of transforming global trade, we remain committed to championing innovation and fostering collaboration by driving efficiency, transparency, and accessibility for everyone.
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