“The digital journey is about evolution not revolution,” commented NatWest’s Lisa-Ardley Price at this year’s GTR UK conference in London, which again provided an opportunity to connect key players and companies across the UK’s trade, export, supply chain and fintech community.

There were over 60 expert speakers from trade and financial industry who delivered and shared their companies’ experiences on building resilience into supply chains, the evolving role of export credit, fraud prevention, and many other topics.

NatWest’s Lisa-Ardley Price, Managing Legal Counsel of Transaction Banking, and Duncan Ruffle, Trade Director in our Working Capital Sales team, participated in two sessions about “Could DNIs revitalise the trade finance product suite?” and “SMEs, NBFIs and unlocking potential: A shift in the role of export credit”.

These were the key messages from our speakers during their panel discussions:

“Could Digital Negotiable Instruments (DNIs) revitalise the trade finance product suite?”

The adoption of the UK’s Trade Documents Act has meant that digital versions of trade documents now have the same enforceability as their paper-based counterparts. Moderated by Wayne Mills, Corporate Finance Advisor to Corporate Digitalisation Taskforce, ICC United Kingdom, the panellists - Founder & Managing Director, Atom Advisory; Dominic Broom, Senior Vice-President, Working Capital Technology, Arqit; Lisa Ardley-Price, Managing Legal Counsel, Transaction Banking, NatWest Group; Joel Schrevens, Global Solutions Director, China Systems; and Ted Scheiman, Chief Strategy Officer, Mitigram – discussed to what extent the Trade Documents Act could open the door for virtual versions of negotiable instruments, such as bills of exchange and promissory notes, which had previously seen their popularity erode, could stage a return:

• Despite the excitement of the highly anticipated Electronic Trade Documents Act enacted last year, adoption of digital trade instruments has been slow, however, this isn’t wholly unexpected: so far, the short legislation leaves a lot of unanswered questions around how to evidence possession and control and what constitutes a “reliable system”. As such, banks and corporates have been slow to adopt or experiment with digital trade instruments.
• The UK is one of the early adopter jurisdictions (alongside the US, Germany, Singapore, France, and some others) when it comes to recognition of digital trade documents, and many jurisdictions are yet to update their own legislation which can lead to conflict of laws and issues with recognition of electronic versions in international transactions. This is currently the subject of a Law Commission consultation on how private international law is applied to electronic trade documents.
• Trade and Supply Chain Finance transactions can often be bespoke, highly depending on the needs of the customer requiring tailored solutions to meet their commercial goals. Hence a standardised approach is unlikely to be an effective solution to early adoption.
• It is not the responsibility of one part of the industry to lead the way, but stakeholders across the industry (tech providers, corporates, banks and regulators) need to clearly communicate their needs to one another and collaborate on developing solutions that work for all.
• It is imperative to keep our customers safe while transitioning to digital. On the plus side: Digital instruments can help mitigate fraud and financial crime risks in Trade due to enhanced security measures.
• Complexity and fragmentation can be combatted by starting small and gradually building up.   E-invoices, for example, could be a good starting point for digital documents.
• This digital journey is about evolution not revolution. Most importantly, the journey needs to   bring people along by changing mindsets and building trust in systems and between stakeholders.

There has been a notable shift in the role of export credit and the products available, with export credit agency remits shifting to greater focus on the working capital needs of smaller companies – one example being the UK Export Finance’s General Export Facility (GEF), designed to provide access to flexible finance for exporting small-and-medium-sized enterprises (SMEs).

Moderated by Geoffrey de Mowbray, Chief Executive Officer, Dints International and Vice-President of the British Exporters Association (BExA); the panel – Duncan Ruffle, Trade Director, Working Capital Sales, NatWest; Philip Reynolds, Managing Director, Newable Lending; and Andrew Woofson, Vice-President, Europe & Africa, AirFinance – examined this trend and how the future of export credit could look like:

• There is a definite need for banks to work with NBFIs to provide self-liquidating facilities for SME customers.
• Banks ought to consider handing off SME customers to alternative lenders who can provide specialist support to access UKEF.
• Banks need to look at other facilitators to ensure higher uptake of UKEF-backed facilities.
• Exporters need better education around what a bank-backed deal would look like, and they also need better access to straightforward funding.
• UKEF schemes ought to have more flexibility in their provision.
• Finally, exporters need to consider that the path of least resistance may not be the right path. Instead, a better worked facility may be a better option.

Want to know more about Trade Finance?

To find out how we could support you, speak to your Relationship Manager.