Standard Bank urges regulators to ease digital trade

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Vinod Madhavan, head of trade for Standard Bank Group.
Vinod Madhavan, head of trade for Standard Bank Group.

Standard Bank, Africa’s largest bank by assets, is engaging with several regulators in countries in which it operates to amend regulations and ease digital trade during the COVID-19 pandemic.

So says Vinod Madhavan, head of trade for Standard Bank Group, who notes the COVID-19 outbreak is set to significantly impact trade growth for the year as countries limit physical movement to curb the virus spread.

“While the health crisis undoubtedly has vast negative implications for global trade processes, it is one that could be turned into an opportunity, as it provides the political and social impetus to accelerate trade digitisation on a larger scale,” Madhavan says.

Headquartered in Johannesburg, Standard Bank operates in 20 African countries and five global financial centres.

The Word Economic Forum (WEF) says the fourth industrial revolution – associated with rapid technological change and digitalisation – has already had a profound impact on the way we trade.

It notes that data flows and digital services delivery, particularly across borders, are also playing a critical role in response to the COVID-19 pandemic response.

WEF believes emerging technologies such as blockchain, artificial intelligence (AI), or the Internet of things could further alter the trade landscape in years to come.

However, it notes, barriers to digital trade exist and in some cases are growing, whether due to outdated rules, new forms of protectionism, or as domestic policymakers seek to address novel governance questions without international collaboration.

Madhavan notes trade services have traditionally centred around physically-intensive processes involving the likes of paperwork, signatures and frequent manual data entries.

“In fact, it has been estimated that up to 15% of the cost of shipment is paperwork in global trade. In the current environment of COVID-19-related lockdowns, many of these processes that work to facilitate cross-border and international trade have been impacted and may temporarily have been rendered obsolete to a certain degree,” he says.

Madhavan points out that existing technological solutions are available for logistics and trade. He explains that rapidly implementing them out of necessity from the current environment will be an excellent step in the right direction for trade digitisation.

This, however, requires a collaborative approach between governments and industries to remove barriers by amending and aligning regulatory frameworks, he says.

According to Madhavan, in many of the 20 countries in which Standard Bank operates, there are stringent and specific requirements around the roll-out of digital solutions.

“Some of the countries have taken market-appropriate approaches towards moving to digitising trade. In certain places on the continent, if one wants to issue a guarantee, for example, the standard is to issue on a physical piece of paper.

“While the core nature of trade is unlikely to fundamentally change in the near- to medium-term future – financial institutions are on a journey to streamline these processes, very often through leveraging the ABCD (AI, blockchain, cloud computing and data analytics) of disruptive technologies,” he says.

From the point of view of adoption of robotics/intelligent automation and AI in trade business processing, Standard Bank has had success in SA and Uganda, Madhavan says, adding Ghana is not far behind in adoption.

“Purely by leveraging this technology, one could materially quicken the issuance of a local guarantee, reducing the time taken to issue a guarantee, for example, by 80%.

“Standard Bank is currently in conversations with multiple regulators, exploring how we could go about amending regulations, even though it may be a temporary dispensation for the duration of COVID-19, to facilitate digital trade.”

Madhavan notes these engagements are happening in multiple markets across the bank’s network.

“With the challenges brought about by the virus outbreak, there is now an exciting dialogue in markets that will help to influence some of the necessary changes.

“It is hoped that by leveraging basics such as digitised signatures and documents and technological innovations such as data analytics, AI and automation to change and improve the way local and international trade is done today, we can reduce friction in the trade process, boost activity and through doing so, help to reduce the impact from reduced global trade, brought about by the global health pandemic.”

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