The success of digitization is standardization

The success of digitization is standardization

Introduction

One of the main reasons why digitization has not been successful in many industries is that the process is not standardized. The lack of standardization causes inconsistency, which leads to poor quality. A standardized approach to digitization can help you overcome these challenges and improve overall efficiency.

All value chain areas must support digitalizing trade finance to spur broad participation. However, there are currently specific roadblocks that need to be taken up on priority and addressed. The International Chamber of Commerce (ICC) offers multiple sets of guidelines to assist businesses in establishing internationally, but they are insufficient.

By harnessing the digitization of trade and introducing standardized digital processes By harnessing the digitization of trade and introducing standardized digital processes and data structures, the banking industry has been able to address the issue of KYC (know your customer) for trade transactions.

It is important to note that achieving this requires strong agreement on what constitutes a standardized product or service. A company is free to choose its business model, but it needs to be clear about what type of services it will deliver and how these will be provided for customers who use those services to have confidence.

The quantity of trade documents significantly burdens small businesses seeking to trade internationally. Due to their sheer amount, the digitization of trade documents could lead to 35% efficiency savings for small businesses and a 13% boost in international business revenue. Despite these advantages, not all trade-related areas have adopted electronic transactions and documents into their practices. Despite more than two decades of digitalization efforts, e-bills of lading are extremely rare in maritime shipping (only 100 are issued annually). In aviation, however, digital processes have become the norm and paper the exception. Air cargo shipments no longer require an Air Waybill because IATA Resolution 672 removed the requirement.

The goal is to create a framework within which all market participants can collaborate effectively.

Standardization aims to create a framework within which all market participants can collaborate effectively.

Standardization is essential for interoperability. Standards ensure that the information shared between systems is consistent, accurate, and complete. The benefit of this approach is that it allows data from multiple sources (such as banks, markets, and regulators) to be integrated into one view across different financial institutions. Standardized processes will enable new products or services to be offered more quickly by improving the speed with which they can be delivered.

Standardization is also crucial for reducing costs. By simplifying processes and creating a consistent environment, there are fewer opportunities for mistakes and fewer human errors. This will reduce the time spent on manual tasks such as reconciliation and make it easier for organizations to scale their operations up or down depending on demand.

For example, a company that sells products online must fulfill its obligation under EU Regulation 573/2016 (the "CRR") to provide customers with information about their rights when buying goods or services online from another Member State company operating from within another Member State territory). This requirement is met by providing either a link to an electronic copy of these documents under Article 2(4) CRR;

?The financial industry's working group on eUCP and eURC has now produced a set of recommendations on how to use existing digital frameworks (eUCP, eURC, and URDTT), as well as on how to bridge potentially divergent approaches within the market.

The financial industry's working group on eUCP and eURC has now produced a set of recommendations on how to use existing digital frameworks (eUCP, eURC, and URDTT), as well as on how to bridge potentially divergent approaches within the market. The recommendations aim to create a framework within which all market participants can collaborate effectively to realize the benefits of digitization in securities processing.

A virtual construct harmonizes existing finance standards (data models and APIs) to facilitate interoperability. This layer would create uniform playbooks for global trade participants by harmonizing disparate existing finance standards and by establishing new measures to address finance regulation gaps. By increasing data consistency, standardized automation playbooks have succeeded in many other fields, including payments and ISO 2022 messaging.

The final report outlines recommendations for future interoperability and standardization in the market.

The final report outlines recommendations for future interoperability and standardization in the market. The first recommendation is to create a data-sharing platform that allows banks to share critical information. This would involve sharing a range of data, including:

  • Customer identity information (name, address, etc.)
  • payment information (account details)
  • transaction history

The second recommendation is to create rules and standards for sharing this data. This would help ensure that banks comply with privacy laws while allowing them to share information securely.

The third recommendation is to create a 'single window' for banks. This would allow them to access the data of other banks while also ensuring that they comply with privacy laws.

Digital trade is based on cooperation across the industry

The digitalization of trade is based on cooperation across the industry. This can only be achieved if all participants - banks, logistics providers, and suppliers - work together.

The financial services sector will play a key role in supporting companies with digitization initiatives by offering solutions. However, financial institutions must know that their customers' requirements are rapidly changing. They need to develop new products and services that keep up with changes in customer needs. Otherwise, banks risk losing market share to other institutions/Fintech that offer more attractive options for small businesses.

Conclusion

The financial industry's working group on eUCP and eURC has now produced a set of recommendations on how to use existing digital frameworks (eUCP, eURC, and URDTT), as well as on how to bridge potentially divergent approaches within the market. The final report outlines recommendations for future interoperability and standardization in the market.

The beauty of the rules is that they are technology-agnostic and reach out to a wide variety of participants, including banks, corporations, buyers, sellers, and non-financial institutions.

要查看或添加评论,请登录

Suresh Krishnan的更多文章

  • Limitless banking

    Limitless banking

    1. Defining Limitless Banking Limitless Banking represents a financial services ecosystem that transcends traditional…

    1 条评论
  • Implementing URDTT - Sellers' View

    Implementing URDTT - Sellers' View

    Implementing URDTT (Uniform Rules for Digital Trade Transactions) from a seller's perspective focuses on ensuring…

  • Implementing URDTT - Buyer side view

    Implementing URDTT - Buyer side view

    In implementing URDTT (Uniform Rules for Digital Trade Transactions), validation and approach are essential to ensure…

  • URDTT - FSP

    URDTT - FSP

    For banks and FSPs, managing and automating trade processing under the Uniform Rules for Digital Trade Transactions…

    1 条评论
  • What if URDTT and CBDC work together?

    What if URDTT and CBDC work together?

    Combining Universal Rapid Digital Trade Technologies (URDTT) and Central Bank Digital Currency (CBDC) could enhance…

  • Trade finance - Digitalization - Need of the hour

    Trade finance - Digitalization - Need of the hour

    Introduction In the world of trade finance, digitization is a crucial catalyst for innovation and growth. However…

  • Payments - Pay for SMBs

    Payments - Pay for SMBs

    Introduction It's no secret that the global economy is shifting. And as a result, banks must adapt and change their…

  • Why Is Digitisation of Trade Important for SMEs?

    Why Is Digitisation of Trade Important for SMEs?

    Small and medium businesses (SMEs) are the backbone of every economy. They are also the first point of contact for…

  • Data with AI - Rule-based and ML

    Data with AI - Rule-based and ML

    Introduction Data with AI are becoming more prevalent in the world. They are being used for various applications and…

  • Why data strategy is vital for data management

    Why data strategy is vital for data management

    Introduction Data management is a critical factor in the success of any company. The amount of data stored on the…

    1 条评论

社区洞察

其他会员也浏览了