Why trade innovation risks being stranded on digital islands
It is a truth universally acknowledged that Covid-19 has been the biggest catalyst for digitalisation that global trade has ever seen. The surge of innovation that has come about as a result means that there are now digital solutions to almost every conceivable problem within global trade and supply chains. However, the hallowed end state of “critical mass”, whereby all participants along the chain are connected to each other and can enjoy paperless end-to-end processes, remains as far away as it has ever been – if not further.
“The pandemic has achieved more for digitisation in the last 12 or 18 months than we collectively as an industry have achieved in the last few years,” Sam Mathew, global head of documentary trade at Standard Chartered, tells GTR. “But that net effect of the flight to digital has created a lot more digital islands, with limited focus on how to navigate between them.”
The reasons for the proliferation of digital islands as opposed to a single, global system are complex and manifold, but can be boiled down neatly to two main issues: legislation and standardisation.
On the legislation front, it remains the case that many digital trade tools are not legally valid in most jurisdictions, which hampers the scalability of many solutions.