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ICC highlights benefits of trade digitalisation - Industry roundup: 29 November

ICC highlights benefits of trade digitalisation

ICC United Kingdom and the Centre for Digital Trade and Innovation have launched a report titled ‘Seizing the moment: Unleashing the potential of trade digitalisation’. This sets out the tangible benefits of the Electronic Trade Documents Act (ETDA) and the opportunities this offers international trading companies.  

The report is aimed at key decision-makers in corporate finance and strategy teams within companies and policymakers within governments. It highlights how the change in law now enables transactions to happen in minutes, not weeks and months, allowing companies to handle finance with much more agility. Evidence shows that this can result in a 100% increase in trade flow, a 15% increase in profitability and an 18% reduction in shipping costs. 

A total of 16 case studies are included in this report, covering UK imports and exports, digital transactions across other jurisdictions, delivering a paperless trade ecosystem, and innovations in trade finance. The report also acknowledges that though trade digitalisation is growing momentum, barriers remain. The fragmented nature of trade processes within companies mirrors that across government departments and the broader trade ecosystem. To capture and scale the benefits requires stronger coordination.

The law aligns the UK to Singaporean and US trade regimes, enabling 80-90% of all international trade transactions to be handled digitally, including 60% of global trade finance. This represents a potential US$10 trillion trade growth across the G7 and Commonwealth.  

“We believe the time is now for a much-needed overhaul of the way we trade,” commented Chris Southworth, Secretary General ICC United Kingdom. “It is time to remove paper and antiquated processes once and for all and use far more effective ways of operating using technology. This report begins to set out the scale of the opportunity on offer.”


EPC payment scheme for instant international credit transfers goes live

The European Payments Council (EPC) has announced that a new payment scheme for international instant credit transfers is ready for use. The launch of the One-Leg Out Instant Credit Transfer (OCT Inst) scheme marks the EPC’s first venture outside of the geographical scope of the Single Euro Payments Area (SEPA).

The OCT Inst scheme is a cross-currency payment scheme to support the processing of incoming and outgoing international instant account-to-account-based credit transfers. It is distinct from other EPC payment schemes as it is the first EPC scheme which covers exclusively the Euro Leg of international instant credit transfers entering or leaving the geographical scope of SEPA.

The OCT Inst scheme is designed to bring the benefits of SEPA payment schemes to international payments. It also responds to the European Commission’s Retail Payments Strategy on strengthening the euro's international role and to G20 objectives on international payments.

This new EPC scheme is the result of a community-driven approach and allows payment service providers (PSPs) in charge of the Euro Leg to make use of existing SEPA payment ‘rails’ – including procedures, standards and agreements with clearing and settlement mechanisms (CSMs) – that are reflected in arrangements which PSPs are already familiar with, such as the SEPA Instant Credit Transfer (SCT Inst) scheme and existing SEPA payment infrastructures.

Under the OCT Inst scheme, PSPs in SEPA can process incoming and outgoing international credit transfers through highly automated funds transfer systems available in the Euro Leg and via similar systems in the respective non-Euro Leg countries or jurisdictions. This allows PSPs to offer their customers international payments leveraging the instant execution, low-cost and broad reachability already available in SEPA, on top of the transparency and payment status traceability required for international transactions.

The OCT Inst scheme will now follow the same transparent change management cycle as the other EPC payment schemes, with all stakeholders invited to submit change requests for the OCT Inst scheme rulebook by 31 December 2023. 


Standard Chartered China participates in e-CNY business pilot

Standard Chartered Bank (China) Limited has announced that the bank has participated in the e-CNY business pilot, providing customers with e-CNY related services such as e-CNY wallet top-ups and redemption through accessing e-CNY applications.

Since the People’s Bank of China (PBOC) launched the e-CNY pilot, it has continued to increase the number of areas covered, enrich the applications scenarios, and expand transaction volumes. Currently, there are 26 e-CNY pilot regions covering most regions of the country, with cross-border applications and exploration steadily progressing.

“As an important infrastructure for the digital economy, the e-CNY will enhance the payment and consumption experience and strengthen the connection between China and international financial markets,” commented Jerry Zhang, Executive Vice Chairman and Chief Executive Officer, Standard Chartered China, Cluster Chief Executive Officer (China & Japan). “We expect the application scenarios of e-CNY will expand to include cross-border merchant payment, trade finance and supply chain finance, which will empower us to continuously provide quality services to meet the needs of both individual and corporate customers, and to inject new momentum into the development of the real economy.”


Anti-greenwashing rule confirmed by the FCA

The UK’s Financial Conduct Authority (FCA) has confirmed a substantial package of measures to improve the trust and transparency of sustainable investment products and minimise greenwashing.

With an estimated US$18.4 trillion of ESG-orientated assets now being managed globally, the FCA is implementing new Sustainability Disclosure Requirements and an investment labels regime after detailed engagement with various stakeholders, including industry, other regulators and consumer groups.

Research has shown that investors weren’t confident that sustainability-related claims made about investments were genuine. This isn’t helped by a lack of consistency when firms use terms such as 'green', 'ESG' or 'sustainable'.

To tackle this issue, the FCA will introduce:

  • An anti-greenwashing rule for all authorised firms to make sure sustainability-related claims are fair, clear and not misleading. 
  • Product labels to help investors understand what their money is being used for, based on clear sustainability goals and criteria. 
  • Naming and marketing requirements so products cannot be described as having a positive impact on sustainability when they don’t


European business lenders forecast spiralling fraud rates to continue 

Almost nine out of ten (89%) lenders across the UK, France, Spain, and Germany noted an increase in fraudulent activity against their businesses in the last year, according to research in Lenvi Riskfactor’s 2023 European Fraud Readiness Report. More than eight in ten (81%) expect a continued increase through the current 2023-24 financial year.

This issue is compounded by the perception that fraud is becoming even more sophisticated – a trend reported by almost three-quarters (73%) of all responding receivables finance lenders. As a result, lenders are increasing their budgets for fraud prevention by an average of 39% year-on-year. Despite this, even the lenders with the highest confidence in their fraud prevention abilities – some 40% of respondents – estimate that they fail to detect one in every four fraud attempts made against them. Nearly a third (30%) of lenders believe they could not detect half of all fraudulent activity in the past year.

Looking ahead to the remainder of the financial year, 70% of all receivables finance lenders recognise fraud as a significant risk for their business, rising to 83% for lenders with less than 250 employees.

While increased spend on fraud prevention does little to mitigate concerns, there is a clear link between a lender’s adoption of technology and the extent to which their business is concerned by the threat of fraud. 84% of lenders with a predominantly manual-led approach to fraud prevention note fraud to be a significant or high risk, dropping to 70% among lenders with a technology-led approach and 66% for those firms utilising a blended strategy.


Emirates NBD and Erguvan launch pilot carbon management solution for SMEs

Emirates NBD has announced that Erguvan, a climate and financial technology venture it recently invested in, has launched a pilot programme to deploy its carbon management solution, “Azalt” among SMEs in the MENAT (Middle East, North Africa and Turkey) region.

The proof-of-concept project was conducted with EKOS Electric, an SME client of DenizBank, a fully-owned subsidiary of Emirates NBD Group. Azalt emerged as a vital tool for EKOS Electric, aiding in the identification of greenhouse gas (GHG) emission hotspots and implementing data-driven emission reduction campaigns.

SMEs significantly contribute to GHG emissions, however, are unaware of their carbon footprint due to low awareness of and organisational capacity for sustainability and a lack of cost-effective digital tools for climate action with easy deployment and use. In this context, Erguvan aims to equip SMEs with a digital tool to initiate their journey into emissions accounting and reporting, ultimately driving emissions reduction. The climate fintech startup also aims to establish linkages between the decarbonisation efforts of SMEs and sustainable finance instruments to accelerate progress.

To be launched officially in early 2024, Azalt is designed to streamline data collection and management efforts, enhance data reliability, and accurately measure, reduce, and offset a company’s carbon footprint (i.e., Scope 1, 2, and 3 emissions). It also offers a carbon accounting infrastructure for financial institutions, enabling a foundation for the sustainable products they offer.

CBA rolls out fraud prevention technology availability

Commonwealth Bank (CBA) has announced that Bendigo Bank and fraud monitoring company Satori, are each looking to pilot CBA’s NameCheck technology to protect Australians from scams and mistaken payments.

The solution applies advanced technology and CBA’s available payment data to indicate whether the account details provided look right. CBA introduced NameCheck to retail customers and on some payments made by business customers in March this year. The bank estimates that since then, the technology has prevented more than 10,000 scam payments which would have totalled over an estimated AU$38m, and already reduced mistaken payments by more than AU$100m.

This technology is being extended to Bendigo Bank to be added to its Up app and Satori, which monitor financial controls for some of Australia’s leading brands like Coates and many of Australia’s industry and government organisations.

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