Navigating the future of digital trade

Patrick DeVilbiss:

So just kind of picking up on, particularly in some of the pieces that you laid out at the end there, if we take a step back, and we talk a little bit more about what's happening at the industry level, how do you think we're going about achieving true end-to-end digitization in trade today? So, if you look a bit outside of your core platform, and you say we, in the trade ecosystem if you will, are attempting to be digital first. I think that's always our goal. Everyone would like to be digital first across the board. Are we making progress there and where are we making progress if it's material?

James Binns:

I think across the trade ecosystem as a whole; the problem we all talk about is interoperability and essentially there are two levels of interoperability or maybe three actually. Technical interoperability, i.e. the ability to be able to exchange documentation from a technology perspective and that interoperability, then legal interoperability. So, the ability to legally exchange documentation rather than having to sign up to rule books of digital islands, et cetera, et cetera, and to be able to do that cross border, cross-continent, et cetera, et cetera.

And then I think the third one actually in terms of interoperability is the whole trust and ID element, and as part of being able to interact with other parties in the trade ecosystem, being able to know that the person you're dealing with or the company that you're dealing with is actually that company, and you can a hundred percent verify that, and therefore create an audit trail around that as well.

Swift did that many years ago between the banks, and we almost need to create the same between all the different parties involved in the trade ecosystem, which is a lot easier said than done because of that interoperability issue.

So, for me, there are two elements here. There's digital islands as they're sometimes called. I don't think that's ever going to go away. I think there's going to be, if anything, there's probably going to be more islands in the future. But if we can achieve a much greater level of standardization in terms of how digital islands communicate with each other, then we can start to create that interoperability. You're starting to see it now on the API side with the ICC digital standards initiative, publishing the standardized formats, API formats for guarantees and SPLCs. That's a step in the right direction. If everyone starts to adopt those, that will increase interoperability by a reasonably significant amount actually.

At the same time with MLETR, the model law for electronic transmission of records, which was published a few years ago and that being written increasingly into sovereign law, in the case of the UK, the Electronic Trade Documents Act, that will start to help us as well. Then you've got other electronic documents like ebills of lading, and you've got as many of you, many people will have heard the Digital Container Shipping Association and their commitment around A, a standard EBL format, and B, a commitment to be a hundred percent EBL-based by 2030. So, you've got a whole load of stuff starting to come together across the trade ecosystem, which is really encouraging, and I think is starting to significantly increase the progress of digitization.

But at the same time, given the complexity and the number of parties and counterparties and countries and regions involved in trade, it's going to take still a long time. And just looking at that DSCA commitment to go a hundred percent electronic bills of lading, that's 2030. That's six years away from where we are now, so it gives you an idea of some of those timelines.

Patrick DeVilbiss:

I'll be thrilled if we're a hundred percent EBL six years from now, that sounds wonderful to me.

James Binns:

So will I.

Patrick DeVilbiss:

It would be excellent progress from a market standpoint. And it's funny that you talk about the digital island piece, and we've discussed this, and I think everyone's kind of discussed this, there was a period of time, we'll say five, six years ago where I think there was a view that said there will be one platform to rule them all, that will pull everyone together, and that has kind of gone away as a concept. And I think you're right that there will be perpetually digital islands that are out there, and it becomes more about the roads we build between them, right?

James Binns:

Correct.

Patrick DeVilbiss:

We're on a path with that and there's a lot. DSI is done. The ICC has done a lot to call out, “Hey, there's a lot of work that's already been done in this space.” LEI has been out there forever, and it's a component that you can leverage. There are ways to validate that, there are ways to register an LEI, et cetera. And I think it's going to be more about how we tie everything together and how we, as a community, start to modernize our approach to digital trade. I think we have the building blocks there today or many of them there today, and it will be interesting to see how we tie it all up because it is complicated when you have so many different parties, and it'll just take a long time. That's the reality.

James Binns:

I think that's a really important point because, actually, if you look across the ecosystem, there are already really good examples of standardization out there. The container size is an obvious one, but then know LEIs with life, as you mentioned, barcodes with GS1. There's all sorts of examples of day-to-day standardization. And I think if we can collaborate to understand how we can use standardization that already exists more broadly across the ecosystem, that will also be a big step in the right direction.

Patrick DeVilbiss:

Yeah. And I think that legal framework in and giving the assuredness to banks is a good thing, but I think that it's going to be the other pieces all tying together that will help provide that interoperability at the end of the day.

James Binns:

Yeah, I think the legal framework is an interesting one. It is absolutely a good start, but there's still quite a lot of work to do, in my view, there. I mean, if you look at the ETDA, for example, in the UK, that specifies exchange of electronic documentation over reliable systems, but I don't think yet the industry has defined what is a reliable system. And of course, as part of that, you've got to add in the whole trust and identification elements as well and that interoperability, so I think we've definitely got challenges, significant challenges still to overcome, but we're moving in the right direction.

Patrick DeVilbiss:

Yeah, absolutely. And I think there is some progress in that space. I do think they've started to identify standard bodies that can help to, I think, use self-register as reliable based on certain criteria, but we're still very early days with that, so it will be interesting to see how that kind of progresses.

Patrick DeVilbiss:

So, if I shift gears a little bit and focus in as opposed to looking more broadly at the industry, would you be able to speak to what technology you are seeing that really, emerging tech that you're seeing that's really helping enable your bank to better suit customer needs, corporate needs? Can you go into some details about what you've been able to put in place or what you're planning to put in place or maybe seeing at a market level that you think is really materially impactful?

James Binns:

So I think to answer that question, first of all, is fixing the basics, and I think that's what we've done quite a lot of work on so far within Barclays, and we're in the process of now finishing off, and I guess I refer to that earlier on about making our core, upgrading our core multi-generation upgrade, but also making that core connectable to the outside world. So I think, first and foremost, if you can fix some of those basics, that should result in actually a very significant uplift to client experience and the client journey.

And then, for me, it's about how you put your API roadmap in place and what your API strategy is around that and making sure that that is built around our clients. So, for example, we talked earlier on about multi-bank portals. Now, if you're a multi-bank client, you issue guarantees through six or seven different banks, the last thing you want to be doing is logging on to each of those banks' individual portals to issue guarantees digitally. What you want is one portal that will enable you to issue through the bank of your choice for that specific guarantee, and that technology's out there. We talked about that earlier on, and that's something that we're obviously engaged together in trying to enable for Barclays and on the CGI platform. So that's one.

I think the other one is, again, we talked about it, is the automation technology and optical character recognition technology because as we've both been referencing, real digital trade is still a long way off. But in the meantime, if we can actually start to digitize paper using OCR technology, then that will enable us to start taking significant cost out of trade transactions which we'll be able to pass on to the benefit of our clients. It'll also enable us to start speeding up those transactions and therefore be able to give quicker turnaround times to our clients, and then I think the other element there that's really important is the whole sanction screening and financial crime element because it will also enable us to be able to do that process, not just more quickly and efficiently, but more thoroughly as well. And in doing so, protect our clients and ourselves in those instances. So, for me, all of that adds up to a much better client experience going forward.

Patrick DeVilbiss:

And if you will, I would also contend, and it's not necessarily a client experience piece, but those intelligent process automation tools I think are also critical to the industry in terms of impact to your subject matter experts. That expertise that's there in trade, there is a reality that a lot of it is going away, and you're not seeing generationally as many folks coming in and working processing LCs for 30 years who then grow up that live, breathe, and feel trade. And so those solutions also allow you to automate and institutionalize some knowledge that is otherwise sitting in a subject matter expert's head, which I think provides more certainty and longevity for the banks in terms of how they process, which is a good thing.

And then, if you're someone who is newer to trade, it's not just, "Oh, I work in this business where I get paper documents, and I scan through, and I do these comparisons." It's, "I'm maybe working on an artificial intelligence platform at the bank," which is really interesting. And I think that provides a little bit of a hook as well to bring in some of that new talent which is important.

James Binns:

I think it's a really interesting point because, for me, I don't think you're ever going to be able to take humans a hundred percent out of doc checking, so you're always going to need that experience and that skill, but these type of platforms now and conversations with a couple of the providers out there in the market, the way people are starting to think about this is quite interesting in the sense that if you think about digitizing documents, scanning those documents, coming out with a list of potential discrepancies, the system using AI or whatever tools it uses, can then refer the operators of those systems to the relevant passages at UCP or the other policy documents. So they can then, and it will then give them the necessary hints and tips as to what to do. And then you can actually use that human intervention you need to make the decisions you do, but in doing so, you can use those platforms to actually train people as well.

Patrick DeVilbiss:

The models, your trainer at the end of the day. It’s really interesting. And I agree, I don't think you're ever going to fully remove humans from the loop. I think you always want that, and banks, risk-adverse institutions will always have something there, so it'll be interesting to see, as this technology only gets better over time, what that means, and I agree wholeheartedly. I don't think we're getting away from the paper side too soon. I think at some point, I'd like to say before I retire, it's going to happen, but it takes you, there's a stopgap.

James Binns:

Hopefully, the days of having to remember every single article of UCP-600 when you're checking a set of documents, as I did 30 years ago, will be gone because the system will refer you to the relevant articles, then you'll be able to, and I think that's going to be very powerful.

Patrick DeVilbiss:

Absolutely.

Patrick DeVilbiss:

So, if we move from a tech perspective, from what you're seeing, have your customers, has their use of technology changed their expectations of how they interact with you today and the types of services that you offer to them at all, James?

James Binns:

Yes, I think it has. I think A, there's always a cost expectation from clients in the market. It's a very competitive market. A lot of our clients are multi-banked. And obviously, everybody sees technology and automation as a way to reduce costs. And therefore, I think that's definitely one of the elements at play here. Turnaround times is another one, and faster turnaround times and the competition around those, I think, is key.

And I think the bit that's emerging more, and we kind of talked about this, is being able to connect digitally to banks in different ways and in a unilateral way rather than lots of different ways as per each bank, so that's those non-bank portals or multi-bank portals.

And then I think the other element that's really more starting to emerge is as we get that digital connectivity more broadly across the industry, clients now starting to want to understand more about the benefits of edocs, ebills of lading, supply chain finance, platforms of choice, and being able to give them more choice and more flexibility in terms of how they interact with their own supply chains and banks being able to facilitate that.

Patrick DeVilbiss:

Yeah, it's an interesting one because you hit on two pieces that are somewhat contradictory. So, on the one hand, we're seeing that customer base saying, "Well, hey, you've got to meet me wherever I want to come to you." And that's going to be potentially multiple different platforms. You'll have to connect through your ecosystem partners.

But the other side of that is, "Well, and we want this also to be cheaper, obviously." Which is great, but there's some cost there. Someone has to pay that bill, and so I think that's part of the challenge that we're kind of seeing with this proliferation of some of these solutions in the market and an expectation that someone along the way is going to have to pay the bill. So, we'll see how that continues to shift, but I don't think the multi-channel world is going away. I think that's only going to get more, I don't want to say more extreme, but there are going to be more options in the market, and hopefully, we can work along the lines of those interoperability solutions where we're either using a standard or a common platform connecting to multiple different institutions that helps drive down that cost of maintaining that connectivity.

James Binns:

Exactly.

Patrick DeVilbiss:

And so, then shifting gears into supply chain finance, can you talk to me a little bit about maybe what's new on the horizon for Barclays in the open account space and if you're seeing any shifts in terms of your customer's usage of payables, receivables just based on market dynamics that are out there today?

James Binns:

Yeah, I guess from a Barclays perspective, as you know, we're obviously in the process of moving all of our receivables, discounting onto our new platform. I think that will be a big improvement both from a client experience side and also from an internal efficiency standpoint, so I think I'm looking forward to that over the next 6 to 12 months. We're also looking at new receivable solutions around different types of pools of receivables and so on, so that's absolutely on our roadmap for 2025 and beyond.

And then, more broadly, across different solutions in open account trade, in the UK we have a confidential invoice discounting and asset-based lending business. We're on a similar journey there to re-platform that. And as you know, ultimately to integrate that into CGI Trade360, so we have one system of record for all of our clients, so that is an exciting journey from our perspective that I'm looking forward to.

And then obviously supply chain finance. And at the moment, you've got a number of big banks who have their own proprietary solutions. But equally, you've got the increased emergence of non-bank platforms, the tauliers of this world, the CRXs, the prime revenues, et cetera, et cetera. And for me, I think that represents a really interesting value proposition to big supply chains and clients because it starts to de-risk the reliance on a lead bank's credit appetite. And it may not be credit appetite from a risk perspective that gets called into question, but going back to the cost issue, one of the challenges with supply chain finance is margins becoming increasingly thin. And at the same time, banks becoming increasingly focused on return on tangible equity that they can return to their shareholders. So, I think there is margin pressure across the supply chain finance sector at the moment, and that is, to some extent, impacting appetite in terms of limit extension to supply chains. Not necessarily on our behalf, but I certainly see it more broadly across the industry.

And for me, non-bank platforms is, therefore, one way of de-risking that to some extent because you're not reliant solely on one lead bank with other participant banks behind it. It's also, I think, really important from a client's perspective that they choose the technology that they want and what they sort of view as best-in-class technology, and I think non-bank platforms, and there's a number of good ones out there now, and clients can, I think it's important for them to be able to choose the one that works best for them and then be able to go back to their banks and say, "Right now I need you to fund me on these platforms." And that's the vision that I have.

Patrick DeVilbiss:

Yeah. And I think you've kind of already answered my next question, which was along the lines of how are you leveraging those FinTech partners? But it sounds like you're actively out there in the market engaging with them, providing support for funding that might be out there from a need standpoint.

James Binns:

Yeah, I'm a big fan of working with FinTechs and technology partners such as yourselves. That's your USP, and leveraging that and getting the connectivity and interoperability that we can get from those interactions, and therefore access to new markets and new pools of revenue, I think is going to be key to our business going forward. And everyone talks about the trade-finance gap, which I can't remember how many trillion it is now, but it's a very large trade-finance gap. There's loads for us all to go after. So for me, I think this is about working with the right technology partners to be able to enable Barclays and other banks to be able to fund more deeply into the supply chains and not just to be able to realize benefit for themselves, but to be able to provide that benefit of funding, working capital funding and trade-finance more broadly across supply chains.

Patrick DeVilbiss:

I think the ADB estimated in 2023, we were up to 2.5 trillion, and it's not getting smaller, it's getting bigger.

James Binns:

Exactly. I was going to say. I was going to say about 2 trillion.

Patrick DeVilbiss:

A trillion here or a trillion there. Suddenly you're talking real numbers, James.

Patrick DeVilbiss:

So, shifting a little bit more, and I appreciate that, the insight, particularly in the supply chain finance world, right, in the open account world. Let's talk, let's kind of go back and talk big picture again. And can you tell me, when we look out over the next five years, James, what technology, what changes, what practices do you think are going to have the biggest impact on us in the trade world, maybe that we're actively looking at today or maybe things that we're not completely thinking about as of now, but over the next five years, what do you think is going to, what's your big prediction?

James Binns:

I'm going to, if you don't mind, spin this around the other way a little bit to start with and just talk about some of the drivers of what that change is going to be from a non-tech perspective. I think number one is clients’ expectation and clients’ experience. We talked about being very competitive. It's a very competitive environment, and I think that will be key, meeting those requirements and those needs is going to be key to sustainable businesses going forward.

And then, of course, there's the whole regulatory side as well, and for very good reason, the increasing regulatory requirements on us all around financial crime, ESG in the future, et cetera, et cetera. I think those will really start to drive different behaviors and different needs across our sector.

And then you start to look at the different technologies that are emerging across the market at the moment, and in parallel with that, that API connectivity and that move, maybe nascent move at the moment, towards more API standardization. And I think to go back to what we were talking about API roadmaps earlier on, having the right API roadmaps, having the right focus areas within that is going to be critical to leveraging the right tech solutions to be able to drive that client experience, that regulatory compliance, that efficiency, et cetera, et cetera going forwards.

Patrick DeVilbiss:

Yeah, that completely, completely makes sense.

Patrick DeVilbiss:

So, we like to end, James, with what I refer to as the rapid-fire questions.

James Binns:

Uh-oh.

Patrick DeVilbiss:

So, we're going to run through, there's a little bit of fun in this one. So we'll go through, no pressure. So, first question, easy one, your favorite book, film, or TV show and a little bit of why.

James Binns:

I don't watch a huge amount of TV or films, I must admit, but I did love Ted Lasso. I thought that was brilliant. I just love the characters in it. I love the storyline. I just thought that was great, and it was a real feel-good classic movie with the villains, the good people, the happy ending. I thought that was brilliant. Books-wise, I'm a big non-fiction person, so I really like interesting biographies, autobiographies. I'm reading some very interesting books on politics at the moment and understanding what's driving some of the political change that's out there these days. I won't say anymore. So yeah, hopefully, that answers your question.

Patrick DeVilbiss:

It does, and we live in interesting times for sure. And I think that Ted Lasso was, I feel like that is universally, the optimism of the show is why people really enjoyed it, right? I think it's nice.

And so, next question is, what's the biggest lesson you've learned working in the trade space? Could be anything at all.

James Binns:

I think for me, it's you always got to look beyond the transaction that is in front of you. So, a shipment of grain or agri commodities, you might be looking at one part of it, but you've really got to look beyond that and try and understand what's either side of that to properly understand the risks, rewards, whatever of a trade transaction. So, for me it's you've got to look, you've got to remember that supply chains are multi-tiered, extremely complex. You might be only involved in one small element of that. And the ability, or at least the consciousness to look beyond that and try and understand what is going on around that transaction for me is critical.

Patrick DeVilbiss:

That's a really interesting one. So, the last question here is, and this can be interpreted however you want it to be interpreted, is the future of trade more of an Apple experience or an Android experience? And that can be taken any number of ways, amorphous.

James Binns:

So, for me, I guess my immediate answer is both. Quite simply because clients will be both Android and Apple enabled in the future, and they will want to communicate to us digitally from Apple platforms and Android platforms via mobile technology in many instances. And we are going to need to be able to cater for both to give clients that flexibility and choice that they need.

Patrick DeVilbiss:

I love the answer of just customers are going to come at you however they come at you, and at the end of the day, you're going to meet them where they need to be met. And that's the reality. James, that's it for today. We really, really appreciate you coming on and sharing your insights. This has been a wonderful conversation. So, thank you so much to yourself. Thank you to Barclays for letting you join us. And thank you to everyone for listening. We will catch you on the next episode.

James Binns:

Thanks a lot, Pat. Great to be with you.