To date, efforts to digitize and connect global trade, supply chains, and trade finance have been unsuccessful. A major reason for this has been the limitations of the legacy trade platforms and networks supporting such efforts. While technology has made some internal processes more digital and efficient over the past several decades, trade transactions involving multiple parties remain extremely costly, complex, risky, and heavily dependent on paper-based processes and financial instruments that are, in many cases, hundreds of years old.
These disconnected, inefficient technology systems have put hard limits on businesses and business models and restricted how, where, and with whom we conduct and finance global trade.
After several decades and countless attempts, we must ask ourselves the question; can global trade really become digital and connected? Fortunately, the answer is yes. However, there are three key requirements that must be met simultaneously to make it happen. Those key requirements are to:
- Support seamless and secure multi-party transactions across independent software systems, platforms, and networks.
- Enable users to manage, control, and secure their own data and support all types of deployment configurations.
- Enable users to connect-once-to-connect-to-many (COCM).
While trade platforms and networks operating under legacy paradigms can typically meet one or maybe even two of these requirements, none are able to meet all three requirements simultaneously. Failure to meet all three requirements simultaneously have prevented legacy technologies from creating a truly digital and connected global trade ecosystem. The advent of new technologies, blockchain and distributed ledger technologies in particular, have been the genesis for a brand new paradigm.
This new paradigm has the potential to lead to a rewiring of global trade finance, replace closed, disconnected systems, and give rise to a smarter, more connected, more secure, and more inclusive trade ecosystem. Trade platforms and networks operating under this new paradigm could help financial institutions, businesses, service providers, and all others involved in global trade dramatically cuts costs, eliminate friction, reduce risk, drive revenue streams, and enable new ways of doing business.
While the problems and desired outcomes are not new, the technology that’s now available to us to solve these problems and achieve these outcomes is qualitatively different. This new paradigm—distributed trade platforms and networks—can meet all three key requirements simultaneously and in doing so support long overdue and fundamental improvements in the way we manage the flow of goods, assets, money, and credit in support of global trade.
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