Using the Bolero platform, HSBC and Reliance Industries jointly achieved a first for international trade in India – the completion of an export deal with electronic documents. The use of e-Presentation on Bolero enabled the trade to be settled in a single day, rather than the 28-35 days it would take to exchange traditional paper documentation.
Q&A session at GTR India Trade and Treasury Conference with:
- Ian Kerr, CEO, Bolero International (IK)
- Rakesh Patwari, Head of Business Development, Global Trade and Receivables Finance, HSBC India (RP)
- Rugved Dhumale, Deputy Treasurer, Petrochemicals, Reliance Industries Ltd (RD)
IK: What lessons did we learn from the transaction?
RD: In a single day the electronic bill of lading went from our bank to our customer’s bank in Italy, so the customer had the bill in his hand and could take delivery of the goods without delays. From a transaction perspective the customer was very happy this had happened. The first step is the hardest and this was two or three years in the making and needed all the stars to be in alignment. But we made it happen and we see digitised trade transactions becoming the norm.
RP: From our perspective this was a trend-setting transaction. We are seeing a generational shift in international trade. As intermediaries in the supply chain, our role is to make the process simpler and smoother, which is what we did. This all has ramifications – from the counterparties’ perspectives, from regulators and carriers and so forth. What it does is bring visibility for every single stakeholder in a complex environment.
RD: A lot of technologies have shown promise, but every five or ten years you find one whose time has come. Each transaction is unique and involves banks, carriers, buyers and sellers, but digital technology accommodates that complexity easily. We are very bullish about digitisation and are working with customers and financial institutions, making sure we are promoting digitised trade to deliver better value to our customers.
IK: How is HSBC applying this to the Indian market?
RP: In my view it is a journey, where pieces of work have been conducted in isolation and now need to come together. But it is inevitable. The benefits are obvious, although all the regulatory, governance, capital regulation, cost and timeline ramifications have to play out first.
IK: India is certainly advancing digitally with the advent of the Aadhaar ID project, Universal Payments Interface and other Digital India initiatives led by the government. What is your perspective on all the developments in digitisation underway, removing paper-work and bureaucracy in India and how might they help us advance digitisation in trade?
RD: The time is ripe. I see no hurdles to trade digitisation in India, but two or three other factors will have to come into place. The government needs to create a level playing field in relation to importers, exporters and standards and we need credible platforms so that all parties come on board. Some platforms, either by design or otherwise, lean one way or another, but we need platforms like Bolero that don’t favour any one counterparty over another and achieve the right balance.
Audience member: Can you identify a couple of challenges that have to be overcome?
RD: Getting everyone on board and establishing the credibility of the platform is important. We have not yet seen the tipping-point where everyone wants to be on the platform.
RK: Yes, trust has to be built up over time, but I believe it is possible, looking at the number of shippers on the platform.
IK: Indeed. The same applies to block chain and distributed ledger technology. We see the use-cases for it, but it is not so much about the technology as about trust, and getting all the parties aligned and bound into a commonly understood legal framework. Less about bits and bytes and more about business processes. Once you have that business process enabled, people will sign up to the legal framework that underpins the transaction and great things can happen. Transactions can be completed in 24 hours instead of 35 days.
Audience member: Can your organisations work with government to initiate processes that are free and open?
IK: Large companies are driving this with large value transactions and will prove the concept, but it would be good to get alignment of parties with common interests around digitisation, be they the government, Reserve Bank of India, customs or port authorities, to make sure that some of these regulatory issues are addressed.
Audience member: Regulatory acceptance of the electronic bill of lading (eBL) is still a grey area. Bolero is a pioneer in this but when is it going to be accepted?
RD: It is only a matter of time before the eBL is accepted.
IK: Having an organisation with the muscle of Reliance Industries behind digitisation is significant. Other corporates too are keen to enjoy the same benefits.
One final question – If you had a crystal ball, could you predict when digitisation will reach a critical mass in India and worldwide?
RP: Somewhere around 2020
RD: It will be diverse across different industries, but I would say in three-to-five years, depending on networks.
IK: Yes I think that is right, it is about the network effect involving banks, regulators and everyone. It won’t happen with the click of a finger, it will be in the next two or three years. At Bolero we are looking forward to working with Reliance, HSBC and everyone to take digitisation out into the wider market.