Legal rather than technical reasons are preventing a widespread take up of paperless trade finance systems according to a managing partner of a trade finance software house.

Bolero, the electronic trade finance platform with its own rulebook, may be the system that is most widely adopted, but according to Jochen Oberländer, Managing Partner of DOS Dialog Orientierte Software GmbH, other systems may win through in the end.

Legal challenge

Writing in the November issue of the UBS newsletter, Oberländer says that because it is unclear which approach to paperless trade finance will eventually establish a dominant position, the challenge for banks is to come up with solutions that can be adapted and integrated at reasonable cost.

In his article in News for Banks, Oberländer suggests that the main reasons why electronic trading documents are not yet widely used are legal in nature. Currently, trading partners cannot be certain that the trade documentation sent to them is not simultaneously being sent to someone else or that the electronic signature is legally watertight Oberländer argues.

Emerging solutions

Several analysts have now reached the conclusion that one or more dominant paperless trade finance systems will emerge and evolve.

The consensus appears to be that solutions will gradually be established to solve the trust, identity, legal and other problems associated with paperless trade.

Bolero's challengers

In the meantime, which solution or solutions will eventually gain the upper hand is still unclear. Oberländer argues that it could be Bolero, where the owner of a specific trade document is managed in a central title registry and can be called up by everyone involved.

Alternately dominant systems could he argues be those that do not, for example, establish document ownership.

Until then, Oberländer suggests that individual trading partners will have no choice but to agree between themselves which electronic signatures and document formats to use.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.