Battered by the COVID-19 crisis, large Indian companies are looking to their banks for digital solutions that can make their supply chains more resilient to pandemic-related disruptions. These demands are speeding the transformation of trade finance—one of the banking industry’s last paper-based holdouts—into a digital business.

The global pandemic hit global trade flows harder than the global financial crisis of 2008–2009. Now, a second wave of COVID cases in the United States and Europe are dashing hopes of an early recovery. For large Indian corporates, that could mean a continuation of troubles experienced in the first half of this year, including supply-chain disruptions due to lockdown measures, industrial shutdowns and the resulting delays in shipping and transport.

“Facing these challenges, Indian companies have changed their ‘ask’ to banking providers,” says Gaurav Arora, Head of APAC & Middle East at Crisil Coalition Greenwich. “In the crisis, operational agility and digital solutions are taking precedence over the traditional priorities of financing trades and meeting liquidity needs.”

Unlike most areas of banking and business, the vast and diverse world of international trade and finance still relies heavily on the physical exchange of paper documents to function seamlessly. However, the results of a new Coalition Greenwich study suggests that the business in India is changing. In 2019, 88% of respondents ranked “competitive pricing” as a key criterion for trade provider selection, while only 11% considered quality of e-banking and digital platform a relevant metric. However, in 2020, we observed a sharp shift toward digital solutions, with 60% of the respondents ranking digitization as a critical metric for evaluating a trade provider.

Although it is companies’ need for operational agility in the face of COVID-19 disruptions that is driving this increased demand for new solutions, the emphasis on digital will outlast the pandemic. Once the threat of the pandemic begins to dwindle, things like end-to-end supply chain visibility and digital interoperability will become much higher priorities for corporates that have now started down the digital path. This, in turn, will compel banks to evaluate their digitization strategy and accelerate the digital transformation of trade finance.

“With corporates increasingly adopting digital solutions to interact with their customers and seamlessly deliver services, they will inevitably demand a similar level of digitization from their banks and other service providers,” says Gaurav Arora.