A series of three blogs from tradefinance.training
Paper’s long reign
A look at the historical entrenchment of paper in trade finance and why, despite its many drawbacks, it continues to endure.
The digital undercurrent
Exploring the legal, technological, and operational forces moving the industry toward digitalisation, and why resistance remains.
The tipping point
A roadmap for shifting trade finance from paper-based inertia to a digitally aligned future, faster, safer, and fit for purpose.
*********
Paper’s long reign
The future of paper in trade finance is, in many ways, a story of decline, not extinction. Paper will almost certainly diminish in prominence, but it is unlikely to disappear entirely in the near to medium term. Its persistence will vary by geography, transaction type, legal infrastructure, and the readiness of market participants. Accordingly, it’s worth exploring the trajectory of paper through four lenses: historical context, drivers of change, barriers to full digitalisation, and what a hybrid future might look like.
The historical hold of paper
For centuries, trade finance has relied on paper. Bills of lading, documentary credits, certificates of origin, these documents established ownership, triggered payments, and ensured that goods moved safely and securely across borders. Paper provided trust in a fragmented global system. It was tangible, transferable, and universally understood.
But this long-standing reliance also led to inefficiencies: manual checking, courier delays, document loss, forgery, and increased compliance risk. A typical documentary credit transaction still involves dozens of documents and touches multiple hands, often taking weeks to settle. Furthermore, the pandemic highlighted the weaknesses of paper, as lockdowns made physical movement of documents almost impossible.
Accelerating forces of change
The transition away from paper in trade finance is driven by far more than just technological innovation. It is underpinned by a broader set of concerns, namely trust, cost efficiency, processing speed, and regulatory compliance.
Several powerful trends are accelerating the shift towards digitalisation. Legal reform is playing a pivotal role, with instruments such as the UK’s Electronic Trade Documents Act (ETDA) and the UNCITRAL Model Law on Electronic Transferable Records (MLETR) providing the legal basis for recognising electronic bills of lading and other digital trade documents as equivalent to their paper counterparts. This equivalence marks a turning point in enabling digital adoption across jurisdictions.
At the same time, technology platforms like Traydstream and Complidata are automating document checking and reducing the scope for manual error. These platforms use artificial intelligence to identify discrepancies and ensure regulatory compliance, transforming what was once a laborious, paper-bound task into a swift, intelligent digital process.
Meanwhile, regulatory demands surrounding anti-money laundering (AML), know your customer (KYC) requirements, and sanctions screening are increasingly difficult to meet through manual paperwork. Digital systems allow for better audit trails, real-time monitoring, and consolidated data handling.
Another factor gaining momentum is sustainability. The environmental cost of transporting physical documents around the globe is no longer being ignored. Companies and financial institutions are under mounting pressure to adopt greener operational models, and digitalising documentation is a clear step in that direction. Altogether, these forces are reshaping the future of trade documentation, not by eliminating paper overnight, but by steadily relegating it to the margins of a more agile, transparent, and interconnected trade environment.
But why does paper still persist?
Despite notable advances in digitalisation, the resilience of paper remains evident, particularly in jurisdictions where legal and operational infrastructure have yet to catch up with technological possibilities. In many countries, the absence of legal frameworks based on instruments such as the UNCITRAL Model Law on Electronic Transferable Records (MLETR) means that electronic trade documents are not yet afforded the same legal standing as their paper counterparts. This lack of legislative support compels parties to rely on traditional documentation, not because digital is unavailable, but because its enforceability remains uncertain.
Even in markets where legal reform has taken place, confidence in digital infrastructure is not universal. Many counterparties, especially small and medium-sized enterprises in emerging economies, continue to rely on paper due to limited access to reliable digital systems or a basic mistrust of electronic documentation. Without the necessary infrastructure or institutional support, these entities often prefer the perceived certainty of paper, even if it is slower and less efficient.
Banking practices themselves also tend to lean towards conservatism. While frameworks like eUCP exist, they are still viewed with caution by many banks. The familiarity and perceived safety of UCP 600 in its traditional, paper-based form often outweigh the benefits of digital alternatives, particularly in institutions where internal processes have not evolved or where operational risk is tightly managed through legacy systems.
The problem is compounded by the lack of alignment across the wider trade ecosystem. A digital bill of lading or electronic certificate has limited value if the parties involved, customs authorities, insurers, freight forwarders, and shipping agents, are not equipped or willing to process it. Interoperability remains a stumbling block, and if even one link in the chain defaults to paper, the entire transaction may be forced to follow suit.
Despite the work of international bodies such as the ICC to promote standardisation and cross-platform compatibility, global trade still lacks a universally accepted set of technical and procedural standards for electronic documentation. In such an environment, the persistence of paper is not merely a function of resistance to change, but a reflection of fragmented readiness. Until legal recognition, institutional trust, ecosystem interoperability, and market consensus converge, paper will remain embedded, perhaps unnecessarily so, in the conduct of cross-border trade.
A hybrid ecosystem
Over the next decade, trade finance is likely to evolve into a hybrid environment in which digital processes become increasingly dominant, but paper continues to retain a foothold in certain contexts.
While paper-based documentation is expected to diminish significantly, particularly in high-volume, low-margin trade flows between digitally advanced regions, it will not vanish entirely. The adoption of electronic bills of lading is set to expand, yet this growth will likely be concentrated in containerised cargo and trade corridors where legal recognition and operational readiness are already in place.
Meanwhile, many trade finance processes will be digitalised at their peripheries, such as in the verification of data, compliance screening, and document extraction. However, in some transactions, the foundational documents may still be issued or maintained in physical form due to legal, logistical, or counterparty-specific considerations. As a result, institutions will increasingly adopt a “digital first” strategy, prioritising electronic solutions where possible, while retaining paper-based fallbacks to manage operational risk or to accommodate parties who have not yet embraced digital trade documentation.
There is a future for paper in trade finance, but it’s a reduced one, and possibly marginalised to contexts where legal or infrastructural readiness remains underdeveloped. The shift is inexorable, but it’s also uneven.
Think of paper’s future like that of the cheque in banking. Still around. Still legal. Still useful in niche scenarios. But its days as the default option are fading, replaced by more efficient, traceable, and secure alternatives.
The real question is not if paper will disappear from trade finance, but how long its long goodbye will take, and who will benefit from accelerating its departure.
