Digital heartbeats: Part 1 of 2


Digital heartbeats in a traditional landscape: Part 1 of 2


Originally published in TFR magazine, SIBOS edition, September 2016


Any sufficiently advanced technology is indistinguishable from magic [1]


Over the last couple of decades, technology has moved forward so quickly that we now almost take it for granted. It is only when we take time to think about developments that we realise how momentous a time we live in. Researching for a recent Ark Group event in London [2], I came across an article that exemplified this perfectly:


‘It takes about the same amount of computing to answer one Google Search query as all the computing done -- in flight and on the ground -- for the entire Apollo program! When you enter a single query in the Google search box, or just speak it to your phone, you set in motion as much computing as it took to send Neil Armstrong and eleven other astronauts to the moon. Not just the actual flights, but all the computing done throughout the planning and execution of the 11-year, 17 mission Apollo program. That's how much computing has advanced.' [3]


In fact, when looking at technology development and adoption over the last 100 years or so, it is incredible to observe the rapid acceleration that we have experienced in the last 30 years.


Arguably it took 50 years for the telephone to achieve critical mass and to have a significant impact on the consumer market. The television took half of that time, between 23-25 years. Moving forward a few decades, PC's and mobile phones reduced the time in half again, taking between 12-14 years.


And this is when it becomes extremely fascinating. Adoption of the Internet to the same extent probably took 7 years, with the iPod halving that time to achieve success within 3 years. Looking at Facebook, they managed to obtain 200 million users in just over a year, with 1.5 billion in 7 years. 2 billion smartphones were in existence within 8 years. The iPhone 4, introduced in June 2010, had the power equivalent to the Cray-2 supercomputer, the fastest machine in the world in 1985. The Apple Watch, released in 2015, has the equivalent speed of two iPhone 4s. And this is not the end: it is estimated that the Internet of Things (IoT) will have 50 billion sensors connected to the Internet by 2020 and 1 trillion by 2025. [4] Consumers are now adopting new technologies in periods measuring months not years.


As expounded in a recent book by Klaus Schwab [5], it can be argued that we are now in the midst of a 4th industrial revolution.


1760-1840: Railroads, steam power, mechanical production.

1867-1914: Electricity, assembly line, mass production.

1965-1999: Mainframe computers, personal computing, digital electronics, Internet.

2000-?: Mobile internet, IoT, Artificial Intelligence, machine learning, advanced robotics, nanotechnology, energy storage, quantum computing, autonomous vehicles, 3D printing.


The differentiation with today's changes is in size, speed, scope and the fact that virtual and physical systems are globally interacting and cooperating. In this age of ‘supra-data', Klaus Schwab argues that there are four particular conclusions:


  • Consumer expectations are shifting
  • Products are being enhanced by data, which improves asset productivity
  • New partnerships are being formed as companies learn the importance of new forms of collaboration - compete and collaborate
  • Operating models are being transformed into new digital models


And there is perhaps no more exciting evolution than the IoT which embeds sensory and wireless technology within objects, making it possible to digitally transfer ownership of all kinds of physical property. The technology has an additional benefit in that it also provides the ‘object' with the ability to transmit data in respect of identity, existing condition and the environment in which it is based. [6]


But how relevant is this in the world of physical and financial supply chains?


Humans have a propensity to truck, barter and exchange one thing for another. [7]


In modern times, efficient and speedy global modes of transport, combined with containerisation, have transformed the physical supply chain. However, due to the intrinsic need for paper, the financial supply chain has not kept pace with physical supply chains. The challenge, as always, is to transparently and simply share information across the numerous involved parties including suppliers, buyers, logistics, financial institutions, etc.


Many attempts have been made over the last couple of decades to introduce to the market a solution that would simplify the exchange of electronic data between the various involved parties. Certainly some have met with a degree of success, whilst others have fell by the wayside, but it can be argued that none have yet achieved the global critical mass required to make a revolutionary impact.


This is not to say, however, that transformational change has not occurred. A close look at technology, workflow and integration in the field of trade finance reveals many transitions and developments. 


E-commerce solutions for Trade started to emerge in the 1980's/1990's but, as has already been pointed out, did not have the immediate impact that had been envisaged: the ‘inertia of tradition' proved to be a fairly implacable barrier with paper continuing to predominate.


However, this did not prevent many financial institutions from building client portals providing access to trade online solutions.  Despite this being an essential and valuable opening to the provision of electronic trade, it was recognised fairly early on that a corporate with multi-bank relationships would be forced to implement a plethora of different platforms that could not communicate between themselves. Definitely a step forward in the right direction, but not the panacea that was required.


On the workflow side, financial institutions were seeking to implement more efficient and cost-effective operating models. However, with the continued high prevalence of paper, it would often prove difficult to build an effective model that would ensure that the business remained profitable without increasing processing fees. Not surprisingly, many banks would turn to one of two routes, either outsourcing or centralising trade operations and processing.


Crucial to all of these changes was the aim to integrate physical and financial supply chains and, in a number of cases, to build synergies between trade finance and cash management areas. The challenge then and now, remains the same - find a way to effectively and efficiently share information across the supply chain between all parties: financial institutions, suppliers, manufacturers, buyers, sellers, logistics, etc. And to ensure whilst providing access to such data that any solution mitigates risk, provides for payment certainty, assures delivery, is scalable, provides strong security, delivers tracking and reporting and, ultimately, reduces cost.

[1] Hazards of Prophecy: The Failure of Imagination, Arthur C. Clarke, 1973

[2] Digitisation of Trade and the Blockchain, June 2016

[3] Google Inside Search, Udi Manber / Peter Norvig, August 2012

[4] DHL and Cisco, Internet of Things in Logistics, 2015

[5] The Fourth Industrial Revolution, Klaus Schwab (Executive Chairman, World Economic Forum), January 2016

[6] Blockchain: implications for trade finance. October 2015

[7] An enquiry into the Nature and Causes of the Wealth of Nations, Adam Smith, 1776

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