Our Global Head of Financial Markets Compliance, Simon Ring, makes predictions for the regulatory technology and maritime sectors in 2021:
Let me start off by saying, what a year 2020 has been. When I wrote my predictions for 2020 last year, I could have never guessed that we’d be facing a global pandemic.
Today, a year into the COVID-19 pandemic, it seems that the current crisis has accelerated the rate of digital adoption, while also accentuating the problems that arise from existing outdated processes in the maritime industry. With 90% of world trade travelling by sea and 70% of which travels in containerised cargo, the maritime supply chain has to keep moving. Understanding the routes and details of vessels has never been more important.
Regulatory Scrutiny Continues to Increase
Despite saying this every year, the statement still holds: the regulatory landscape has never been more complex. In the past 12 months, we’ve seen US and UK regulators issue game-changing guidance which has placed all maritime industry stakeholders under the microscope. Maritime insurance companies, flag registry managers, port state control authorities, shipping industry associations, regional and global commodity trading companies, brokering companies, ship owners, operators and bunker providers, and classification societies must now significantly improve their compliance programmes to avoid breaching U.S. sanctions. A change of mindset and processes throughout the maritime industry is required, and despite the maritime industry being slow on the uptake of digital solutions, this renewed regulatory focus will prove to be the catalyst for the accelerated digitisation of the industry which we will see in 2021.
As regulators continue to crack down on sanctions regulation breaches, we have begun to see a renewed focus on ensuring the use of tamper-proof systems and processes to demonstrate best efforts in compliance.
A New Battle for Maritime: De-Carbonisation
The tail end of 2020 saw the International Maritime Organisation (IMO) agree on the first carbon emission reduction measures for the world fleet. With ESG performance also beginning to impact shipping companies’ ability to access financing, the opportunity has emerged to access innovative trade finance programs that provide a direct link between financing terms and ESG performance. We are currently working with several partners to announce an exciting solution in this area in Q1 2021.
Digitisation Speeds Up
Throughout 2020, we’ve seen the shipping industry and all related supply chains evolve in terms of technology and digitisation, moving away from archaic paper-based processes. In 2021, I expect this to culminate in a new wave of technologies for processing and financing, allowing for greater efficiencies and cost savings, alongside a reduction in risk and sanctions related exposures.
In terms of providing holistic and effective solutions to the industry, digitisation has never been more important to tackle illicit trade, assist in decarbonisation, and ensure cost effectiveness.
2021 has the potential to be the year where trade platforms take a leading role in trade finance, driven by the growing need for corporates to access faster, cheaper and more efficient payment solutions. We will be seeing the release of new solutions in this area, and a faster rate of digitisation, as well as distributed ledger technology being leveraged to its full potential to enable better synchronisation. As such, we can expect to see the velocity of financial and informational flows better synchronised with the velocity of the physical transactions.
Learn more about Pole Star’s regulatory compliance solution, PurpleTRAC
