Opinion| Virtual remedies: Countering COVID-19 with digitisation

Chaker Zeraiki
10 Min Read

Despite the disruption caused by the novel coronavirus (COVID-19) pandemic this year, the global economy has soldiered on, largely thanks to digital technologies and electronic solutions.

The uninterrupted flow of monetary transactions, trade financing and liquidity management has remained a key source of strength for economies worldwide. Key commodities, such as medical supplies and crude oil, remain available amid the worst health crisis in more than a generation.

Underpinning these efforts are digital solutions that have allowed companies to operate, albeit remotely, fund operations and pay staff.

The shift is already under way. As many as 41% of businesses are planning to digitise processing and adopt paperless documentation, according to HSBC’s latest Navigator study, which surveyed 2,600 senior executives across 14 countries.

Countries and companies are also looking to take control of their supply chains to ensure they can face the next crisis from an even greater position of strength.

“As two in three businesses seek greater control of their supply chain, they place greater emphasis on supplier resilience,” the survey noted. “More broadly, they are reconsidering the shape of their entire supply chain, variously pursuing diversification, digitisation and vertical integration.”

Governments and institutions in the Middle East have been proactive in ensuring the virtual world remained robust even as the physical world was shut down. Investment in technology infrastructure will be vital as countries accelerate the digital trend already under way.

For example, just over a third of businesses surveyed by HSBC said they expect remote working to be the norm in the next two years.


Chaker Zeraiki

The Central Bank of Egypt (CBE) moved swiftly in the early days of the pandemic, to ensure that the private sector had the support it needed. It also enabled telecom operators and financial institutions to offer self-registration for e-wallet services, so that customers could make digital financial transactions.

The country’s banking industry has also upgraded its omni-channel offerings, with a focus on reducing branch visits. The industry has also promoted e-documentation and other electronic services to ensure businesses and exporters were able to conduct their activities remotely.

The focus by Egyptian authorities and companies on closing ranks and moving ahead quickly in a coordinated manner during the crisis, ensured that trade flows remained robust during the first half (H1) of fiscal year (FY) 2019/20, which included lockdowns during the pandemic.

Non-oil merchandise exports rose 11.4% to reach $9.2bn, due to rising exports of electronic goods, drugs, vaccines, pharmaceuticals, and organic and inorganic compounds, according to the Ministry of Finance.

The Suez Canal, a vital gateway of global trade, saw revenues rise to $1.91bn in the first four months of 2020, compared to $1.87bn during the same period last year, according to Mohab Mamish, Chairperson of the Suez Canal Authority.

HSBC Egypt has also been at the forefront of helping clients during the crisis. The bank launched its award-winning HSBCnet Mobile Application for corporate clients in June, offering a one-window solution to meet global banking needs.

The HSBCnet Mobile App integrates HSBC’s latest trade finance tools, such as Trade Authorisation and Trade Transaction Tracker. It also offers customisable solutions in a variety of formats, including different languages and time zones.

HSBC’s regional and global networks allow clients to operate remotely, reducing the need for physical documentation and processes that bog down businesses. The security features of the HSBC network and its tailor-made services allow trade finance to continue without any delays.

Another critical service offered by HSBC is the Digital Trade Open Account, which allows clients to submit trade open account transactions online, enabling an effective Form 4 issuance. Paperwork is digitised, saving 140,000 sheets of paper, and up to three hours on average on each transaction.

The online service offers authorisation of multiple transactions and provides 24/7 access to requests, plus customised reports and different access levels for users in a company.

Apart from being a secure network, the service provides global accessibility, especially important for multinationals, and saves time and costs by eliminating branch visits.

In anticipation of the future, HSBC has been actively investing and engaging to develop an entirely digitised supply chain, one that is more customer-centric, efficient, transparent and connected. The bank was already on a trade transformation journey, looking at fixing critical processes and challenging absolutely everything.

HSBC expects to see further acceleration in digitisation to make supply chains much more sophisticated. The bank has embarked on an ambitious programme to help customers with their business continuity efforts, enrolling hundreds of clients onto its digital platform, HSBCnet, adding two months worth of customers to the system in just a few days.

Providing this digital lifeline has been crucial to company supply chains. There has been an increase in transactions as an immediate response to COVID-19 as customers rerouted their business to HSBC, using the bank’s global reach to manage the risk of unforeseen disruption to payments.

The bank is currently processing the majority of health care transactions and food sector transactions within 24 hours. This would not have been possible except through digital platforms.

Egypt’s digital framework

Egypt’s robust banking sector is a source of strength for businesses at this time. According to the World Economic Forum’s 2019 Global Competitiveness Report, Egypt ranks 23rd in terms of soundness of banks, and 41st in financing of small- and medium-sized enterprises (SMEs) out of 190 countries.

The robustness of the banking sector has played an instrumental role in ensuring the economy keeps moving. The Suez Canal, a global transportation hub, continues to function, while Egypt’s key exports of crude oil, wheat and manufacturing products continue to flow.

Like the rest of the world, the Egyptian economy will feel the impact of COVID-19, but it is entering the slowdown from a position of strength. Egypt’s GDP grew 5.6% during FY 2018/19, placing it third after China and India among emerging economies.

In the medium term, the economy is expected to rebound as a number of structural strengths remain. These include large-scale energy projects, real estate developments, power and utility, and the consumption power of its 100 million people.

Egypt’s economy will be the best performing in the MENA region this year, rising 2% in 2020, and another 2.8% in 2021, according to the International Monetary Fund (IMF).

In efforts to jumpstart the digital drive, the CBE has documented and archived 100 million documents, with another 500 million documents planned for the next phase.

The deployment of block-chain could emerge as another area for the country to pursue in its quest to develop innovative solutions in the post-pandemic era. Block-chain facilitates safe, easy transactions, builds trust between trading partners, and can be deployed in cross-border transactions, trade finance platforms, clearing and settlements and credit reporting.

HSBC, which recently completed its first live end-to-end trade finance transaction using the distributed ledger technology, is well placed to help Egypt.

The development of block-chain technology is expected to accelerate in the next few years, as the global pandemic has already underscored the need to find secure and cost-effective digital solutions.

The pandemic has changed the global economy, accelerating the need to build back better. Businesses across the region and in Egypt in particular are committed to continue to learn and adapt to the new market normal.

HSBC’s clients are already embracing digital offerings such as mobile and desktop trade applications, and SWIFT for corporations. This places them in pole position to embrace more technology, optimising supply chains, exploring thought leadership solutions and building back better for the next generation. The future is shaping up today and trade will continue to be at the forefront of the change.

Chaker Zeraiki: HSBC Bank Egypt, Head of Global Trade and Receivables Finance

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