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Cutting paper out of the deal
How a universal electronic trade system takes the paper trail out of international trade. An introduction to bolero.net - and how Japanese Bank, Sanwa estimates it can make substantial savings through the system
According to the UN, 7% of world trade - $420 billion a year - is wasted on paper-based administrative costs.The solution to this problem seems obvious. For world business to cut paper from the equation and exchange trade documents and data electronically.
However, the electronic business systems that existed up until the autumn of 1999 were generally restricted to one particular company, industry or trading community. They were only of use to organisations within the appropriate franchise.
This situation led to the launch of bolero.net on 27 September 1999. A joint venture between the worldÕs banking and logistics communities supported by some of the world's leading multinationals, bolero.net binds together all the parties in the international trade chain - exporters, importers, banks, freight forwarders, carriers, ports, customs authorities and insurers, to remove paper from the global trading environment.
Offering an open commercial model, a unique legal framework and complete security, bolero.net enables the electronic transmission of all documents and data between the various elements of the trade chain. And by transforming the process of cross-border buying and selling, the savings that the world wide business community stand to make by being bolero.net are enormous.
This broad base means that bolero.net is all-inclusive. Instead of forcing users down a given technological or commercial path, bolero.net is essentially trying to create a community where as much as possible can be put into the competitive market domain. Any proprietary IP network or the Internet can be used to connect. The interfaces have been developed by third parties, the business applications by other third parties.
Security and the
Bolero.netÕs secure messaging service has been outsourced to S.W.I.F.T, which as S.W.I.F.T members will know, maintains the highest levels of operational integrity and security.
Bolero.net has also addressed the legal dimension. Most international agreements take the use of paper as given. Until now, sending electrons down a wire has not involved the exchanging of contractual obligations - Bolero.net will change this.
Last year, Bolero.net carried out the largest ever study into e-commerce. The result is the Bolero Rule Book, which allows any dispute to be resolved in the same way, as it would be with paper documentation. Globally patented, signing up to the rulebook is a pre-condition to using bolero.net. Welding the technology to the legal framework is one of the things that makes Bolero unique.
How it Works
Users are able to go to the bolero.net web-site (www.bolero.net) to download the various documents that are needed to apply to connect to bolero.net. They are then issued with a digital key and certificate, before downloading from the Internet the freeware that they need to start using bolero.net services. The web-site also includes file formats covering a range of commonly used documents that can be used with bolero.net, and a registry of users.
And through our partner programme, many logistics and financial services users will soon be able to access bolero.net through a range of third-party partners, who will be 'bolero.net enabled', i.e. they will badge Bolero onto their own products and services.
Bolero.net is giving the banking community the opportunity to redesign existing trade services and, by making them “bolero.net enabled”, increase their usage by making them more efficient, transparent and more cost-effective to operate. By integrating bolero.net into existing trade chains, bolero.net partners in the banking sector stand to gain through the ability to reconcile and turn around trade data more quickly, peace of mind through a reduction in fraud and risk and the ability to drastically cut courier and fax costs.
Perhaps the most important benefit to banks will be potential to increase customer satisfaction, add value and raise additional revenue by developing completely new credit and risk intermediation products that are underpinned by bolero.net.
A Case Study - Sanwa Bank
Sanwa Bank, one of Japan's largest banks with assets worth $431 billion and a network spanning 23 countries, participated in an extensive bolero.net pilot test programme throughout 1999.The tests showed that Sanwa Bank could halve many administrative costs, leading to several million dollars in savings. As a result, Sanwa Bank now intends to take the lead in persuading its own customers to become "bolero.net connected."
Significant Savings During the summer, Sanwa Bank was part of a chain that evaluated bolero.net against paper-based systems, on exports of tyres from Japan to Hong Kong. The Japanese trading house, Mitsui, acted as the export / import agent, while Sanwa acted as the bank to provide the letter of credit.
Sanwa Bank identified that by using bolero.net for data and trade documents and data; fax, courier and archival / filing costs would decrease drastically. By eliminating the use of paper, data would not have to be keyed and re-keyed over and over again, allowing staff time to be spent on more productive tasks.
According to Mr Hiroshi Haneda, Manager of Payment Strategies & Solutions Department, "nobody can stop the electronic commerce ''tidal wave'.Our feeling is that bolero.net is effectively the first initiative to facilitate an e-commerce solution for a cross-industry / cross border environment. Bolero.net will surely become a de facto industry standard, attracting a large number of businesses."
"From the very beginning, we grasped the concept of bolero.net, which in addition to providing us with significant savings on everyday administrative costs, will also allow us to strengthen our trade related business for new and existing clients."
"We are already providing documentation services relating to trade and logistics. By using bolero.net, weÕll be able to improve our service level with straight-through processing of such electronic trade documents. We support bolero.netÕs global roll-out, and see great advantages in having bolero.net become a standard for the international business community.Ó
"For instance, the cross-border settlement business will be enhanced by using bolero.net, allowing automated reconciliation and higher cash management services. Once bolero.net is integrated with other ERP or banking cash management services, we will be able to achieve a truly integrated and comprehensive electronic commerce service."
"For Sanwa bank, the decision to support bolero.net was a strategic one. With bolero.net becoming a global standard, banks are now in a position to gain from the digital era. Banks that donÕt take bolero.net on board, risk being left out of settlement business related to future trade transactions."
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