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E-Guarantees: Making Trade Finance Faster and Safer

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E-Guarantees: Making Trade

Finance Faster and Safer
MARCH 13, 2020

Author: GFMag.com Admin

Andrzej Gliski, Member of the

Management Board of Bank Millennium
in Poland, explains how electronic
guarantees are increasingly used in trade
finance to simplify the circulation of
documents, reduce processing times,
provide greater transparency, and cut
transaction costs.

As digitalisation and optimisation are

transforming daily life and more services are
delivered electronically, banks are increasingly
replacing traditional paper documents with
electronic files.

Electronic guarantees, known as e-guarantees, have

been used in trade finance for some time, but Bank
Millennium has seen e-guarantees growing in
popularity with our trade finance customers, which
had one out of four guarantees issued in electronic
form in 2019. With e-guarantees, a bank can deliver
bank guarantees to its business customers and their
counterparties faster and more safely than traditional
paper bank guarantees. An electronic guarantee is issued as a PDF file with a secure qualified
electronic signature placed by two authorised representatives of the bank. In legal terms, a guarantee
saved in the form of an electronic file, and signed with a qualified electronic signature, is a declaration
of will made in electronic form and, according to Polish law, is treated as an equivalent to a written
guarantee with signatures made by hand and a stamp.
Use of e-guarantees is increasing because of the benefits to our customers as well as their
counterparties, the beneficiaries of the guarantee. The main benefits of replacing
traditional paper documents with e-guarantees are faster delivery of the guarantee, lower
cost with elimination of courier fees, and heightened security.

For speed and convenience, our business customers can order an e-guarantee to be
issued online in the electronic banking system, in the Trade Finance module or in
traditional paper format, using a bank guarantee request form. The electronically signed
guarantee document will be sent by the bank via email to the customer or a counterparty,
the beneficiary of the guarantee. Then the bank sends the e-guarantee directly to the
beneficiary’s email address. The bank can also make the electronic guarantee available to
the customer for downloading in the electronic banking system.

E-guarantees provide increased safety because

authenticity of electronic signatures can be checked
quickly and easily in Bank Millennium’s e-guarantee
file in Adobe Reader. Additionally, the bank publishes
a list of representatives of the bank authorised to
sign e-guarantees, which is available on the bank’s
website. Therefore, to confirm whether the persons
who signed the e-guarantee are authorised signers
and whether their certificate is valid, anyone can
quickly find the information on Bank Millennium’s
[secure, password-protected] website. Upon a
customer’s request, the bank can also send a SWIFT
message to the beneficiary’s bank with confirmation
of issuing the e-guarantee. Electronic delivery of
guarantees also eliminates the risk that delivery by
courier will fail.
Member of the
Management Board,
These guarantees also provide companies the
Bank Millennium
opportunity to take part in public procurement
Poland.
proceedings, where a condition for participation is to
submit all documents in electronic form. Although e-
guarantees are usually used in public procurement
tenders, customers increasingly use them when securing commercial contracts, mainly
because the e-guarantee can be delivered to the beneficiary in a quick and secure way.

E-guarantees issued by Bank Millennium are usually related to tenders for various types
of deliveries for public administration, including IT hardware, software, office or IT
accessories and materials, as well as personal or property protection services, booking
and delivering travel tickets, or insurance services.
The next step towards further digitalisation of bank guarantees will undoubtedly be the
possibility to make a claim under a bank guarantee, bearing the beneficiary’s qualified
electronic signature. Bank Millennium continues to see customers eager to pursue
electronic solutions for banking transactions and documentation and we are committed
to providing our electronic banking services effectively and securely.

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