The increasing dangers from forgery mean the US$9 trillion (S$12.3 trillion) business of financing global trade has to go digital, said an OCBC Bank executive.
Forgers have become so adept at faking documents used by banks that going paperless has become a necessity, said Ms Ng Chuey Peng, managing director and head of global commodities finance.
Digitalisation will also make the financing process more efficient, she added, noting: "Going paperless has to happen."
In the high-tech world of financial markets, the continued use of paper receipts looks arcane.
As much as 80 per cent of global flows of merchandise - worth about US$9 trillion - is financed by some form of credit, guarantee or insurance, said the International Chamber of Commerce. Trade finance revenues were US$39 billion in 2017.
Paper is used throughout the process. The documents, including bills of lading, Customs notices, inspection certificates, invoices and warehouse receipts, also track the origin and whereabouts of the merchandise and are critical for banks lending money to finance the trade.
Forgeries are "so good that you can't tell the difference", Ms Ng said. "The colour, the watermark is exactly like the original."
Mr Simon Collins, co-founder of online trading platform TradeCloud Services, describes the documents used in commodities trading as "paper bridges" linking disconnected systems.
"These paper documents are open to manipulation," said Mr Collins. "This is high risk, given the large transaction size in the commodities industry. Digitalisation, with a high level of security, can significantly reduce these risks."
Some recent high-profile cases of fraud involving commodities highlight the threat.
Standard Chartered and Citigroup in 2014 lost millions after forged warehouse receipts for metal held in a Chinese port were used multiple times to raise finance. Two years ago, ANZ said it suffered substantial losses from forged receipts for nickel.
All three banks are now involved in initiatives to reduce fraud in trade finance through technology, including sharing information on companies seeking access to finance, allowing them to cross-check information and speed up decision-making.
Some of the biggest lenders are also teaming up with commodities traders.
In September, trading giants Mercuria Energy Group and Gunvor Group joined forces with Royal Dutch Shell and a slew of banks to create Komgo, a trade finance venture that is developing a ledger-based system to track transactions using blockchain technology.
Many of the same companies are also involved in the Vakt venture that went live last year, using blockchain to trade crude, while the London Metal Exchange is reported to be behind a project called Forcefield that uses the technology to track physical metals trade.
Cybercrime is also an increasing threat as fraudsters become more sophisticated, said Mr Collins.
"The problem is getting worse," he pointed out in an e-mail. "Many of the people we have talked to have openly admitted that they have been the victim (or attempted victim) of cyber crime. In particular, the industry needs to draw itself away from e-mail when it comes to transmitting sensitive information and move to a more secure system."
In addition to preventing fraud, technology creates a "tighter" payment system, said Ms Ng.
"If payment becomes so short, the financing cycle may be shorter," she said, adding that she would then question the relevance of letters of credit, a document issued by one bank to another to serve as guarantee for payments.
Ms Ng is unsure when the widespread adoption of technology in trade finance will happen.
"Blockchain, Komgo, Forcefield, Vakt, one of these will have to work to change how trade is being done," she said. "When, I can't tell, but I think it has to go paperless."