Lloyds Bank has launched a new paperless solution which allows its business customers to request digital Direct Guarantees or Standby Letters of Credit.

The bank said that the move would enable companies to “trade more efficiently, safely, and securely”.

Lloyds' says that its Paperless Guarantee initiative, designed for businesses who have a high volume of transactions requiring bank guarantees to be issued, enables "instant" delivery to recipients while reducing their carbon footprint.

The new solution forms part of the bank's wider plan to digitise trade and follows its successful completion of the first digital trade transaction under the UK’s new Electronic Trade Documents Act (ETDA).

Last year, Lloyds also completed the UK's first transaction using a digital promissory note purchase.

Promissory notes are used to complete purchases in lieu of cash, allowing a purchaser to obtain goods or services based on their creditworthiness. While they have been around for thousands of years, in a modern setting their use is typically limited to large transactions that often involve the sale or purchase of property.

In April, the bank announced it is using blockchain technology to support its plans to digitise trade documentation and trade finance products.

At the time Lloyds Bank, which has entered a long-term partnership with blockchain technology company Enigio, said that the move would widen the application of the technology for digital original documents, including promissory notes, bills of exchange, and bills of lading.

“By working closely with our clients and their buyers and their sellers, we have a deep understanding of the nuances and challenges of trading internationally,” said Gwynne Master, head of lending, trade & working capital, Lloyds Bank. “Our latest development, the Paperless Guarantee initiative, offers clients a solution to some of those challenges.

"It is much more efficient, saves time, and removes costs. Removing the need for the physical delivery of paper is the future of trade and we are proud to be supporting our clients to achieve his with our new initiative.”

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