Lloyds Bank Completes UK's First Transaction Utilising Digital Promissory Note Purchase

Lloyds Bank has completed the UK's first transaction utilising a digital promissory note purchase. This landmark transaction dramatically increases speed of payment and paves the way for a significant increase in the use of promissory notes for a broad range of transactions.

Under legal guidance, Lloyds Bank developed a digital promissory note – a solution that works within contract law and utilises the International Trade and Forfaiting Association's (ITFA) dDOC specifications, under the Digital Negotiable Instrument Initiative (DNI).

On 17 August, Lloyds Bank successfully completed a "pilot" transaction, which is the first under the DNI initiative, and a key milestone in the digitisation of trade finance. The transaction was initiated and completed within the day and involved the sale and purchase of land worth £48m between several UK businesses. The Bank's promissory note was issued using Enigio´s solution, trace:original, for digital original documents.

The new digital solution delivers a same-day payment to the vendor by removing the need to physically transfer actual notes. This creates a more affordable, safer, more flexible, more sustainable, and transparent online solution that could be applied to other types and sizes of transactions. This innovation is expected to open a new form of payment discounting to businesses of all sizes for the first time, improving cashflow for SMEs on both sides of a trade transaction.

Gwynne Master, MD, Lending and Working Capital for Lloyds Bank said: "Promissory notes are an important tool for businesses that undertake large transactions but are a relatively niche solution. Their use allows purchases to progress where shortage of cashflow may otherwise prevent them. Until now, this industry-side solution is typically slow, expensive, and administratively cumbersome.

"With this successful UK-first transaction, we have delivered an innovative digital solution that is quicker, less expensive, and more secure. The digitisation and simplification of this solution finally opens this form of payment discounting to potentially millions of small businesses, improving their ability to manage their working capital and the cashflow of their suppliers by fulfilling invoices more quickly."

Patrik Zekkar, CEO of Enigio said: "We are extremely pleased in the way Lloyds Bank have proactively and constructively leveraged the capabilities of trace:original to enhance their value proposition, increase cost efficiency and also enabling financial inclusion. It's a partnership which challenges us to continue to improve, for the benefit of trade. trace:original is a game changer for achieving global paperless trade, given the solutions ability to replace all physical paper documents currently in use globally, with multiple additional digital benefits."