Why regional banks must digitise their trade finance platforms right now

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© Motivate Publishing Trade Finance 2[4] copy

The Covid-19 pandemic had an unprecedented impact on trade, disrupting economic activity and the flow of goods across supply chains, which has in turn had a huge bearing on trade finance.

Trade flow values fell by anywhere between 11 per cent and 30 per cent in 2020, according to analysis from consultancy BCG, the International Chamber of Commerce (ICC’s) annual Global Survey on Trade Finance revealed.

Meanwhile banks worldwide reported an average 0-10 per cent decrease in their trade flows in the first quarter of 2020, with most expecting at least a 20-30 per cent decline for the full year, another ICC survey found.

However, despite the challenging atmosphere, banks around the world are generally optimistic, ICC stated. Even in the initial, highly disruptive stages of the global Covid-19 crisis, trade finance has remained “available and accessible”, it stated.

Looking ahead, supply chain finance and digital trade are the key growth priorities for banks, with 86 per cent and 84 per cent of respective respondents calling them an ‘immediate or near-future priority’, the ICC annual survey found.

When dealing with trade finance, banks tend to face a barrage of operational tasks as well as complex paper forms, while also needing to ensure that customers are updated on product statuses via email or phone, says global IT firm Comarch.

Hence automation and digitisation are key requirements to ensure that banks can improve efficiency and provide better services to their customers.

“The legacy applications which exist as single monolithic entities and have often been heavily customised to a particular bank needs are very difficult to upgrade,” says Marcin Stryszowski, product manager- Trade Finance at Comarch.

“Even small changes can result in the need of complete regression tests and new deployment. This makes adjusting to regulatory changes or international standards quite painful, let alone trying to keep up with innovations in the sales channels on regular basis.

“Parting ways with a monolithic approach should make it easier to keep up,” he adds.

For instance, Comarch Trade Finance is a front-end platform that allows a bank’s customers to apply for and manage guarantees, letters of credit and collections – all online. The end-to-end platform ensures the digitisation of the entire trade finance process.

For banks, adopting the platform will ensure online product applications and status checks with less paperwork, in turn reducing costs. Thanks to its modular architecture, the software can be adopted as required – so banks can choose which trade finance products are to be digitised first and develop further. The platform also comes with strong security features and is compliant with newest ICC regulations and SWIFT standards.

For customers, the features include the option to issue payment requests, accept/reject discrepancies, access an overview of credit limits for trade finance transactions and request financing. It also makes the process more transparent and responsive for customers, with up-to-date information.

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