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Trade Finance

Improve compliance and efficiency by automating and centralizing standard trade processes.

Overview of Trade Business

With shrinking margins in trade finance business, the biggest challenges that banks are facing today include improving service levels, increasing scale of operations and ensuring regulatory compliances without adding additional costs.

As paper based trade processes are likely to continue to dominate, banks are looking forward to streamline inefficiencies in trade operations by automating trade operations in an electronically driven paperless environment.

With the ever growing competition, it’s imperative for banks to optimize the complete trade finance processing, from origination, issuance, amendment to collection. Most of these banks provide Trade Finance and International Banking Services to their commercial customers to help them expand their business in the global marketplace and maintain their margins and profits.

Typical Trade Finance Services include issuing Letters of Credit, Short and Medium Term Trade Finance Instruments, International Payments and Collections.

Challenges

While banks leverage their Core Banking System to maintain the customer accounts, limits and loan transactions, the overall trade processes remain highly manual, fragmented and paper driven. Banks have tried to automate trade initiation partially using standalone application for data capture, application processing, workflow, document management etc. but the unified end-to-end trade finance automation is missing.

Some of the key challenges arise from the fact that core banking systems competently act as transactional system, however they do not provide Trade Finance Module. As a result banks need to adopt third party trade applications.

Finance-World

Solutions

being used by banks to handle Trade Finance Business

Home grown applications

Most of the big multi-national banks are using home grown applications to handle their day to day trade finance transactions.The solution is customized to the specific needs of the bank, but it has an additional reoccurring cost attached to it and time to market is also high

Over the Shelf point solutions

Second option available to banks is buying a ready to deploy point solution along with their core banking system. Point solutions are domain rich and ready to deploy, but the initial cost of the product is very high and getting bank specific modifications will cost a fortune

Best of Both the Worlds

Our Trade finance solutions accelerator is BPM framework based domain rich solution, which is flexible enough to capture 100% bank specific requirement and is also quick to market

Banks are looking to scale up their trade finance business and increase reach in financial supply chain by extending purchase order and invoice discounting to their trade customers. However, the standalone, manual & disjointed systems are not only acting as barriers to operational efficiency but may also expose the bank to risks associated with compliance and controls.

Advancements in technology have raised the bar of expectations of the corporate customers. They prefer to reach out to banks which can provide efficient, web driven, cohesive and integrated services to suit individual customer needs. Trade Finance customers expect banks to

  • Provide solutions that allow them to seamlessly connect with the bank in order to complete their international trade transactions through web portals and/or handheld devices
  • Perform follow up activities required in completing life cycle of a trade
  • Be one-stop-shop for all trade instrument needs viz. documentary products, guarantee products, payments, SWIFT, purchase order financing, invoice discounting etc.
  • Meet SLAs for processing the trade transactions without any error

Investment in automating trade operations and tight integration with core banking system will result in improved efficiencies, better decision making while ensuring compliance. Technology can drive this transformation by enabling smart automation, seamless collaboration, straight through processing and effective integration.

Factors contributing to low trade finance efficiency include:

  • Lack of end-to-end automation – Repetitive work in multiple applications leading to operational inefficiency
  • Movement of physical documents – Trade finance is one of the most document intensive work which necessitates movement of documents across departments and users resulting in higher turn around time
  • Missed TAT and SLAs – Too many manual actions across different teams, sometimes leads to push transaction in no man’s land or remain unattended, resulting in missed SLAs and customer dissatisfaction
  • Manual handling of regulations – Manual control for regulatory, internal compliance, domestic & international trade guidelines, country specific compliances
  • Inefficient tracking of transactions – Spreadsheets based manual processes for transaction tracking, income/commission calculation resulting in profit margin leakages
  • Manual compliance and exception handling – User need to refer the policies and procedures every time an exception of internal compliance issue to be raised, to check for exception handling matrix
  • Unproductive resources distribution – Economic non-viability to post a dedicated trade finance staff at a branches where business volume is low
  • Poor inter-departmental co-ordination – Ineffective coordination between different departments, like trade operations, branches, Credit limit, FX Treasury etc.
  • Lack of automation capability – Banks need the capability to define & collect customer specific charges, do compliance check at initiation due to inter country movement of documents and review capabilities at branch

SOUTH AFRICA

Johannesburg Office

35 Fricker Road, Illovo, Johannesburg, 2196, South Africa.
Entrance in Harries Road.

Phone

+27 11 480 4865

Fax

+27 11 642 6011

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