Modernizing Trade Finance with Low Code (Ankur Rawat)

Trade finance continues to serve as an essential enabler for global trade growth. The expected growth of the
trade finance market was valued at $63.5B in 2019 and is expected to grow to $79.4B in 2026! The trade finance market has recently witnessed a shift, primarily driven by pandemic disruptions,
technology, globalization, and real-time access to data. Since trade finance serves as a critical pillar for banks’ future business strategy, the shifting realities are pushing banks to face a make-or-break moment.

Banks need to modernize trade finance operations to keep up with customer expectations

Today’s digitally savvy customers expect a seamless digital experience with their banks. Banks need to be able to provide solutions to enable customers to seamlessly connect with the bank and complete their international trade transactions through mobile
devices or web portals. Customers expect a transparent and real-time update of their trade finance requests across the process lifecycle. Meeting SLAs and ensuring error-free trade transaction processing will ensure customer satisfaction and positively impact
the revenue from the trade finance business.

But banks face tedious challenges in the trade finance process that act as bumpers

While banks race to digitize, the modernization of the trade finance process has yet to gain traction. By its nature, the trade finance process is highly manual and fragmented as it entails heavy documentation, checks, and levels of approvals. According
to this research, experts reckon that
nearly four billion documents and pages get circulated in documentary trade alone! In this situation, the lack of end-to-end automation leads to low efficiency and delayed processing cycle times. Poor-interdepartmental coordination (including credit limit
departments, trade operations, FX treasury, etc.), myriads of domestic and international compliances, and multiple stakeholders add to the woes of bankers.

And low code-based trade finance platform can help tackle these challenges

Let’s have a look at what a low code trade finance platform can do for your organization:

• Become lean and agile with a unified front and back-end

According to research by EY,
60% of CROs stated that IT obsolescence and legacy systems are an emerging risk in the next five years! This is why banks need to turn towards low code platforms to reduce dependency on multiple applications, quickly design critical applications, tie customer
portal with the back end, and respond to market changes faster.

• Tame compliance complexity: Anyone who has ever worked in a bank can understand how important compliances are for the industry. Financial regulators, locally and globally, continue to update rules and regulations, and keeping up with these ever-changing
  compliances can become challenging, especially for a sector like trade finance. Data by EY indicated that
  
  manual compliance reviews consume nearly 30% of banks’ trade operations capacity. An in-built business rule engine in a trade finance platform makes it easier for banks to configure compliance needs and address different compliances such as ICC, UCPDC,
  and URG, among others.  

• Orchestrate user journey for an enriched  experience

It can be challenging to generate business value when the workforce is engaged in putting out fires and performing error-prone, manual tasks rather than value-added activities. Low code platforms allow banks to configure user journeys—be it customers or
banks’ users—to create a frictionless experience through end-to-end workflow automation. For customers, banks can orchestrate their journey from origination on the customer portal/multichannel to seamless document submissions, verifications, real-time customer
communications (Advice and SWIFT), and more. For bank’s users, the journey can be orchestrated by including automated processes of extraction and data validation, auto doc check, intelligent case routing for approvals, auto AML and compliance checks, and more.

• Integrate core system with multiple third-party applications

With a low code trade finance platform, banks can seamlessly integrate with treasury systems, sanction screenings, anti-money laundering systems, and third-party applications such as credit bureaus. This ensures that your bank can make the most out of your
current technology investments and enable seamless information flow across departments.

• Arrest trade origination challenges

Banks spend almost 65% of their transaction efforts on originating trade finance requests. Inefficiencies like this can be costly. A trade finance platform with capabilities to digitize documents through the ingestion of docs from multiple channels, perform
auto doc checks, and validate documents for ICC, UCPDC, URG, etc., can help banks address origination challenges.

To conclude

A trade finance platform built on low code can lend a competitive advantage to banks and win big in the profitable trade finance business. Banks can future-proof their offering if supported with cutting-edge technologies like AI, ML, RPA, and blockchain.