• Marc Smith , Founder, and Torben Sauer, CEO, at Conpend


• 24.09.2021 02:30 pm
#Trade #compliance #security

Thanks to critical concerns regarding compliance and security, combined with the complexities of upgrading legacy platforms, banks have been some of the most difficult organisations to digitalise, despite the obvious benefits. Nonetheless, the sector has made great strides in the past several years, which paid dividends in the near-seamless service from most banks as business continuity plans were implemented during the 2020-21 Covid-19 pandemic. 

Trade finance is an industry that has had to adapt more than most, however. Too reliant on stretched supply chains – reaching into some of the least technologically-enabled parts of the planet – paper-based documentation remains a persistent problem. This hinders the digitalisation of trade finance, which, according to the International Chamber of Commerce (ICC), covers around 80% of cross-border trade. In fact, a recent ICC survey saw 45% of bank respondents report that physical paper for documentary transactions had been removed “to no extent”, leaving trade finance somewhat in the doldrums with respect to digitalisation, despite a strong desire among banks to optimise processes. 

Could automation be the answer? To explain: larger banks have addressed the paper-based challenges of trade finance via their use of low-cost trade documentation service centres. Here, extensive volumes of trade finance documents are checked manually – a hugely time-consuming task that leaves the entire value chain vulnerable to delays and human-error. Errors that – given the punitive fines now habitually presented to non-compliant banks (around US$10 billion in 2019 alone) – have compelled banks towards seeking help via automation. 

How automation can help

Powered by the advancements of artificial intelligence (AI) and machine learning (ML), automation can provide banks with the perfect solution to bridge the technological divide that currently exists within the global supply chain. 

With automation, paper-based documents can be scanned into digital documents, and the contents can be read by AI applications that check documents against pre-defined rules – for example, compliance requirements and legal specifications. ML enables such applications to also build knowledge continually from all the transaction and data it has processed, resulting in the solution constantly updating and improving itself. 

By leveraging automation, workers are liberated from the burden of time-consuming and repetitive manual processes that encourage errors – instead focusing on the more meaningful task of assessing and resolving the anomalies discovered by the AI application.  

Also worth noting: automation via AI works seamlessly between both paper and digital documentation. This means that, while neutral with respect to how the documentation is delivered to the bank, it does nothing to prevent the future digitalisation of trade documentation. Automation via AI therefore perfectly complements existing trade finance processes, while simultaneously driving a bank’s digital transformation journey. 

Our recent whitepaper on trade – Trade finance document checking and data management: the case for automation – explores further the benefits of automation.