By Colin Camp
Now is the time to look at innovating Trade Finance Operations and Compliance by adopting new technologies such as Artificial Intelligence – the same technologies that have brought innovation to our personal lives over recent years – to automate the burdensome manual processes of today.
As countries and banks around the world start the process of getting back to normal operation, one thing that this terrible experience has shown us is that it is no longer needed, safe and viable to have large teams of people working closely together in the same office at the same location.
The drive to digitisation has become more vital and urgent, which should be lauded. We have been on the digitisation journey for some years and there are areas of the banks operations which are now fully digitised however this journey to a certain extent has always stopped at the door of Trade Finance and specifically Trade Finance compliance.
The manual nature of this operation, caused because of the abundance of paper-based documentation in this process, has long been accepted as a necessary evil despite being a strain on the profitability of the business.
Businesses trying to do cross-border trading activity during this time have been thwarted in being able to move goods from one location to another due to the inability of the players in the supply chain including banks to transmit and process the necessary paper documents. This has rightly caused a demand for the process to be reformed and laws in various countries requiring paper documents to be amended. The ICC published their guidance paper on the impact of COVID-19 on trade finance transactions issued subject to ICC rules covering these issues including proposing amongst other suggestions banks having the ability to process transactions using faxed, scanned or emailed images of documents.
So, the digitisation movement for trade finance is taking a huge step forward however as can be applied to the emergence of blockchain platforms across the globe, these changes are not going to happen overnight. Like it or not, paper-based documents will be with us for the near future.
So, what do banks do when their trade finance volumes start to pick up as businesses start to get back on their feet and start trading especially when staff are still either fully or partially working remotely from home. How do you run an operation which is reliant on a manual workforce when the workforce isn’t operating at 100% capacity? In addition, how do you safeguard your business if there is a second/third lockdown or another event causing significant impact to your business?
We’ve all heard the old saying, “Necessity is the mother of invention.” While the provenance of the proverb is uncertain, its truth is not in doubt. One may consider the terms “invention” and “innovation” as synonymous, or at least very closely related. Necessity forces us to think differently. To simplify our lives—to make things better, faster, cheaper—we often need to take a new approach. In an effort to make day-to-day lives easier, we sometimes need to innovate, to envision a new way of doing something. Necessity has spurred humans to innovate throughout the ages.
Now is the time to look at innovating Trade Finance Operations and Compliance by adopting new technologies such as Artificial Intelligence – the same technologies that have brough innovation to our personal lives over recent years – to automate the burdensome manual processes of today.
The ability to automatically extract data from paper-based documents, verify, validate and compare exists today with smart OCR and Natural Language Processing techniques. The ability to automatically screen for sanctions and embargos, dual-use-goods and other compliance red-flags exist today with those technologies and the use of Machine Learning.
Correctly deployed, these technologies can allow banks to operate on significantly lower workforce numbers, process significantly more transactions and more importantly in these days, allow remote operations and investigations of any alerts created.
With the current market turmoil, can banks avoid the need to innovate for now and the future.