Most of the pain points outlined in Figure 1 can be alleviated using digital trade ecosystems. Generally, corporates, banks, importers, and exporters want the same goal: to make trade simpler and cheaper. Automated trade processes reduce manual effort, reduce errors, and increase consistency. Further, digitalizing the process will offer greater transparency and connectivity among the ecosystem of trade finance: importers, exporters, customs agencies, shipping companies, and banks.
According to the 2020 ICC Global Survey, 83% of global banks have a digital strategy for trade finance in place. Of the various digital technologies surveyed, banks picked online platforms as the most implemented approach. Swift MT798 came in second, followed by APIs, imaging, and OCR.
Trade Finance Automation Technologies
Distributed Ledger Technology: DLT could be a real game-changer in trade finance thanks to several features: It provides real-time review of documentation. It offers complete transparency (for all parties), immediate access to information, and the ability to conduct peer-to-peer transactions. A DLT-based solution could make end-to-end automation a distinct possibility.
Imaging, Optical Character Recognition, and AI: OCR in conjunction with AI can offer a perfect trade finance solution. The key feature of this technology is the ability to convert paper documentation into a specific electronic format, which will greatly reduce processing time. Subsequently, valuable transaction-related data and information can be gathered in a structured form.
Robotic Process Automation: RPA is a business process tool that automates tasks that are repetitive, manual, and/or rule-based. In the realm of trade finance, RPA can monitor and classify documents, manage compliance checks based on specific conditions, and extract eligible data. While rule-based and labor-intensive processes are perfect candidates for RPA, processes that require validation or judgment may not be a good fit. Here, banks may consider enhancements along with the traditional RPA.
Application Programming Interfaces: API acts as a plug-and-play interfaces between different systems and the embedded data. APIs not only improves efficiencies but also creates new opportunities and new solutions and enhances existing applications Increasingly banks today are looking to leverage agile technologies, including microservices operated in the cloud to improve operations with automated processes, and therefore increase the efficiency of doing trade.
Benefits for Banks
Given the growth and importance of trade finance – and the critical role of banks in initiating and facilitating end-to-end trade operations – it’s important for banks to evaluate technologies like the ones described here.
In considering these technologies, banks must balance the need to address current trade finance requirements with future requirements; trade finance is a fast-changing, dynamic area. Banks may still be far off from fully automated trade finance operations, but even a partially transformed process can deliver real results and help them deliver a more automated, more seamless, more effective experience to their customers.
Wipro Capabilities in Trade Finance Automation
Wipro’s expertise in the automation of trade finance covers the entire value chain, including letters of credit (import and export), guarantees (inward and outward), loans, collections (import and export), shipping guarantees, and reimbursements. By integrating OCR, machine learning, and decades of experience, Wipro’s enterprise-ready trade finance solution delivers maximum value and minimizes risks.
The platform supports global implementations using a single instance, both on-premise and cloud-based. It integrates seamlessly into current business processes and can be rapidly deployed for production use. And, when integrated with back-office systems (auto block transactions, hard link to source data), Wipro’s solution minimizes risks and increases productivity by shifting manual processes to straight-through processing.
Ultimately, with Wipro as their trade finance technology partner, banks can focus on their biggest source of competitive advantage: client service and building relationships.