Digitalisation stays firm at the top of trade transformation agenda
The increasing burden of AML checks and ‘false positives’ add significantly to the cost of compliance
The digitalisation of trade finance services and measures to combat counterparty risks occupy the mind of trade financiers
The ongoing slowdown in global trade, exacerbated by the US-China trade tension, has reduced transaction volume, increased compe- tition and eroded margins in the trade finance business. This situation may have inadvertently accelerated banks’ quest to reduce costs and improve profitability. Moreover, corporates’ growing demand for shorter processing time, greater visibility and automation of processes, coupled with the need to mitigate the growing risk from trade-based fraud and anti-money laundering (AML) and sanction violations have driven trade finance providers to explore and implement agile digital trade solutions.
This year’s Asian Banker annual survey of trade finance trends highlights swathe of chal- lenges such geopolitical uncertainty impacting trade relationships, associated shifts in supply chain patterns, tighter know your customer (KYC) legislation, emerging technology and lack of wider adoption of industry standards, all making trade digitalisation a rather tough climb. Commercial banks are recognising these chal- lenges, and rolling out customised/structured trade finance solutions to cater to specific client need. Banks are also accelerating innovation of electronic/paperless trade processes, and upgrading online product/channel facilities to reinforce core bank-enterprise relationship. The best practices identified in the survey include conversion of manual procedures to reduce pro- cessing time across wider ecosystem, strength- ening KYC processes for earlier risk detection and streamlining due diligence processes.
Please login to read the complete article. If you already have an account, you can login now or subscribe/register.