Digital Themes

Trade Finance Process Automation

What is Trade Finance Process Automation?

Banks and financial institutions are increasingly recognizing trade finance as a crucial element to the success of their future and ongoing business strategies. Trade finance, however, remains labor-intensive and often paper-based, leading to lengthy transaction turnaround and costly processing errors. Trade Finance Process Automation involves understanding and prioritizing processes that can be automated for better and faster service trade finance solutions.

Leveraging technologies such as robotic process automation (RPA), cognitive process automation (CPA), and deterministic process automation (DPA) can improve a bank's agility in approving new trade requests, reduce their trading headcount, improve audit confirmations, expedite acceptance bookings, accelerate payment import, and even facilitate loan liquidation.

With technology enabling banks to be at the forefront of digitization and process automation, the trade finance industry is getting progressively revamped. Some banks are digitizing their front-end operations, and others are working with blockchain-based networks to fully automate their trades.

Trade finance processes involve high volumes of documentation and constant auditing, extensively utilizing paper documents throughout the cycle of the transaction. As all documents are subject to compliance audits, there is an obvious advantage to automating these processes. The currently manual and very error-prone processes lead to issues with extended trade finance transaction times, storage and handling fees for all documentation, and costly error rates during manual document authentication.

Trade finance workflow generally involves a bank receiving the transaction documents (e.g. commercial invoices, application forms, insurance documents, purchase orders) and the subsequent manual data analysis, audit, and processing of those documents. From the time the bank receives the document to the time the transaction is approved or denied involves several manual detail verification steps. Automating some of the more labor-intensive checks can expedite transactions while improving accuracy and compliance. Thus, process automation solutions can reduce both labor costs and the average handling time.

What are the benefits of Trade Finance Process Automation?

  • More Profitable Man Hours: Persistent demand for manual intervention slows response times and increases errors. A financial employee’s time is a highly valuable asset. Using process automation reduces the time that employees are performing repetitive and mundane verifications, and allows them to focus their time on more lucrative ventures. 

  • Improved Efficiency and Productivity: Automation easily leads to quicker turnaround times for transactions. In the highly competitive trade finance sector, that is an invaluable advantage to have. Keeping up with client requests and approvals when the market is up, and having around-the-clock robotic approval or compliance check functionality allows financial institutions to stay competitive and reduce customer churn.

  • Fewer Errors: Manual processes are extremely prone to errors. Automating some of the existing processes that aren't dependent on reason and judgment - simple keyword or compliance checks - not only removes the propensity for error in those steps but also frees up mental bandwidth in employees usually fatigued by the monotonous and repetitive checks.

  • Improved Global Trade: Trade finance is heavily focused on documentation, but international trade finance involves even more documentation on cross-country regulations and international trade compliance. Trade finance process automation can reduce some of the time and expense immersed in international trade documentation.
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