Trade bankers know that, in a world running at Internet speed, standing still is not an option. The scope and scale of the changes they face is ever-changing, whether in terms of regulations, customer expectations, market conditions, supply chain innovations or a multitude of other factors. From a competitive perspective, a bank’s ability to manage real-time exposures and risks will shape its future. Even so, many executives are uncertain about how to take their trade banking systems and infrastructure to the next level.
When envisioning the future, clarity is key. One way to reach “next level” capability is to consider these five recommendations:
- Eliminate stand-alone IT systems and one-off solutions.License-based regional models that are often dependent on an initial headquarter implementation followed by a rollout to regions and branches can result in slow, costly and uneven delivery of new service capabilities. Multiple, dissimilar systems result in high maintenance costs, as well as constant or inconsistent upgrading. An integrated global trade platform speeds up time to market, improves customer service and drives long-term competitive advantage.
- Optimize global/bank-wide operations. Optimized processing models help banks to achieve a competitive cost structure and deliver consistent customer service. In addition, the ability to grow requires transformation into a global/bank-wide trade business. Industry research also shows the need for technology that is purpose-built to support global/bank-wide trade businesses on a single instance platform. Such a technology environment drives global synergies, operational optimization, consistent customer service across the globe, and real-time functional evolution worldwide.
- Manage your global business with a global view. Banks often hire global managers and then fail to provide these high-powered executives with the information they need to take forward-looking views. Such views are enabled by real-time visibility into current day risks and exposures on a global basis, as well as insight into every aspect of the bank’s trade finance business. The trade business is conducted in real time and requires proactive management of SLAs, operational productivity, risk/compliance management and bank/customer exposure.
- Address the challenges of regulatory compliance. While global trade is facing many challenges today, the costs and complexities of today’s regulatory compliance remains a major issue. Sanctions scanning needs to be automated. In collateralized lending, for instance, Basel III now requires banks to demonstrate that they have a legal stake in the commodity collateral they are financing and that the collateral is under their effective control. Generating this level of visibility requires valuation of commodities in real time, live feeds for effective collateral monitoring, and a thorough understanding of exposure across deals, commodity types, geographies, currencies, and trade counterparties.
- Stay focused on the business of trade when building, implementing and operating the trade platform. Working with a trusted technology partner that can deliver and operate your complete technology solution frees you to keep an eye on the business while leveraging the specialized expertise of your partner. Both trade banking and trade banking systems are full-time jobs, but they are not the same job. Focusing on both usually leads to a lapse in the timely introduction of new functional capabilities, which inhibits business growth and competitive advantage.
In sum, forward-looking banks are taking a more holistic view of trade transformation. Transformation touches virtually every aspect of the business, bringing together all of the fragmented parts to create a new and more powerful trade business. The hallmarks of a successful transformation include an integrated global trade platform, a superior customer experience, optimized global/bank-wide operations, real-time global management, and evolving products for growth, including trade, payables, receivables, collateral and cash products. Technology has become the key enabler behind such transformations, so banks seeking to reach the next level are investing in the right technology capabilities, making their trade bank systems a part of the solution, not the underlying problem, and positioning themselves for long-term profitable growth.
About this author
Vice-President and Senior Offering Manager, Trade and Supply Chain Solutions
Kitt Carswell has 30+ years’ experience providing trade technology for banks and their corporate customers globally, including five years running CGI’s corporate banking for Europe. As Vice-President and Senior Offering Manager for CGI’s Trade and Supply Chain Solutions group, he is responsible for the strategic ...