How Automation is Benefiting Trade Finance


Since the time of even the world’s first civilisations in Mesopotamia, trade finance has been around to bolster our economies. A thousand years later, much of the world’s major industries have integrated technological systems and solutions into their core operations.

Despite this, trade finance still urgently needs updating. To keep up with the changing times, the industry needs to change their mindset on digital transformation. In recent years, more finance companies in the new normal are seeing automation as the key to success because it can process large data sets quickly and with fewer errors. This can help companies keep up with rapid developments in the industry such as shifting market demands and consumer values.

When it comes to trade finance, the rewards of technological integrations are no different. These benefits provided by one of the cornerstones of digital transformation –automation–may convince you to do just that.

Streamlined processes

Automations streamline operations like application processing into four precise, mechanised steps: digitisation, classification, data extraction, and the detection of fraud and suspicious activities. These steps will be expounded later on in the article, but know that such a flow is shorter and more efficient compared to analog trade finance processes that involve lengthy back-and-forths. With less time (and, consequently, money) spent on menial tasks, companies can redirect their resources to more profitable undertakings like finding talent or developing new trade partnerships.

Digitised documents

Current analog methods in documenting trade transactions often produce unreadable documents and a lack of consistent formatting. This manual gathering of data for analytics takes too much of a trade institution’s time and resources. Fortunately, there are cost-effective automation tools like intelligent data extraction that can read any type of document, take salient information, and convert it into a digital file that follows your company’s standard format. Intelligent data extraction tools will automatically send it to your enterprise resource planning (ERP) software, and inform how it can best streamline your company’s various processes.

Future-proofed systems

In recent years, the industry witnessed how exponential and unpredictable global transformations can disrupt trade finance. That’s why we mentioned in a previous article that technology can help future-proof trade finance by anticipating multiple security issues your organisation may experience in precarious times. In particular, we discussed that complex AI-powered automation can be used to power data analytics and streamline risk management. With it, you can generate information and insights from a client’s trading records all while putting together their credit history, internal affairs, and standing amid market or economic fluctuations. You can then determine whether they are a worthy investment or a high-risk one.

When it comes to fraud, an algorithm can slowly learn the patterns of fraudulent activity over time with the help of human specialists. By using such automated tools over time, your company’s resilience to such risks improves as well.

Refocused human resources

Since automated systems can handle verification and repetitive tasks, employees can shift their focus to areas where the human touch is a necessity. For example, they can focus more on providing quality customer service. After all, clients still prefer to interact with human representatives. As such, when utilising automation, take it as an opportunity to refocus human resources into more important undertakings that can establish your company as a formidable player in trade finance.

It will take years before the trade finance industry will fully automate its processes. Yet with mechanised operations promising to increase productivity and resilience, banks and other financial institutions should consider automation as vital to their long-term resilience and growth.

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