Modern Trade Finance Solution in Operations for Banking Industry

Commercial banks are currently facing a wide array of challenges. Not only have the service expectations of corporate and institutional customers shifted dramatically in the past generation, but regulatory compliance is also the most complex it’s ever been. The rise of sophisticated malicious actors has also placed an undue strain on the resources of banks and other financial institutions.

However, current trade finance solutions have made it possible for commercial banks to not only meet these challenges but take their service offers to the next level as well. Here are some reasons a modern trade finance solution may help your bank raise its operational standards.

How Modern Trade Finance Solution Help Operations in Banking Sector

The financial services business is under a lot of pressure from competitors. Economic and political considerations, ongoing regulation, and fast changing markets all contribute to an environment that is highly complicated and dynamic. These concerns will lay the groundwork for a wide framework and service processes for functions of management. Consider how modern trade finance solutions may assist banks in managing their operations.

Guarantees Compliance 

Regulatory compliance gets more and more complex every year. Banks with outdated systems may find it harder to maintain these critical standards without the inordinate use of resources. 

By updating to a trusted trade finance solution that’s maintained by a qualified SaaS (software as a service) provider, banks can easily keep up with the different regulatory standards that come up each year. This not only saves time but also greatly reduces the risks of noncompliance.

Multiplies Manpower

Today’s trade finance solutions can easily automate common functions and dramatically reduce the amount of manual data reconciliation needed. This not only guarantees better data accuracy but allows a smaller team to effectively handle a larger workload. This may help smaller banks and financial institutions gain the capabilities of their larger competitors.

There are other benefits to manpower as well. Users of the trade finance system can spend less of their time on necessary but low-value tasks such as compliance and data management. This effectively frees them up to do higher-value work, such as gaining new accounts, strategic financial management, customer relationship management, and strategic planning.

Improves Forecasting

While older generations of trade finance software were fairly capable, they do not benefit from the advanced machine learning and artificial intelligence features of today’s software. These advanced algorithms allow fast and highly accurate modeling and forecasting, something that is especially important in today’s complex and fast-paced markets.

Better forecasting allows banks and other financial institutions to reduce risk, which also allows them to better offer services to a wider range of customers. This, in turn, can be critical for increasing the bank’s revenue and widening its customer base.

Expands Potential Services

Not only will better software enable banks to serve more customers, but it can also be instrumental in creating new financial products. The ability to better gauge risks can enable banks and other financial institutions a freer hand to innovate with their products and services. 

Where a new financial product offer once tended to be difficult to validate and justify, the superior risk modeling offered by newer trade finance solutions can easily truncate the otherwise tedious development process. This may enable banks to serve more customers or even pivot towards a completely new direction without needlessly exposing themselves to risk.

Prevents Emergent Cyberthreats

As mentioned earlier, malicious actors are now more sophisticated than they have ever been. Some of them even have the resources of entire rogue governments behind them, making them an extremely credible threat not just to individual banks, but to the financial and economic systems of entire countries and trading blocs as well.

The machine learning and AI incorporated in newer trade finance software suites can dramatically improve an institution’s protection from all kinds of cyber threats, including from these state-sponsored entities. In addition to protecting the banks and institutions themselves, these new capabilities also serve to shield clients from fraudulent activity by automatically detecting even novel attempts to exploit the system.

Reduces Overhead Costs

Not only do newer systems protect banks and expand their capabilities but they also help them reduce their overheads as well. The time savings, increased accuracy, and reduced need for manual labor all help contribute to reduced baseline costs that keep the institution competitive.

These cost savings are expanded for SaaS systems that are hosted on the cloud. Not only are banks freed of the need to maintain large and well-trained finance IT teams, they no longer need to maintain servers and other critical equipment on-site. This also allows for some interesting setups for financial institutions. Having a remote-hosted system can potentially enable them to enter new markets without the need to establish and maintain a brick-and-mortar location.

Is It Time for a New Trade Finance Solution?

If your current system is still unable to reduce manual data reconciliation or has trouble keeping up with regulatory compliance, then an update is probably necessary. Systems that are unsuited for taking on the challenges of cybersecurity and new market opportunities presented by cryptocurrencies, NFTs, and other emerging asset types should also be replaced. 

If you believe that your institution may benefit from an update, be sure to choose a reputable vendor that can offer solutions that closely match your institution’s current objectives. This may help bring down development and customization costs and result in a more reliable trade finance solution.


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