Complex Problem Simple Solution

Complex Problem: Operational challenges

Trade financing, where banks and financial institutions provide credit facilities in order to guarantee exchange of goods, is a centuries old industry that hasn’t seen much change with the growth of global trade flows.

Banks need to transform themselves for efficiently meeting the growing trade finance demands of corporates. Corporates are looking for ways to improve their trade service quality levels, expand trade operations to a global scale and ensure compliance to regulatory bodies without incurring additional costs. The responsibility lies on the banks and financial institutions to ensure that corporates can achieve their trade goals without any friction. Banks and financial institutions need to offer solutions that automate the end-to-end lifecycle processing of trade finance operations thus satiating the corporates’ trade needs with realtime visibility over their trade transactions.

According to the analysis by the Boston Consulting Group, the global trade flows are estimated to hit a record US$24 trillion by 2026, and the trade finance revenues projected at US$48 billion in the next three years, with a growth rate exceeding at 6% a year. These statistics show us that the trade business is heading towards growth and banks need to pull up their socks and transform themselves to address the needs of trade market efficiently.

The trade finance lifecycle is a very complex process when carried out manually. The processes involved are document intensive especially when corporates function their business from multiple location and the application has to go through multiple verifications, amendments, and approvals. Digital transformation in trade finance will play a very critical role in empowering banks to provide trade finance services at lower costs and at a higher efficiency level.

Simple Solution: Improve Foundation First 

OCR technology using artificial intelligence solutions could be a meaningful innovation in trade finance operations. Its key feature is to enable the conversion of paper documents or documents containing unstructured data into a selected electronic format and subsequently deriving transaction-relevant data in structured form.

It is based on AI, which improves the scanning efficiency and can process a larger number of documents. Document processing with the OCR solution offers the user full recognition of characters or entire texts and then the selection of data contained in the document, based on key words. Some advanced OCR solutions also offer compliance checks of data correctness against transaction conditions.

Enterprises are investing large amounts in technologies that can help them digitalize their work process and increase productivity. Since data is a critical element for an organization, adoption of technologies such as OCR, which enables users to convert text data in different types of documents and images into editable or accessible formats, has increased. Analytics performed on just last ten years of trade data can open up deeper insights, trends and enhanced compliance operations.