Revolutionizing the Financial Markets

36
Sponsored Section
Trade
Finance
for the
Digby Bennett
Regional Sales Director at China
Systems Corporation
Digby is a veteran of 35 years
of Banking and its associated
technology, with 19 years in
product and sales roles at
China Systems.
Ages
A busy 12 months installing SCF has underlined the continuing drive
to open account financing and the steady erosion of the traditional
trade model. As commodities markets continue to suffer their cyclical
decline the trading houses are looking to extract real efficiency and
speedy turnarounds for documents and electronic document handling
is increasingly seen to drive those efficiencies. Companies such
as Bolero are beginning to see appreciable volumes after years of
investment.
On the other side, the banks are hamstrung by high internal
revenue targets designed to meet the cost of compliance and
deleveraging brought about by higher capital and liquidity
requirements imposed by Basle rules. Consequently business
focus has moved from smaller businesses to focus increasingly on
structured and tailored solutions to maintain revenue intensity. The
banks have also had to face up to the challenge of an ever-aging
pool of talent in trade finance, and this has resulted in a greater use
“hub-and-spoke” globalized trade processing model to centralize
the scarcer trade talent, while also attempting to improve processing
costs for clients.
Together, these trends mean that Banks are focusing more on
the digital bank experience through electronic channels rather
than branch networks to drive throughput. Documents such as bills
of lading are being made electronic with supporting documents
being scanned into centralized document management systems for
processing. While BPO has not yet made mass-market adoption, a lot
of the footwork is being put in to lay the foundations.
Enhancing the client experience
The client experience is “glued” together with strong workflow
management that enables “follow the sun”, and work-sharing
between teams in major banks and customers alike. For corporates
Shared Service Centres, or Centres of Excellence are putting in place
uniform processes to drive “vanilla” processes, while structuring
teams work on the complex processes.
In banks nowhere is this centralization more exemplified than
by the growth of the middle office function, which brings risk
management skills and structuring together into a single function.
The middle office sits between the back office, the sales team and the
client to provide the optimal structure for risk mitigation and revenue
accrual. In one major case, China Systems, has built complex online
work-sharing that connects the bank and the client throughout
the transaction initiation. This is aimed at reducing the scope for
errors through strong collaboration. Documents are exchanged
and commented on through an auditable process until finally the
transaction is submitted for processing. This ultimately speeds up the
processing time, while ensuring that the bank is properly protected.
In another case, the bank has brought together processing of open
account and trade transactions onto a single operating platform,
thereby enabling the client to deal with one team and experience
a single integrated operating model from initiation to fulfillment.
Again the benefits in speed, and efficiency are significant as the bank
eliminates internal competition for the same client, and creates a
platform to enable the most optimal structure to be delivered.