By Jacco de Jong, Global Head, Bolero
Banks have long been struggling to keep pace with the ever-changing demands of their corporate trade customers. In recent years, those customers have become more demanding, more sophisticated, and more mobile. They now expect their banks to provide them with the same level of service and convenience that they receive from the leading online retail companies.
In response, banks have been investing heavily in developing their own digital capabilities. However, they have been largely unsuccessful in meeting the expectations of their customers. The problem is that banks are not digital native companies, and they are therefore not able to move at the same pace as the fintechs that are disrupting the financial services industry.
The good news for banks is that there is a solution to this problem: they can partner with fintechs.
Fintechs are typically much smaller and more agile than banks, and they are often able to develop new products and services much faster. By partnering with fintechs, banks can outsource the development of new digital capabilities to companies that are better positioned to meet the needs of their customers.
Banks that lead in facilitating digital trade services and prioritizing the support of digital trade are using innovative fintechs to build fast, future-proof solutions.
These are the top priorities large banks are considering as they future proof their trade finance communications, and these are some of the factors that have nudged financial institutions to pursue solutions from external vendors.
Delivering a revolutionary, digital user experience
Through trade portal as-a-service solutions, banks are now able to allow their trade customers to not only conduct transactions, but overtime be able to fully handle directly from a single portal application, advising as well as utilisation of electronic documents.
Many of the world’s largest financial institutions are not able to offer a fully digitised service to their trade customers due to the immense cost, time and complex implementation processes required to offer a fully digitised user journey. But with advancements in recent technologies like Bolero’s Galileo, banks are well placed to offer truly digitised experiences to their customers to conduct their business at speed and with great efficiency.
The pandemic has highlighted the inherent inefficiencies within trade finance operations and as a result, the demand for digital trade services is at its peak. Trade customers today want to conduct their business online therefore it becomes vital for banks to digitise the customer experience as quickly as possible or risk losing that customer.
Breaking through the limitations of current portal solutions
As a result of corporates’ digitisation of their trade finance processes, banks have been under significant pressure to provide new and improved digital services to their corporate customers who are pushing for a fully digital experience.
Some of the banks we have spoken to tell us that their existing portal solutions do not meet the requirements of their clients anymore.
Corporates today are looking for solutions that could adapt quickly and flexibly to new requirements so that they could offer their corporate clients a quick and smooth transition from the old to the newer more innovative systems. They can handle their trade finance transactions as well as having all correspondence between their trade clients and the banks electronically.
Avoiding costly ownership and maintenance
Many banks consider the total cost of ownership for a trade portal prohibitive, and as a result, they are reluctant to offer improved customer experiences. This reluctance slows down adoption despite the considerable demand from their trade customers.
A subscription-based, turnkey solution can reduce the cost of prospecting, which in turn reduces the cost of acquiring new clients while also reducing the need to hire support staff who create upgrades or provide regulatory-change compliance.
Banks that replace their legacy systems with a state-of-the-art technology platform can provide their customers with a more sophisticated digital experience at a lower cost than they would have paid previously.
That’s not all, for smaller more regional banks that do not have many trade clients, the efforts and resources associated with installing a portal solution for their clients often are not worth it. A plug and play solution open the market up for financial institutions of all sizes.
Innovation without being held back by technical debt
Technical debt discourages banks from building bespoke applications because they do not want to deal with the expensive upkeep required after a system is built.
Many banks have changed course by adopting white-labelled solutions, which reduce costs and free them from the burden of constant updates for their trade customers.
By upgrading their online banking platforms and making changes to improve the customer experience, they are encouraging innovation in a booming industry without having to deal with the technical burden of developing the new platform in-house.
Creating an end-to-end digital experience for corporates
Many of the existing legacy portals we see banks use today do not allow for corporate clients to manage their own trade transactions and products like Letters of credit, guarantees, electronic bills of lading and standby Letters of credit.
As corporate clients become more demanding of their trade partners to embrace digitisation and increasingly rely on technology to conduct business, banks are stepping up to the challenge by delivering enhanced user experience, improved functionality, and a broad suite of connectivity options.
Structured bank communications and audit trails
Structured bank communications and audit trails between banks and clients are very important. Banks have the responsibility of ensuring that their communications with clients are structured and clearly defined to avoid any ambiguity or uncertainty. It is also important that the correct parties respond to the communication in a timely manner, such that there is an appropriate audit trail for all individuals involved.
For example: On many occasions, we have seen cases where a client receives a notice from the bank but does not respond to it immediately. In some instances, the client may not be aware of the deadline or may be unaware of what actions need to be taken as a result of receiving this notice. The lack of proper structure and clear messaging can often lead to delays in responding to requests from banks.
Improved connectivity and customer stickiness
As demand for multi-bank trade finance solutions has more than doubled over the last few years, an increasing number of corporates that use the services of multiple banks are finding it inefficient to work with every bank on an individual basis.
Larger corporates have the bargaining power to dictate to their banks the formats they should use, however for smaller corporates, buying or building a multi-bank solution can prove to be expensive – and then they convince their banks to work with it.
The growing demand for multi-bank solutions presents a difficult hurdle for many banks which must focus on client needs.
In conclusion, a black swan event has forced corporations to adapt to new technological standards, creating chaos and new opportunities for businesses. Banks must do the same to keep up.