The industries and customers trade banks serve are embracing the digital transformation of their businesses and supply chains. In turn, this is driving demand for banks to deliver services seamlessly through digital channels. To meet this challenge, trade finance is undergoing an unprecedented transformation where emerging technologies are enabling new business models while improving user experiences and bank operations, write Nancy Amert, Director for CGI’s Trade Innovation Lab and Rory Kaplan, Offering Manager for CGI’s Trade and Supply Chain Solutions.


In today’s business climate, the phrase “do more with less” has never been more apt. Trade banks are now facing fiercer competition and fighting for a shrinking piece of business as traditional trade volumes remain flat or decline (Source: “2017 Rethinking Trade & Finance: An ICC Private Sector Development Perspective”). More competition for a smaller pie means lower margins, particularly when compounded by regulatory pressure. Open account trade and supply chain finance represent a bright spot for the trade industry. Though traditional trade growth remains anemic, global trade has been growing year over year, driven by open account transactions and through channels where banks are attempting to establish new products to add value for their clients.

While efforts for more efficiency and new products occur within banks, external factors also influence the state of the market today. Consumer experiences with technology outside of banking are raising expectations of how corporate users interact with their bank. For example, if a cheque can be easily scanned and posted to a personal bank account on the same day, why does documentation in trade finance have to be so difficult? A cadre of corporate users have been influenced by the simplicity, effectiveness and seamless operation of the latest consumer applications. In addition, we are witnessing the ascent of a new generation of trade bankers. Increasingly, the executives engaged in the business are closer in age and mindset to millennials than they are to boomers – the business is seeing a shift in focus to value collaboration, technology, and change. Paired with heightened technology expectations, this new generation is scratching their collective heads and wondering why digitisation and innovation seems to be so difficult in trade.

Demand for change has resulted in the establishment of digital ecosystems and a host of new startup companies focused on changing the landscape of trade. Business-to-business networks and hubs have been formed as a place where your corporate clients are able to interact, distributing POs, invoices and other trade documentation between established trading partners. Trade banks in the future may play less of an isolated service provider role in corporate trade, and instead become a participant in these business networks, offering their services digitally. Corporates will always gravitate to solutions that cost-effectively and efficiently provide a positive user experience. It is now of utmost importance for bank technology platforms to consider interoperability and collaborative engagement as part of a core offering.


State of the trade technology market

The shifting client expectations in banking have been paired with new technological breakthroughs and methodologies that impact delivery of banking services.

Usage of APIs has greatly enhanced the ability for applications and platforms to communicate with one another in an understood language. Indeed, interaction with these new business networks is nearly impossible without leveraging the latest communication protocols. Interoperability is critical to success, particularly as the number of mobile services and external networks that banks must connect to has expanded.

Distributed ledger technology (DLT) and blockchain have taken the industry by storm, promising more secure, accessible and efficient access to banking products. Whether or not the technology is a panacea, it has become imperative for large banks to involve themselves in consortia and platforms to make sure they do not lag behind the competition. If 2017 was the year of proofs of concept for DLT, then 2018 is the year of commercialisation with several DLT platforms promising to launch commercial offerings by the end of the year.

Intelligent process automation (IPA), in the form of artificial intelligence, machine learning and natural language processing, is beginning to see uses in commercial products, particularly in the area of chatbots and intelligent data capture. IPA has the potential to dramatically alter the landscape for back-office operations. In the near future, we may see smart workers leveraging their digital counterparts to perform document examination, early compliance and AML reviews. This will lead to an increase in straight-through processing, freeing up resources that can focus on value-added activities for the banks’ customers. With access to the appropriate data warehouse, these same elements can also be used for advanced analytical techniques to derive critical information about customer behaviour for the purposes of cross-selling and risk mitigation. Understanding and accessing this data is key to maintaining an edge in a competitive market.

New technologies are being deployed via an agile development approach, iterating on deliverables in short sprint cycles to maximise the output for corporate customers. Lengthy product development is no longer acceptable; banks are increasingly pushed to react faster to the market, particularly with the rise of fintech firms. Fintechs frequently partner with banks for balance sheet, access to customers and regulatory reasons in the short term. They can often outmanoeuvre traditional financial institutions when engaging with demanding customers. The sheer volume of new entrants in the fintech space is dizzying and even the most diligent product managers struggle to differentiate vaporware from a legitimate service provider.


Transforming Trade

These marketplace challenges, and the expectations of the current generation of corporate users, can appear insurmountable. However, success, growth, and profits await the financial institutions that are able to tame the maelstrom of change engulfing the industry.

In order to prosper in this increasingly digitised environment, banks simply must deploy robust technology capabilities that both deliver on their customers’ rising expectations and respond to and anticipate future demands. CGI strives to be a leader in the trade finance technology space. CGI Trade360 is a global platform supporting many of the largest trade banks’ customers and bank operations on a single global instance. It provides nearly 50 traditional trade, open account, collateral management and cash management products, unmatched in the market. CGI Trade360 is a Software as a Service (SaaS) offering, securely hosted in a private cloud, and has recently been re-architected, making it a truly next-generation trade platform.

The new platform features a core architecture capable of connecting banks with the outside world. Hosted on cloud-based infrastructure, the new Java Transaction Processing System boasts more than 2,000 API-accessible fine-grained endpoints, plus orchestration layers to make course-grained functions available to an increasingly connected digital world. The extensibility of the platform ensures that trade banks can connect to their own web applications, while also offering ease of connectivity to external business networks.

Agile product development ensures that banks are always on the cutting edge. Connections to external business platforms are made easy by the highly secure and load-balanced trade integrator, where the course-grained end-points (APIs) are exposed to facilitate interoperability with third-party platforms, services and networks. As bank business models evolve, CGI removes the burden of tracking an ever-changing technology landscape.

CGI takes a collaborative approach to engaging as a technology partner, working closely with clients to deliver a solution that meets business needs while taking advantage of market-leading innovation. The combination of a true SaaS platform, and an extremely effective and unique collaborative community model allows banks to provide direct input into the platform roadmap and product development. This results in a superior market solution quickly shifting to meet market and business needs. Multiple releases a year ensure client banks are always ahead of the curve with the latest platform version.

CGI’s Trade Innovation Lab, established in 2016 to explore and commercialise new innovations, continues to push the boundaries of emerging technology, pairing advances in new practices with a rigorous methodology that ensures new solutions can be taken from proof of concept to commercialisation, while delivering against business needs. Recent areas of focus include IPA, DLT and interoperability with nascent business networks and national trade platforms. This exploration and flexibility in understanding, testing and improving new technologies is immeasurably important for the successful incorporation into bank offerings.

Sitting on the sidelines is no longer acceptable. Banks must rise to the challenge of today’s expectations in order to retain clients, maintain earnings and capture new business. A strong technology partner will help you navigate the transition to next generation trade finance.