Financial software developer Misys and paperless trade platform provider essDOCS have teamed up to work on integrating two of their trade finance solutions. The move will see further digitisation of trade finance processes and could provide a one-stop shop for banks in supply chain financing.
The two companies have initiated a statement of intent that will see essDOCS’ CargoDocs electronic documents (eDocs) capabilities integrate with Misys FusionBanking trade services solutions. The combined platform will aim to allow digitised documents along the physical supply chain to be available for use in the financial supply chain.
With more readily available digital documentation, banks will be able to reduce transaction processing times for clients, minimise discrepancies and provide greater visibility to clients around the movement of goods, say the companies in a joint statement. The additional transparency will also help banks to assess working capital, reduce risk and identify new opportunities for post-shipment finance.
“We are dipping our toe in the water to begin with. We will start with a simple interface between the two applications,” David Hennah, head of trade finance at Misys tells GTR.
“Eventually, based on market demand and through demonstrating that we are delivering something valuable to the banks and the corporates, we will perhaps create a module with our technology that incorporates essDOCS.”
According to a recent report by Bain & Co. about 50% of banks’ cost for a letter of credit arises from manual document handling and checking, which creates delays, errors and expense.
“In today’s world of trade finance, gaining visibility of trade and shipping documents can take up to five days, and that is simply too slow. Automating paper-based processes saves valuable time, drives efficiency and, importantly, enables banks to make data-driven decisions, given better oversight allowing them to serve their corporate customers more effectively,” says president at Misys Simon Paris.
The combined platform will also provide a single solution for corporate clients and supply chain participants to link eDocs to transactions and allow all parties to see and manage documentation and track goods along the physical supply chain, explains managing director of essDocs Jacco de Jong to GTR.
Despite the potential advantages of digitisation, the trade industry has so far been reluctant to embrace existing propositions. By bringing two digital obligations together, which separately have had limited traction, Misys and essDOCS hope to make the offer a more compelling one.
“This statement of intent is to generate interests and leads,” says Hennah.
“We need to demonstrate measurable value of what we are doing. A lot of trade business, I would suggest, is being done at a loss because they don’t have metrics in place to prove value – and that’s what we need to help them to do. If we can demonstrate savings, it becomes a no brainer.”
At this stage the companies need interest from only one bank in order to proceed with building a prototype interface, but hope market demand for the product will see them able to offer a deliverable in 2017.