The Conpend TradeAI app is now available on Finastra’s open development platform, FusionFabric.cloud. The app digitises the document checking process in trade finance to reduce the risk, processing time and cost of operations.
Since it was established in 2016 as a spin off company from consulting firm Proferus, Amsterdam-based Conpend has focused on making the manual examination of paper and virtual documents in trade finance digital. Now, the company sees value in extending its expertise to other products, including trade-related loans and KYC processes.
GTR speaks to Marc Smith, founder and director at Conpend, about the company, its relationship with Finastra, and branching out of trade finance documentation.
GTR: It has been four years since Conpend was formed, where is it today?
Smith: We have a platform that digitises the checking of trade documents and can also read blockchain-related transactions and digital document alternatives, such as electronic bills of lading (BLs) and certificates, for example. We perform a number of checks on those documents from a documentary credit point of view. We automate the unstructured part of the process, known as document examination or checking, against International Chamber of Commerce (ICC) rules. We also do compliance checking against the Bankers Association for Finance and Trade (Baft) anti-money laundering (AML) guidelines and the OFAC, or similar, regulatory sanctions screening. In a nutshell, we take documents and then process them and produce an outcome, which enables the operator to look at the report and approve or reject a transaction.
We have developed our own data extraction engine using machine learning and artificial intelligence. We don’t do anything with templates or the traditional data capture. Based on benchmarks that have been done in the market, as far as I’m aware, we are still the best performing in terms of accuracy and speed. The technical performance is important, and we built that first, it is quite mature now.
Commercially, our customers are banks. We also work with a number of other parties in a transaction in more of a proof of concept (PoC) setup. We have a number of commodity traders that have shown some interest in our vessel tracking and price-checking capabilities, for example.
GTR: Do you rate the documents in a scoring system?
Smith: Our vision is to get to a yes or no outcome with as little user intervention as possible. In practice, it depends very much on what it is, to what level of hands-off involvement is possible. With a big, paper-based transaction that has really poor-quality paper, the user would be needed a lot more to verify the interpretation of the documents has gone correctly before even looking at any kind of result, for example. If it is checks against the ICC standards, then this is largely automated in the sense that a lot of the rules are straightforward. Whereas AML requires the profiling of a transaction against client behaviour and therefore is more of a judgment call. We visualise the data in a way that allows a person to take a decision.
GTR: How has your relationship with Finastra evolved?
Smith: We have been close to Finastra since the inception of the company. Quite soon after we started, Finastra launched the vision of becoming a platform rather than a software company, and they started working on their Fusion Fabric offering. We got involved very early on, and with them have explored the added value of this concept. Currently, we are offering Finastra’s clients access to our software directly integrated with the Finastra software. So, through the platform, you get a completely seamlessly integrated experience.
We’re very excited about this new development because we’ve been in the background, in the sense that we have been doing a lot with Finastra but it’s never really reached the maturity level that clients can just go in and buy off the shelf. Finastra clients knew we were working with the company, but it was abstract. Now you can go in and order a Finastra product and a Conpend product, for example. You can click and get the Conpend product integrated out of the box. That’s a very attractive upgrade for Finastra’s existing install base. For those that are not Finastra clients but are interested in exploring or experimenting, the platform also gives them a very easy way of testing things. It is similar to a sandbox environment.
GTR: What is the plan going forward?
Smith: For trade, we are pretty mature, and we are actually looking at going into other business areas. Primarily, know your customer (KYC) compliance and loans. We have a version of our platform already available for both product areas and we are in different stages of PoC/co-development with some of our existing clients in those areas.
From being absolutely concentrated on trade finance and a vertical business that focused on the operations area of banks and compliance within trade, we are now branching out into trade-related loans. A lot of these are syndicated and quite complicated, commodity trading-related loans where there is a lot of work and checks required, for example. Then the KYC in trade is extra complicated because it has potentially a lot of counterparties or clients that are based around the world. If you look at the really big energy companies in Russia for example, they are very obscure in their organisation.
Our strategy is to focus on automation of the business process: the difference between digitisation and digitalisation. Our concept is very simple, if you invest, you can automate the checking process right now.