Between last year’s Sibos and this year’s event, there probably haven’t been any particularly radical new technological breakthroughs. That’s not to say that vendors haven’t been innovating and upgrading their offerings. They have. What is more noticeable is how those solutions are being deployed in the trade finance space.

“What is continuously evolving is how technology is being used,” says Joel Schrevens, solutions director with China Systems. He explains that this is being driven by a deeper and wider involvement of banks in supply chain processes as well as their customers’ processing activities. There is a growing demand for higher connectivity and interoperability and an increasing need for flexibility to support differentiation.

“There are more advanced capabilities than ever before, allowing for transparency, seamless integration, and personalisation in ways that can truly deliver business benefits,” says Steven Starace, director and head of trade & supply chain finance at CGI. “However, banks’ traditional trade businesses are typically supported by older, inflexible technology and significant capital investment is required to upgrade or to meet today’s needs.” And therein lies the dilemma. Many banks faced by the combined pressures of the credit crunch and falling margins in various aspects of their trade services businesses are naturally reluctant to invest in new technology.

“The risk of not investing is huge,” warns Starace. “As the needs of corporate customers change, they will eventually grow more frustrated with antiquated or partial services provided by their bank.”

This is particularly so for corporates, which have spent years perfecting their supply chains and now want to integrate and streamline their financial supply chains.

To do so not only requires cross-departmental collaboration, but also cooperation with key third parties, whether they be suppliers, logistics companies and of course banks. And threading all that together requires technology, which is flexible and scalable, and that in turns means investment. Though, trade finance may not be the biggest profit generator within a bank, it is still important, especially for big retailers, wholesalers and manufacturers, which engage extensively in global trade. Not to offer those corporates a complete suite of financial products may mean giving competitors an edge. They would be happy to provide trade services, even if not particularly profitable, so as to have a relationship with that corporate that may put them in pole position when more lucrative project finance or investment banking opportunities emerge.

Looking ahead, scalability and flexibility will remain important themes. Schrevens also sees greater integration of logistics companies into the financial supply chain as they furnish some of the key documentation, which triggers potential financing events. He also sees growing use of web services to support data exchanges. In terms of investment by banks, he sees this becoming more selective, especially in the US and Europe. In many instances, new IT projects in trade services are going to require a stronger “strategic” justification. This would mean, for instance, covering payments, foreign exchange, traditional trade, open account and SCF and taking a front-to-back end view of integration.

He also notes strong demand in Asia for solutions that support trade services, particularly in China.

Starace also sees a continued focus on developing capabilities around the SCF. He also sees integration, scalability and flexibility as important ongoing themes. “We firmly believe that an integrated and complete trade solution is what is necessary to enable banks to compete and provide value-added services for their corporate customers,” says Starace.

In terms of product releases, CGI launched Proponix360 back in May. It’s a broader more comprehensive solution than its predecessor providing end-to-end capabilities for all facets of trade including newer areas such as supply chain finance and working capital management, all available on one integrated platform.
New releases
China Systems, meanwhile, is planning to update its Eximbills Enterprise solutions platform to support SWIFT TSU release 2. TSU r2 should become effective around the first quarter of next year. The update will include the addition of certificates data sets covering insurance, quality, quantity, health and origin of goods.

Other features will include notice “of an intent to pay” messaging between buyer and supplier. A similar payment obligation messaging feature for an obligator bank and a recipient bank, will also be added. China Systems is also working on two collaborative portal initiatives in Asia, which work around TSU. However, these are still at the prototype stage. Judging by how busy many of the technology vendors have been over the last 12 months, there will no doubt be plenty of deals announced at this year’s Sibos.