Carlos Teixeira, Senior Industry Principal at Finastra, provides an overview of a discussion hosted at ‘Finastra Forum Middle East and Africa’ that touched on tighter controls in the UAE’s compliance landscape, the impact on practices and processes for banks in the region, and the role that digital trade can play in helping financiers stay ahead of the curve.

Finastra recently hosted a discussion with Wipro, Bank ABC and Conpend to unpick how the region’s banking sector could adapt to the latest step changes in regulation, following a big push forward and a new directive from the Central Bank of the UAE.

The directive aims to accelerate banks’ digitisation efforts related to trade-based money laundering so that they leverage data while automating their compliance processes.


How do you adapt to new regulatory changes?

The challenge around compliance is nothing new. The Central Bank of the UAE’s actions are reflected by similar institutions across the GCC, as well as across the world. Banks are expected to manage sanctions, vessel checks, price checks and more, while this latest order calls out dual-use goods and red flags. For Bank ABC’s Deputy Head of Operations, Paul Baker, this highlights the importance of automation and audit trails to ensure that banks are ready for regulation.

The quicker that banks can automate trade finance through digitising trade documents, the better they can improve turnaround times for clients. Not only this, but digitising trade finance in this way will improve the quality and accuracy of the data that banks can maintain for the future.

Banks manage a significant amount of data, and having an updated view of this data is becoming more important for trade and working capital finance, said Baker. Capturing, scrubbing and processing the data accurately, and in a way where the bank can then process the data later on downstream, is central to everything that Bank ABC does.

Crucially, having better, more accurate and more transparent data becomes another advantage when auditing operations. When documents such as letters of credit are uploaded digitally, they become more easily traceable, ie with a complete and natural audit trail of the documents’ interactions. This provides visibility of when decisions were made in the trade finance process – a win-win for banks, businesses and auditors.


Technology plays a key role

Staying in front of the tech curve and adopting secure new practices or rules is key as the regulation evolves – and leveraging an ecosystem of fintech partners can enable banks to deliver effectively. Edwin de Groot, Head of Sales at Conpend, highlighted that by implementing a two-week software cycle – as opposed to having a six-month or one-year gap between releases – enables banks to continuously improve their compliance automation.

For example, Conpend has recently produced updates for the Australian, UAE, European and South American markets, all packaged into one bi-weekly release that banks can adopt quickly and implement in a very short time period, using little resources.

By taking this approach and rolling out new quarterly money laundering benchmark data, banks can start to see efficiency gains in the order of 30% on top of their current processes after just six months of partnering, according to Conpend.

There is a great advantage for banks of working with a partner like Conpend to run this process improvement. Conpend merges the ever-evolving market standards with the banks’ proprietary money laundering data every three months – in effect, merging the databases to make Conpend’s solutions more powerful for the banks, quarter-on-quarter.


Orchestrating the data play for trade

Joining together financial products, technology-based solutions and processes across trade finance relies on effective integration. Banks need partners who can work with them to provide the right integrations to solve their technology needs.

Sushil Chawla, Senior Banking Expert and Advisor at Wipro, discussed how banks need to be able to integrate compliance solutions, such as Conpend’s, with their own core processes and with additional solutions for other processes, such as sanctions. It is this approach that will allow banks to offer end-to-end digital trade finance.

It is not just about stitching one solution into the bank’s fabric, but also about thinking more widely, for example looking at how one can make data that’s available in one part of the process also available and usable in upstream or downstream systems. This approach enables the bank to grow quicker, and with greater flexibility around future implementations.

To watch the session in full, search ‘Orchestrating digital trade finance in a new regulatory landscape’ and view it on the Finastra Forum platform.