The pandemic changed us, significantly altering consumers’ expectations.
In the trade finance sphere, the shift came in the form of digitisation demands.
To catch up on the latest around trade finance digitisation, Trade Finance Global (TFG) spoke with Michael Vrontamitis, lead industry principal for Finastra’s lending business unit.
Clients demand better customer service
When it comes to financing international trade, banking customers are no longer satisfied with the old status quo.
Trade is a historically paper-based industry, with less than 2% of transactions being in electronic form.
Technological advancements, coupled with the eye-opening disruption of the pandemic, have made customers desire more of their services to be available in a digital manner.
To capitalise on this growing demand, banks dealing with importers and exporters are increasingly looking at how they can provide these types of digital services that customers have grown to expect.
Unfortunately for banks, going digital is not always a quick and easy solution.
Vrontamitis said, “It all starts with the basics—you can’t just layer a good digital experience on poor architecture.
“A lot of banks are now investing in their core architecture and systems to ensure that those work more efficiently, so that they can then build the digital experiences on top of it.”
With so many fintech vendors on the market today, it can be difficult for anyone to choose just one to go with.
Thankfully this decision may not be one that banks and clients need to make.
Vrontamitis said, “What we’ve seen over the last number of years is all about partnerships and developing an ecosystem that we can work together on.
“We believe that finance is open, and by being open, we need to connect people to their overall ecosystem.”
For Finastra, this means working with partners on multiple levels to implement an assortment of solutions and technological capabilities.
Vrontamitis added, “No one technology vendor can provide every solution to every client, making it critical to be able to provide that sort of connectivity and seamless integration with a number of partners.”
This degree of interconnectivity will be further aided by an increase in standardisation across the industry.
In the international world of trade finance, however, standardisation is not an easy issue to overcome.
Over the years, many initiatives and working groups have been established to standardise the space, the most recent of which is the International Chamber of Commerce’s (ICC) Digital Standards Initiative (DSI), predicated by the Universal Trade Network (UTN).
The work of these initiatives primarily revolves around building awareness and understanding, identifying the white spaces where standards are required, and then working together to deliver those standards.
For many, this means that standards take a while to deliver; and there has not been much traction with uptake in the banking, corporate, or application programming interface (API) space.
Vrontamitis said, “In the interim, we expect that we’re going to have to help our clients connect their platforms in the absence of those standards because we have to enable them to grow their revenues.”
While banks certainly have an increased workload with the added challenges of sanctions and compliance requirements, they must remain focused on a digital transition and its parallel elements if they wish to stay relevant.
Vrontamitis said, “I expect that we will see continued growth in the trade finance business over the next six to twelve months.
“We are focused on how we bring those partnerships to market and allow our customers to connect to the different options that are out there more seamlessly.”
A significant part of this involves remaining open to exploring fruitful partnerships in the space and sacrificing some individual autonomy for the collective benefit of a common set of standards.
If they do this, banks can tap into that growing market with the enhanced experience clients want.