Integrating trade-related systems are not high on bank executive and IT priorities. Those responsible for trade operations need to present clear justification for funding and people resources if they want their projects to get the green light. Yet, calculating the potential ROI and presenting the justification is not an easy task – especially for bankers who have limited experience with it.
Your business case has to market your vision, goals, and the overall ROI of what you want. Get them to buy into a multi year plan, but in bite sized chunks so executives can evaluate your success and ROI to date. Start with some easy stuff and get some quick wins.
What are the key areas for ROI in trade finance automation?
- Human Resources – As we discussed in earlier blogs, your team is aging and people don’t want to be stuck performing document checking or other mundane tasks. Reallocating these resources to higher value tasks will increase retention and improve recruiting and could lower your overall headcount costs as people retire. You have to be able to assign $$ values to this, which may be difficult. Include training costs. With the ever increasing changes and additions to regulations and procedures, how much of your team’s time is spent on continuous learning and how much can this be reduced through good automation?
- Consistency – People centric processes tend to be very inconsistent. This leads to costs from errors, rework, unhappy clients, and down the road challenges. Point these out and attribute costs/savings from greater consistency via automation. Everything should be included in your ROI justification.
- Risk Mitigation – Take a few minutes with your team to jot down every risk/error you have actually experienced over the years. Lost or delayed documents, poor audit trails, missed steps, errors from data entry/re-entry, and much more. Assign costs, both realized and potential, to these. Then look at how a good automated solution can mitigate the risks and save real money.
- Regulatory Compliance – As mentioned, regulations are constantly changing. There are so many external sources to check for OFAC, AML, shipping, credit, and many more. Staying on top of them is very difficult and expensive. More expensive if you miss something critical! Assign $$ to the compliance and calculate the savings from having an automated system that adopts the changes and makes the compliance checks automatically. There are real dollars here as well as avoidance savings.
- Time – Manual processes and manual transmission and reentry take time and create problems. Automation can change the creation, validation, flow, and approval of trade documents to less than a day. What does that do for your ROI and customer service?
- Customer Service and Competitive Advantage – How will your customer service improve via a faster, more efficient, lower error rate and lower risk solution? Can you integrate back into your biggest clients to streamline even more? How will that translate to a competitive advantage for you, with both existing and new potential clients? Will it make your the bank of choice and drive more business your way? Will it improve customer stickiness? Increased revenue always gets more attention than just risk mitigation. Get the revenue production side of the house involved in this part of your business case as they have management’s ear. Clearly show how the bank can increase business.
- Overall Costs – Lay everything out. Get one of your better sales/marketing people to punch it up a bit so it is a better sales pitch to management. Just be realistic yet optimistic.
Act Now! Time is not on your side.
Traydstream developed a set of questions to help you understand and quantify you ROI. Ask us for a copy. We are here to help you succeed in your innovation journey!
Until next time…
