Embracing the Future: Putting It All Together!

We have quickly covered many topics in the past 6 blogs.  I hope this has been helpful.   Let’s use this final blog in the series to summarize it all and be ready to keep moving forward in  2025 and beyond.

The next three years demand massive changes in the trade finance process. Traditionally managed with paper and reliant on skilled personnel, the process is labor-intensive and time-consuming. Moreover, the pool of experts is aging, and the younger workforce shows little interest in careers mired in documentary minutiae and growing regulatory scrutiny.

The allure of automation is there, promising efficiency and cost/error reduction. Yet, hastily implemented systems without proper planning and fallbacks usually lead to catastrophic failures and wasted resources.

Here are the main points and actions from our previous blogs and some additional closing comments.

Paper, Paper Everywhere!

We have been lamenting our dependence on and excessive use of paper for years. Despite some improvements, we remain ensnared by paper’s limitations, resulting in slow processing, heavy human involvement, poor audit trails, and security vulnerabilities, along with limited integration capabilities with modern technologies.   And, it still has to be stored somewhere or digitized and stored.  Yes, there are many nations and groups that still want paper, but the paper can be promptly converted and routed and stored better, faster, and cheaper.   Corporate clients or central scanning/digitizing centers can make this better for everyone.  Digitized presentations and LCs could travel globally at internet speed, reaching the correct destination without delays or losses. Changes could be made and returned to the bank just as swiftly. This would provide a competitive advantage and result in more satisfied clients and better archiving and audit trails.   And, you can move it to your archiving/storage provider faster and cheaper than sending them boxes of paper.

Best Uses of Talent: Adapting to Technological Change

As the industry evolves, the role of expert document checkers is changing.  Current experts are aging, retiring, and often seek broader roles. Younger workers seek involvement in cutting-edge systems and processes, managing millions in trade transactions, and handling AI-driven exceptions—a far cry from traditional document checking.  It takes years to train a new person in the processes and regulations involved in trade finance.  And, these regulations are constantly changing.

AI and OCR solutions like Traydstream minimize the need for traditional document checking roles, but what happens to the existing workforce?   Some strategies:

• Involve Change Management and HR: Redesign processes to leverage technology while maintaining a mix of job skills that support future needs. Experts will still be necessary for resolving discrepancies and manual interventions, so don’t eliminate these roles prematurely.
• Expand Employee Roles: Moving experienced employees across various operational areas (e.g., from trade to credit to treasury) can enhance job satisfaction and retention. Promising new recruits the opportunity to work with cutting-edge technologies and focusing their efforts on exceptions rather than routine tasks can also be an attractive proposition.
• Enhance Client Relationships: Consider redeploying some of your best people to focus on client satisfaction. These employees can work closely with top clients, providing personalized service that strengthens relationships and increases client loyalty.

The Dream of Integration

The concept of fully integrated systems where users can perform all tasks from a single platform has long been a professional aspiration. However, the reality of IT projects has frequently fallen short, with most failing to meet desired ROI, deadlines or budget expectations. In blogs 4 and 5, we broke down the key goals, common pitfalls, and strategies for a more effective approach.

Understanding Your Goals

Begin by clearly defining where you anticipate the highest return on investment (ROI). Quantify this ROI in monetary terms to justify the budget, IT involvement, and other resources.

The Full Integration Dilemma

Often, full integration may not be necessary or could be prohibitively expensive, failing to deliver the anticipated ROI. Instead, consider starting with standalone solutions and then evaluating which integrations are truly beneficial. This approach allows you to tackle integrations gradually, minimizing the risk of overwhelming complexity.

The Crucial Role of Data

Data is at the heart of successful integration but is frequently overlooked. Here are some critical questions to address:

• What data are you capturing and manipulating? Understand the types and sources of data involved.
• Where is this data currently located? Is it in paper documents with varying levels of legibility, or is it in digital formats that you can easily access?
• What do you want to do with your data? Define the intended use and processing of the data.
• Who will use this data and how? Identify the end-users or systems that will interact with the data.
• What results do you expect? Determine the outcomes you aim to achieve with the data.
• How will the data be stored and accessed later? Plan for data storage, accessibility, and security.
• Is there an audit trail? Ensure that your system provides a way to track changes and access to data.

Failing to address these questions can lead to purchasing shelfware—solutions that are bought but never properly implemented nor fully utilized. Many organizations, including banks, struggle with poorly managed data, leading to over-budget and delayed projects.

To Integrate or Not To Integrate?

Not every aspect of your systems needs integration; each bank’s situation is unique. Institutions with lower transaction volumes may only need to automate specific processes. Assess your current landscape and identify opportunities for further integration.

Assuming your core DDA and Loan/Credit systems are already integrated, the next logical step is to integrate your core trade system with these. If you lack a trade system, you might be relying on manual processes or desktop solutions for LOCs—what’s your next move?

Focus Areas for Integration:

1. Document Management: Streamline digitization, assimilation, compliance checks, and archiving to Iron Mountain or whichever storage provider you use.
2. Payments and FX: Ensure seamless connectivity with Treasury and payment systems.
3. Human Resources – How can integration help you reallocate resources to higher value tasks?
4. Consistency – People centric processes tend to be very inconsistent.   This leads to costs from errors, rework, unhappy clients, and down the road challenges.  Attribute costs/savings from greater consistency via automation.   Included in your ROI justification.
5. Risk Mitigation – Take a few minutes with your team to jot down every risk/error you have actually experienced over the years.   Assign costs, both realized and potential, to these.   Then look at how an integrated solution can mitigate the risks and save real money.
6. Compliance –  There are so many external sources to check for OFAC, AML, shipping, credit, and many more.  Government regulations are also constantly changing.  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 and integrated system that adopts the changes and makes the compliance checks automatically.
7. FTE Efficiency and  Total Processing Time – Manual processes and manual transmission and reentry take time and create problems.  Automation and integration can change the creation, validation, flow, and approval of trade documents to less than a day.   Calculate your efficiency inside the bank as well as the benefits of faster total turn around.  What does that do for your ROI and customer service?

ROI and Justifying Your Project Request

To secure funding and a good place in line for resources, you need a winning story.   The above will help you craft the ROI justification around actual cost savings, risk avoidance, personnel challenges, etc.   But don’t forget that you can help grow the business for the bank!

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 the insurers and other third parties give you and your clients better rates/terms because you have provided better quality and speed?

Will it make you 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  up your proposal a bit so it is a better sales pitch to management.

Act Now!   Time is not on your side.

You need to be a vocal advocate for change.   Don’t allow your needs to be sidetracked and delayed.   There will ALWAYS be other projects and priorities competing for financial and people resources.    If you allow them to always come first, your time will be too late.   Get your internal proposal together, gather executive support, and demonstrate why your needs are important.