Trade Finance Digitalization

Problem Statement

Bank-to-Corporate connectivity is about the methods by which banks and corporates communicate key information on a trade finance transaction between each party. Challenges in this interaction are many, when done manually. There is a need to address it digitally.

Trade finance uses specific instruments for trade finance mechanisms that banks/financial institutions use when working with corporates, to ensure that the international transaction cycle continues uninterrupted.

Banks are struggling to keep outdated, customized, and siloed systems and processes integrated, causing critical inefficiencies for running the trade finance process. To gain value and reduce the inefficiencies, banks are addressing below process and related pain points using advanced digital technologies such as blockchain, AI, Machine Learning. They are expected to have a profound impact on how banks transact and participate in global transactions as an embedded business partner into a transaction initiated by corporates along with their ecosystem.

Challenges in Trade Finance Process involving Bank and Corporates:

Poor collaboration between internal business/operations function of the banks and corporates internal users/participants using emails to run the trade finance process.
Email exchanges of information back and forth with attachments leading to delayed response times and errors involving version control/compliance.
Manual paper-based submission of transaction request and email-based interactions along with document submission leading to increased cycle times and difficulty in tracking changes.
With Corporate’s business established across different countries, more digital and more innovative solutions to optimise working capital or to consolidate commercial operations is sought from banks.
Lack of capability to track payments, receivables, liquidity in one place that can help bank to have enhanced flexibility in their offerings to corporate clients.

The Business Need

Bank to corporate communication for trade finance transactions using emerging technologies.

Challenges

Business Scenario

Banks are facing complexities in their interactions with corporates involving multiple channels/ecosystem business partners.

Understanding of the business activities & chain of custody in multi-party transactions especially within and outside large corporates is becoming a critical business requirement for banks.

Banks are moving digital with higher automation, greater visibility as per the regulatory and operational requirements to ensure compliance and risk mitigation.

The lack of visibility in leads to inefficient supply chain, with collaboration issues and inability to enforce effective risk-free contracts leads to delays in payment processing.

The trade finance process covers multiple trade finance instruments like LC with heavy documentations and involving multiple contractual obligations.

Key corporates need fast and efficient and not a more time-consuming manual tasks and delays in a financing partner as it impact the business revenue and profitability.

dltledgers Can Help You

Our state-of-the-art blockchain-based platform is designed to provide a streamlined trade finance transaction process involving banks and corporates. This App allows reduced cycle times and enhanced user efficiency in Bank-to-Corporate connectivity, eliminating time-consuming manual tasks.

The app also enhances greater real-time collaboration across Transaction value stream in a multi-party environment with verifiability of transaction records, tamper-proof record of transaction documents and data with speed, accuracy and security bringing in auditability and accountability.

Solution

Solution Brief

A simpler and more intuitive way for trade finance connectivity involving bank and its corporate clients with shorter cycle time improving customer experience
Banks are embedded into the flow of a business transaction of corporate with enhanced collaboration, accountability and visibility for trade finance process involving multiple parties in multiple geographies & improved user-efficiency.
Enforcement of effective risk-free contracts across bank’s team and customers team
Greater visibility and transparency across the digital network of customers helps to drive reduction in TAT (Turn Around Times), leading to faster release working capital
A secure real-time information on the status of trade finance with status flags ensuring that the digital network members can quickly and effectively triage a vast range of operational issues and enable optimised shipping of finished goods in line with order promise date.
Streamlined trade finance process involving multiple corporates in a digital network with focussed operational insights.
Accurate data and digital document repository with auditability across bank’s and corporate’s functional departments and ecosystem participants.
Real-time reports and secure tracking of trade finance verified documentations and negotiating documents as tamper-proof digital records for future use and compliance.

Benefits

Platform and the application help streamline Accounts Payable process via a secure channel with data/document exchanges shared in real-time
Banks can have digital trade finance execution using the application and increase their wallet share as Global Business Partners in the network
System brings more transparency and generates more value in the network, providing faster time to resolution and reduced fraud
Visibility into transaction generates more confidence in client and their operations
Platform allows banks to create more value from existing network of clients and create new revenue streams.
Building and expanding the client network is made easy via the platform.

“Abu Dhabi Commercial Bank (ADCB) has digitised trade finance for its customers using the Singapore-based dltledgers Blockchain platform. ADCB is the first bank in UAE to run the end-to-end Blockchain trade finance transaction with full document automation for accounts payables through the dltledgers platform, offering corporate customers greater confidentiality, the ability to keep a closer tab on the flow of the goods and documentation, faster turnaround, and enhanced fraud prevention”

– Krishnakumar Duraiswamy, Head of Trade Finance at Abu Dhabi Commercial Bank