Banks struggle with next generation Trade finance portals, trade apps

Many banks are trying to figure out how to provide supply chain finance and open account capabilities to their clients beyond traditional trade.  The key growth area is the trade credit sitting on the balance sheet of corporations.  Early payment of suppliers is mushrooming, and eventually as networks and intelligent underwriting models are built – purchase order finance, and other triggers, such as advanced ship notices, etc.

As banks look to build their future capabilities, figuring out how to work with the emerging network players - Taulia, Tungsten, Tradeshift, Nipendo, Ariba, etc. will be important.  They cannot be an island of capabilities.

On the trade app side, Banks continue to think of apps in the form of mobile solutions to help check on balances or alerts. Very few banks to date have invested in any apps for trade finance. I am sure there are Treasurers that will value these mobile apps to check if a Letter of credit was issued or to confirm a payment was made from their phone or tablet on the go. It is certainly not business as usual yet, but there are some Trade B2B mobile applications such as:

  1. Deutsche Bank's Autobahn App Market, launched in 2013, claims to have 165 Apps for various business areas, including – Commodities, Fixed Income, and Global Transaction banking.
  2. HSBC's 'HSBCnet Mobile', which allows corporate treasurers and senior managers to check account balances and statements, authorise cross border payments, and receive alerts through their hand-held devices.  The irony with HSBC Mobile is you need your little security device to access the site. I am not sure many Treasurers are carrying the device in the photo above.
  3. Citi Trade Services offers Citi Supplier Finance Mobile, which allows suppliers to inquire about the status of payments and discount requests from virtually any mobile device. This is part of CitiDirect BE Mobile. They even have functionality to enable importers, issuing banks and beneficiaries to check status updates on their LCs, document presentations, collections and open account transactions, including whether they have been advised, amended or paid.

Quite a few banks are looking to enhance their front end capabilities around trade and trade finance. Unfortunately, other than build themselves, there are only a handful of vendors offering traditional trade platforms - the usual suspects like Misys, CGI, China Systems, and most of these vendors have not embedded the platform as a service (PaaS) model. In terms of development, what most banks tell me is that their world is full of regulatory, compliance and they do not have much room for innovation.

None of these banks are thinking interoperability with networks. Maybe none is harsh, but for them, innovation is giving access to information on a mobile device. That’s great for executives on the go, but the future of electronic interoperability, while not here, will come.

My colleague Jason Busch sums it up best around the PaaS model.

 The concept of PaaS centers on building network ecosystems that will allow all participants to more easily “plug and play” new capabilities, apps, and value added services on top of core functionality. It is somewhat like’s and ecosystem, but keep in mind that this is a nascent area for buy-side vendors, and a work-in-progress. It will be important to establish and manage new partners, new supply chains, new customers, adhering to new regulations, responding to risk elements and reshaping programs on the fly.

These networks are working on some amazing capabilities and are looking to take the world of P2P/O2C (including full validation, workflow and connectivity within an open network/platform, rather than in the application) to the next level.  Tradeshift has been an innovator here with their Studio venture – See Tradeshift Extends “App” Ecosystem

It will be important for the banks to think about this as they lay the roadmap of the future of trade banking.

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First Voice

  1. Gayathri G:

    Can be a worthwhile initiative for banks to gain first mover advantage

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