Digitising TF operations – a corporate case study

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Author: Jacco de Jong, global head of sales, Bolero International


Digital transformation, particularly in the realms of international trade and trade finance, has been widely talked about in recent years. But at the end of the day, it has mostly just been talk.

The questions that blockchain, for instance, have presented to the market have outweighed their original answers by ten-fold. In the world of trade finance, every week there seems to be another POC or fintech partnership. But what are the actual benefits to corporates?

In this article, we take a step back and explore a case study of one of our customers – a multinational corporate (MNC) that mainly uses Bank Guarantees. This customer made the change over to digital, specifically using a SaaS multi-bank trade finance solution. We delve into the reasons for this change beyond just a corporate policy to go digital by year X.

The purpose of digital transformation is to use technology to improve processes, operations, and organizational changes. This may get lost in the excitement of adopting new technology, but that is what it is at its core.

For example, the focus is on a process change of communication, organization, and application for trade finance solutions. The company we are looking at is a telecoms multinational with multiple departments that deal with numerous bank guarantees globally and many different financial institutions.

The somewhat ironic start to this story is that, although our SaaS solution is deemed to focus on trade, the search for a solution by said corporate was non-trade related at all. Its purpose was to handle their rental guarantees for stores globally.

Therefore, given the wide use of guarantees for local divisions in several countries, the first key point of change needed was a central repository to show a complete list and monitor these transactions.

Theoretically, this could be done in an excel spreadsheet, but the task of manually copying and pasting from several bank portals with several different divisions around the world to reconcile is enough to make anyone develop a migraine.

This brings us to the second point, the need for an open and direct digital channels between the different divisions and financial institution which aligns with SWIFT messaging formats.

It would be hard to have a central repository without reliable channels to feed them instantaneously and with a well formatted solution ensuring these messages don’t get lost in translation from one institution to another.

Now internal workflow management can be established between various teams to deliver accurate requests to banks and other financial institutions.

Overview of active transactions

A single platform for managing all transactions offers numerous benefits, including the ability to manage Bank Guarantee transactions.

This can allow companies to reconcile operations with all banks, streamline communications with financial institutions, and consolidate guarantees on a regional or even global scale.

The treasury departments of this multinational corporation are able to see, manage, and edit their bank guarantees if needed. This is particularly important because the corporation has subsidiaries or divisions distributed across the globe.

The treasury departments needed greater visibility across borders and organizational boundaries in order to provide efficiencies at scale in use of credit lines, working capital and transaction management.

Ultimately, the centralisation of these transactions has improved communication and coordination between parties, streamlining the use of credit lines and other forms of capital while facilitating a more efficient transaction process.

Enhanced features, continuity and innovation

One of this global corporation's primary concerns was the phasing out of outdated but important solutions. This is an issue for all businesses, but it is a particular issue for this corporate because the bank solution that they worked with before would eventually be phased out.

When you work with a dedicated fintech, you can expect continuity, regular updates, and better features.

The right solutions provider is constantly working to keep their products up-to-date and offer new features that their customers will love.

In addition to this, because they will have replicated the process multiple times, they can offer their products at a lower cost than if it were to be bespoke developed in-house.

As a business, you want to be able to solely focus on your operations and workflows. Therefore you should make sure that the providers of those solutions have a vested interest in keeping everything running smoothly.

Having to constantly update your solutions can be a hindrance to your business if you don't have the right provider.

A global, robust an internal workflow management tool

Workflow management tools are being adopted by more and more workplaces in order to streamline internal processes and increase efficiency.

As organizations grow more complex, employees are taking on a growing number of tasks, and the need for automation becomes increasingly apparent.

This is especially true for distributed organizations; where employees are located around the world, working from different locations, time zones and these days often from home.

While this can be an advantage, it also means that there is a greater chance for the lack of cohesion when managing transactions in multiple ways.

In many cases, trade finance solutions can be used to keep track of deadlines and transactions across departments and regions.

This has the added benefit of improving transparency throughout the organization; particularly useful when trying to ascertain how workflows are operating across teams.

Another common benefit is that it can encourage collaboration; bringing people from different departments to work on transactions together whilst still maintaining secure levels of access and approval.

This MNC has a reconciled and consolidated view of their bank guarantees for the banks they deal with, as well as greater visibility across borders and organisational boundaries, by utilizing this solution as an internal workflow management tool.

This provides efficiencies at scale in use of credit lines, working capital and transaction management that were impossible to reach previously.

To sum up, we have seen that trade finance solutions are crucial for companies from various industries and sectors that handle great numbers of financial instruments all over the world.

This corporate and many others are now able to employ one tool and one repository when managing their transactions and at the same time facilitate seamless communications with all their banks, a far cry from the manual approach that was once needed.

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