Capco Blog

Trade finance modernization: Can banks capitalize on change?

Whatever their lines of business, banks have been operating in a more difficult world since the 2008 financial crisis. Trade finance, in particular, may face more diversity, complexity and urgency of demands than ever before. The looming Basel III minimum capital requirements, heightened customer expectations, and the growth of open account trade and supply chain finance are making it harder for banks to continue serving the trade market and maintain return on equity performance. This confluence of factors is driving banks to examine how they can serve the trade market profitably or, in some cases, if they should exit the business.

Banks have ample opportunity to make their trade operations more efficient, thereby freeing capital to develop new financial products and services. They can use analytics to help customers make trade finance more efficient, creating a broader customer relationship in the process. By deploying digitization appropriately, banks can free personnel to focus on value-added services enabled through social media, mobile technology and other innovations. And they can make the transition incrementally without the need for wholesale upgrades.

By moving quickly to modernize their operations to improve efficiency and create new revenue streams, banks can reinforce their traditional role in traditional trade finance, while seizing opportunities to capture new business in the open trade arena.

What steps are you taking to modernize your trade finance operations? Join the discussion.


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