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Digitalisation and your trade finance career

11 October, 2021Ouida Taaffe

After many years of slow change, the digitalisation of trade finance is accelerating – bringing automated document checking as well as new roles and skills for trade bankers.

Connected-earthTrade finance depends on making sure that the documentation is correct. Do the contents of the containers tally with the bill of lading? Does the ship exist? Did it travel to and from the ports listed?

If any of that’s wrong, the bank and the customer could be defrauded. Worse, the bank could find itself party to crimes such as evading sanctions, money-laundering, or financing terrorism.

That is why checking trade finance documentation is much more than a proof-reading exercise.

“It can take at least three years for someone to become a truly proficient checker,” says Alex Gray, Head of Trade and Transaction Banking at the London Institute of Banking & Finance. And it never becomes an easy job.

Digitalisation and document checking

The good news for trade bankers is that technology can now take on some of the heavy lifting in document checking.

Machines, unlike human beings, don’t get tired, bored or distracted. They can also check multiple documents a lot more quickly. That cuts time, benefitting both banks and clients.

However, until recently, the digitalisation of trade finance documentation looked like a project that would take years.

First, in law, the paper bill of lading gives title to the goods. That’s why banks required paper documents. Second, many countries in the developing world were daunted by switching to e-documents.

Covid-19 changed that. When paper documents could no longer be couriered to banks, electronic alternatives were needed. This turbo-charged the move to digital trade docs.

In particular, the G7 announced in April 2021 that it’s promoting the adoption of the UN’s Model Law on Electronic Transferable Records (MLETR).

The G7 points out that reaching agreement globally won’t be easy. Stumbling blocks include:

  • data protection
  • ‘know your customer’ (KYC) and ‘anti-money laundering’ (AML) regulations, and
  • rules on capital requirements.

However, the International Chamber of Commerce (ICC) called the G7’s decision a “momentous step forward”.

There are many benefits. Digital document checking is faster and could provide more security and transparency through standardisation. It will also make trade finance work more challenging and interesting.

Trade expertise

The recent ICC white paper, ‘Automation of document examination under documentary credits’ states that automating basic document checking will let “experienced document checkers…concentrate on where they are needed the most”. That is, on really examining potential discrepancies. 

What this means for staff is that they’ll have space to examine documents for important discrepancies more accurately.

If people can focus on what employees do well, rather than on tasks that machines do well, they’ll be able to become good checkers quicker.

The ability to check a document word by word, which robots can do, isn’t about knowledge of how the world works. If a trade banker can show their real knowledge, which brings value to the bank, they’ll be able to progress their career faster.

Overall staff wellbeing should improve too, meaning the bank will also benefit. A happier workforce means less attrition, with better morale, lower costs and higher productivity.

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