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The current trade wars driven by US tariffs have significantly altered the economic landscape, affecting trade flows and increasing costs for businesses worldwide. The tariffs are resulting in huge supply chain disruption, increased currency volatility and contributing to rising inflation and slowing economic growth, which poses great challenges for accurate financial planning and forecasting. Companies the world over are having to re-evaluate trading partners, funding strategies and risk management practices.

As trade finance continues to digitize at a rapid pace, compliance is expanding beyond the ever-changing regulatory checks and due diligence. For example, banks looking to adopt trade finance software must ensure they are meeting the current standards in accessibility, digital resilience, and document compliance. For practitioners, understanding these areas is essential, not just for audit readiness, but for ensuring smooth, secure, and efficient operations. Here's a quick high-level summary of key considerations you need to know right now!

For the past two decades, I have witnessed the evolution of transaction banking from cash management, payments and treasury services transitioning from paper-based processes to digital workflows, from siloed systems to interconnected ecosystems, and from legacy infrastructure to cloud-based platforms. However, the one area that has historically lagged in this transformation is trade finance.

The trade finance landscape experienced a notable turning point towards digital adoption in 2024, with financial institutions and corporations recognizing its strategic importance. Historically burdened by paper-heavy processes and fragmented systems, the trade finance sector is now embracing digitization as an essential rather than an optional tool.

Before we dive into the trade finance transformation that Generative Artificial Intelligence (AI) can bring, let’s review it from a wider perspective.

The digitalization of trade finance has the potential to significantly enhance corporate competitiveness. Innovation is not limited to products or services; the digitization of trade finance is now a critical lever for improving overall performance. Simplifying operations, standardizing and automating processes, managing risks, and increasing transparency are some of the major challenges European companies face today - particularly for their treasurers.