Japan as a market
TT: A common outside view of Japan is that it is a very modern, very tech-oriented, very digital nation that is driving innovation globally. Japanese corporations like Toyota, are not just synonymous with building state of the art products, but also in exporting the innovative way they work. So, has it been surprising to find that lots of Japanese corporations are still processing trade documents manually without using specialised systems?
KL: Yes, it is a little surprising, although it’s a tale of two halves. Through research and understanding from talking directly with local banks and corporates, it is clear to see that – thanks to the pandemic and increasing ESG pressure to reduce the use of paper documents – Japan’s trade digitisation efforts are now ramping up. Poised to enhance trade finance services, there is a lot of investment from the megabanks into blockchain and into building networks to connect to their corporates and facilitate document sharing. However, for the regional banks and their clients who are mostly SMEs, the extent of development is limited, and banks are still servicing their clients through physical paper, fax and email-based communication and processing.
The trade digitisation journey
TT: Are we at a turning point for the country’s digital trade adoption thanks to the G7 declaration earlier this year of which Japan is a part?
EBW: The G7 declaration was absolutely a turning point. In the recently published ICC report, it is now thought that trade across the G7 could increase by over 40% to US$9tn by 2026 if all the participating countries fully digitise and adopt the new standards pertaining to the transfer of electronic trade documents. Now is absolutely the time for Japanese corporates, big and small, to start demanding change from their banks. After all, in the consumer world, Japan, like all the other G7 countries, is saturated by digital services and we have come to expect nothing less. So why should it be different in business, especially in the world of trade which is fundamental to the countries’ economic health and wellbeing. If banks are forced to digitise their trade finance operations in order to provide better customer service, the corporates are not only the drivers of change but the beneficiaries of it and facilitators of growth.
TT: So, what is Surecomp doing to address the digitisation needs of Japanese banks and in turn their corporate clients?
KL: Surecomp’s strong heritage in digital trade finance and our global customer base, including many of the world’s leading banks and some of Europe’s largest corporates, means it is the perfect time to bring our global standards to Japan. For example, we are now seeing many small to mid-sized banks who don’t have a digital channel through which to service their customers simply because they lack the internal infrastructure, seeking to improve back-office trade finance processing to accelerate their own operational efficiency. Surecomp’s Trade Finance-as-a-Service (TFaaS) solution which is a web-based back-office solution designed specifically for small to mid-sized banks, can be onboarded in just ten weeks and meets the demand for an increasing appetite for cloud adoption. This will inevitably lead to banks then wanting to digitise their front-office corporate channel to completely move away from paper-based manual processing. Corporates themselves can also benefit directly from Surecomp’s digital trade finance solutions to improve their own operational efficiencies and drive trade transaction volume growth.
TT: Can you tell us a bit more about the work you specifically do with corporates?
KL: We partner with companies across the world to provide trade finance solutions that are perfectly tailored to streamline the transaction lifecycle. For example, we work with Hitachi Energy to help process its high volume of bank guarantees across the thirty plus banks with which it has credit line agreements across the globe. We work with corporations of every shape and size to help them to save time, reduce costs and drive growth by automating their trade finance operation. Serving a diverse range of industry sectors, we provide a single consolidated view of their trade finance portfolio across all financiers including bank and group guarantees, incoming guarantees, import, export and standby letters of credit, import and export collections, open accounts and export financing. It empowers companies to drive growth through increased visibility and control.
The journey ahead
TT: Japan is a slightly closed market compared to others and this can make accessing clients from the outside a challenge. How do you plan to overcome this?
EBW: Finding the right approach is essential, and where Japan is concerned taking a local approach is essential. Our first steps beyond establishing an office presence have been to set up a website for our trade finance solutions in Japan and build a local team to support our global efforts. We are in the process of recruiting more local resources and will be leveraging the relationships we have built over many years with our customers who already have operations in Japan. It’s a market built on relationships and trust, the very two attributes that Surecomp has successfully fostered and upon which our customers rely.
For more information on Surecomp’s digital trade finance solutions for banks and for corporates, please visit www.surecomp.com
Originally published in Treasury Today