Before we dive into the trade finance transformation that Generative Artificial Intelligence (AI) can bring, let’s review it from a wider perspective.
AI made a big bang in 2023 entering mainstream consciousness. People became universally aware of what it is, yet unsure how and why to use it. Fast forward to 2024, and we moved into production mode – with it a much greater understanding of which model to use, how much it costs, how it helps and how to navigate security, prompt engineering and data bias. It became a question of workload management and value generation rather than experimentation.
Generating value for the trade finance industry is particularly key when paper-based transactions are still so prevalent. One of the main barriers we come across with transitioning to digital trade finance is not the operational but the cultural barrier. When manual processes have been in place for so long, it requires a fundamental shift in mindset, which requires awareness, education and understanding. With the help of Gen AI bringing technology to the fore, which is by definition generative – we’ve seen a notable shift towards digitizing trade and trade finance in 2024. Banks and their corporate customers are realizing the significant impact and return on investment, with Gen AI adding even further value in terms of cost savings, error reduction and improvements in fraud detection ranging from 30-50% respectively. Similarly, from a supply chain finance perspective, automating supplier onboarding, which typically consumes a lot of time and effort, is bringing great value.
Surecomp’s cloud services provider Amazon Web Services (AWS) is helping to guide customers on how to use AI effectively. By working with AWS, Surecomp has been able to enhance its RIVO™ solution to add even greater value and productivity for its customers. The overall cost of trade operations is reduced; headcount is reduced, inventory levels are improved, service levels are improved, cash and liquidity management are improved. If the CFO of a large corporate can harmonize transparent data and gain a holistic view of group-wide credit limits across multiple subsidiaries, that is optimizing visibility, control, financial planning and risk management, and bringing cost efficiencies. By streamlining and automating trade finance with AI-powered straight through processing, banks and corporates can bring huge efficiencies of scale, improved data accuracy, fraud prevention, which in turn saves costs and delivers enhanced customer service.
Addressing another trade finance gap
We find that banks typically take an average of 5 days to issue a guarantee. Inefficient, manual limit checks and guarantee text alignment are key causes of delay which are impacting turnaround times, trade volumes and supply chain. Processing unstructured guarantee data is inefficient, error-prone and skilled in-house knowledge is lacking. In many large banks the trade finance department is shrinking. There is a retiring population, and upskilling resources to understand the nuances of guarantee text is tedious. By automating this with RIVO™, leveraging AWS native Gen AI technology, non-legal bank staff can check text in less than 10 seconds with the accuracy matching that of a seasoned trade finance expert. This significantly increases process automation, enhances the efficiency of corporate-to-bank guarantee management, renders banks less reliant on trained professionals and more able to focus on customer service and growth.
When a corporate submits a guarantee application, for example via email with multiple pdf attachments, the bank forwards the request to its dedicated RIVO™ email address. The email and attachment data is automatically read and a transaction generated within the platform without the need for manual intervention. The transaction automatically contains all the required data from the email, including instrument type, applicant reference number, applicant name, transaction value, transaction status, expiry date, beneficiary details and legal terms and conditions, gaining an estimated 30% improvement in efficiency. This automatic extraction and validation of trade document data saves time, reduces errors, accelerates issuance turnaround, all without the need for dedicated trade finance expertise.
The transaction data can also be automatically synchronized with the bank’s back-office trade finance system whether it be Surecomp’s DOKA-NG™ or another external solution.
Other Benefits of Leveraging Gen AI for Trade Finance Automation:
Repetitive task handling – automatic compliance checks and invoice reconciliation, enabling faster processing and reduced administrative overheads.
Risk mitigation – automatic fraud detection with predictive analytics, trends, suspicious activity alerts, invoice duplication or any irregularities in trade documentation.
Credit risk assessment – automatic credit worthiness evaluation and potential default prediction by analyzing a borrower’s historical data and external market conditions.
Compliance – automatic and streamlined anti money laundering (AML), KYC processes, customer due diligence, sanction screening for accurate trade partner and transaction screening, minimizing legal and reputational risk.
Data security
When it comes to cloud and the use of AI, security is still a concern for some. AWS reinforces that with its model there is no sharing of sensitive customer data with the model provider. The data stays in its host AWS region – a region being one or more data centres usually located inside a specific country, though large countries sometimes have more than one region. It is always encrypted, cloud-certified, GDPR compliant and is never transferred anywhere outside of AWS or to a different region.
That said, AWS is keen to reinforce that banks do need to take responsibility for their own data security and closely monitor the legal and regulatory landscape in which they operate. Establishing governance and compliance guidelines, understanding problems, privacy concerns and tailoring a solution to meet those needs is critical. Educating employees on how to use an AI solution properly is also key.
In summary, with the right security and compliance in place, the true value of AI lies in using enhanced data quality, efficiency and analytics to improve decision making, digital customer experience and to fuel growth. We at Surecomp aim to simplify trade through fast and easy solutions, supporting a more connected, frictionless, sustainable and compliant landscape. Amid the multiple innovations we bring, we believe leveraging AI is going to be one of the most transformative.
Contact us to discuss your specific requirements. We look forward to hearing from you!
