As businesses strive to optimise processes, enhance efficiency, and meet growing customer demands, the tools they use need to evolve as well.
For those who trade internationally, having the most up-to-date, innovative trade financing tools and processes can mean the difference between success and failure in foreign markets.
To share more about the current landscape of digital trade finance processes, Surecomp surveyed nearly 100 trade finance professionals. Approximately 40% of respondents represented banks, 40% came from corporates, and 20% from other organisations.
The survey covered areas ranging from the average number of trade finance requests processed per month and satisfaction with finance approval times, to the methods used to manage trade finance processes and the drivers for digitalisation in the industry.
Key figures and insights
The results of the survey revealed diverse perceptions and practices in the trade finance industry. Here are some of the key figures:
Trade finance transaction volumes
The surveyed organisations process a wide range of trade finance requests each month. Nearly half (46%) reported handling between 1 and 20 requests, while 19% handled over 500 requests each month (as shown in Figure 1).
Three-quarters (76%) of the respondents with more than 500 monthly requests were banks, while the majority of corporates (54%) indicated they only have 1 to 20 monthly requests.
Trade finance transaction growth
The survey indicates the growing need for trade finance as more and more corporates demand liquidity and financing support in the wake of post-pandemic trade growth, supply chain recalibration and economic turmoil: the majority of respondents (71%) stated that their trade finance transaction volumes were growing. 20% said that they were staying the same, and only 9% said they were contracting (Figure 2).
Among corporates, 87% said they are experiencing transaction volume growth, while only 63% of banks said the same. This could potentially indicate a lag in their capture of market opportunity due to insufficient digital support and a lack of SME support.
The widespread growth in trade finance transaction volumes requires the support of scalable and efficient digital trade finance solutions. Developing or enhancing trade finance processes to accommodate increasing transaction volumes will be key to enabling growth.
Satisfaction with finance approval time
Only 27% of respondents indicated that they were happy with the amount of time taken for finance approvals – nearly equal to the proportion of those who said outright that they are unhappy (26%). Nearly half (47%) said they feel there is room for improvement (Figure 3).
Both banks and corporates cited room for improvement though corporates exhibit a slightly higher level of satisfaction compared to banks.
This could be because banks face more significant challenges in streamlining their finance approval processes, possibly due to regulatory constraints or legacy systems. Corporates, on the other hand, might have more flexibility to optimise their processes.
Finance approval time
The average time for finance approvals varied widely. Over half of respondents (54%) said that it takes fewer than 3 days, while a small number (4%) said that it takes over 4 weeks (Figure 4).
With the vast majority (62%) stating it can take up to one week (between 1 and 7 days), it is clear that digital solutions offering real-time collaboration and transaction resolution within a matter of hours rather than days can be hugely beneficial. Particularly for banks keen to address approval time inefficiencies, this could significantly enhance overall customer experience and streamline their operations.
Unsurprisingly, the satisfaction with processing times correlates with the average time taken. More than half of those who said it takes less than 24 hours indicated that they are satisfied, while half (50%) of those who said it takes more than 4 weeks said they were not happy (Figure 5).
The time taken to issue or receive financial approvals also correlates with a firm’s perceived ability to support transaction volume growth.
Figure 6 shows that, of the organisations with growing trade finance transaction volumes, the shorter their average issuing and receiving times, the better able they felt to support the growth they were experiencing in their volumes.
Of those that take less than 24 hours, nearly all (92%) felt able to support growth, while none of those taking over 4 weeks feel the same.
Management of trade finance processes
The survey showed a diverse range of approaches to managing trade finance processes, with nearly equal proportions of respondents indicating that they use digital, hybrid, or manual methods (Figure 7).
Corporate respondents were more likely to manage their processes manually, with 46% indicating that is the method they use. In contrast, 44% of banks reported that a hybrid process is their current method.
The prevalence of manual processes among corporates highlights a potential area for improvement through digitalisation. By adopting automated solutions, corporates can enhance process efficiency, secure faster financing to bolster liquidity, and, in turn, secure faster trade agreements to bolster supply chain resilience and growth.
Figure 8 shows that organisations that manage their trade finance processes digitally use a variety of solution types. The majority said they use either in-house-built solutions (32%), on-premise vendor solutions (32%), or private cloud-hosted vendor solutions (21%).
Of the organisations that currently manage their trade finance processes manually, the vast majority (93%) indicated that they would be willing to consider switching to a digital solution (Figure 9). Those who said they would not be willing to consider a digital solution pointed to IT constraints, costs, regulations, and low volumes generating insufficient need, as their reasons.
Primary drivers for digitalisation
The majority of respondents (52%) selected operational efficiency as their primary driver for digital trade finance processing (Figure 10). The next most commonly selected drivers were customer demand (15%) and cost efficiency (11%).
The focus on operational efficiency underscores the industry’s commitment to streamlining processes and optimising resource use.
Among corporate respondents, sustainability and paperless processing was the second most commonly indicated driver for digitalisation (after operational efficiency). emphasising the global trend towards environmentally conscious business practices.
Digital solutions are faster and support growth
Figure 11, which compares the amount of time taken to issue or receive finance approval to the method of processing employed, shows that digital processing methods tend to lead to shorter processing times, and the inverse with manual methods.
Nearly half (47%) of all firms that reported processing times of less than 24 hours used digital methods, while half (50%) of those taking more than a week currently use manual methods.
Furthermore, firms using digital methods are far better positioned to handle trade finance transaction volume growth. 76% of digital firms reported feeling capable of supporting such growth, compared to only 42% for hybrid firms and 38% for manual firms.
These insights confirm that adopting digital processing not only allows firms to efficiently manage growing transaction volumes (while firms relying on manual methods face delays and may struggle to scale effectively) but transitioning to digital processes is likely to provide a competitive edge, allowing organisations to retain existing customers while acquiring new ones and expanding into new markets.
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This survey provides insight into the current state of trade finance processes, particularly with regard to the impact of digitalisation.
As firms’ trade finance transaction volumes continue to grow, the data suggests that those using digital processing methods may be better positioned to manage this growth efficiently.
The correlation between shorter finance approval times and digital methods indicates that transitioning from manual processes is a worthwhile consideration for organisations aiming to enhance their operational efficiency.
While these findings are not prescriptive, they do confirm that exploring digital solutions can help firms better support their trade finance activities and respond with agility to market demands.
