TradeSun Blog

Governments Called on to Respond to Trade Finance Barriers

By Nigel Hook, TradeSun Founder and CEO

In a recent article in the Global Trade Review, Eleanor Wragg reports on a recent plea to the government by the International Chamber of Commerce (ICC) to “enable an immediate transition to paperless trading.” The article addresses the current challenges of COVID-19 in the processing of trade finance transactions amidst stay-at-home orders around the world. It is suggested that the government should remove requirements for “key trade documents such as bills of lading, bills of exchange, promissory notes and commercial invoices to be presented in paper format” as many banks are currently unable to handle trade finance paper documents in person.

Paperless trade is a concept that banks have been working towards for years, but have so far found challenging to make a reality. As the article explains, “unless you get every shipowner, every customs authority to agree to accept, for example, the electronic bill of lading, it still doesn’t work…Bringing all actors in the world’s supply chains together to agree on the validity of electronic documents simply isn’t feasible.”

That’s where TradeSun comes in. Our philosophy is to let artificial intelligence (AI) understand any document, and then normalize it into a common standard rather than requiring everyone to conform to the same standard. As humans, we can’t even agree on miles or kilometers, let alone an entire documentation system. With TradeSun, a uniform e-document is not a necessity. The TradeSun platform can process any document, regardless of format. Using state-of-the-art AI, TradeSun’s patent-pending Astra algorithm harnesses image recognition, natural language processing (NLP) and propriety technology to read and transform any document into a transaction. With the highest accuracy rate in the market, TradeSun gets exponentially smarter with the more documents it processes.

In this new world, perhaps government emergency response is the catalyst to finally leaving behind paper and postal systems. At TradeSun we are currently seeing an increase in interest from banks in re-thinking their internal restrictions to allow for the future of work: an accessible from anywhere, scalable solution that elevates humans from menial to meaningful work and accelerates digitalization of trade finance.

Coronavirus May Get Trade Finance Banks Thinking
about the Future of Work

By Wyn James, Senior Vice President of TradeSun, Inc.

From collapsing stock markets to suspended flights and lockdowns, the effects of the COVID-19 outbreak are being felt worldwide. As one response to this global pandemic, attempts are being made to “flatten the curve” by allowing employees to work from home.

In a few months’ time when banks conduct a post-mortem on the outbreak, a major point on the agenda will be their future preparedness in the case of a similar global pandemic. As they have now set the groundwork for this remote solution, why would they stop this trend once the emergency is gone? Could this outbreak be the event that lays solid ground for a conversation around the future of work and the idea of remote trade finance office workers?

Remote working – a test

Technology is touching everything we do, and trade finance document processing is no exception. So what can remote work look like for such a heavily paper-based industry? In my role working with the TradeSun platform, I often describe it as a collaboration between man and machine. Until trade finance becomes 100% digital, provided there are team members onsite to receive, scan, and dispatch the original shipping documents, the remaining processes can be managed both automatically and remotely using a cloud-based platform like TradeSun.

Although it has been argued that people are more productive when working remotely, the fact that remote workers are not visible except when meetings are called is something that most seasoned managers struggle with. In this case something like TradeSun’s analytics module becomes helpful. The banks decide what they wish to measure by way of user activity, and the data delivers the answers. The positives of a lower cost base, increased productivity and more accurate compliance checking that is available anytime, anywhere to the banks is clear.

Implications of a digital future

What will come of employees under this new structure?  Well for starters they get to spend more time with their families as they don’t have to commute to and from work. They can choose when and how to work as long as the job gets done.

In this digital future, tens of millions of workers may be working from home, albeit consuming electricity but not producing substantial fumes from combustion engines. According to a recent survey, 118 metric tonnes of CO2 can be saved every year by flexible workspaces that require less commuting. “There’s no quicker, easier, cheaper way to reduce your carbon footprint than not drive,” said Kate Lister, president of Global Workplace Analytics, a U.S.-based firm that helps companies plan for the future of work.

In the longer term, of course, emissions savings can be even greater, as telework policies allow banks to reduce the amount of office space they must heat, power and equip. Some of this will be offset by home workers using home electricity, but the global implications of remote work are still strikingly positive.

And what about the local communities world-wide? Workers will get used to visiting their local restaurant, local gym, local theatre, local pub or local cinema. The makers and checkers will work more and more from laptops through cloud-based workflow automation, fully connected to their bank employers but participating more actively in their local communities.

Food for thought

Once the dust has settled, there will be much more to ponder. We’ll need to consider not only the cost of this outbreak, but how to prevent future ramifications in case a global catastrophe strikes again. Some banking departments have performed exceedingly well for a while with remote workers. The coronavirus outbreak, for all its disruption to the global economy and stability, could be the catalyst for the future of remote and distributed workers in the trade finance space.

A Bright Future for Trade Finance

by Dan Scanlan

Published on April 26, 2019

I remember as if it were yesterday. I was sitting in my office doing what countless others were probably doing at the time: I was on a conference call. This call was with ten or twelve BAFT members representing their respective banks listening to a presentation from a company whose name I can no longer recall. They were telling us how they were going to be the first ones to do the equivalent in Trade Finance of boiling the ocean. It wasn’t easy to pay attention after they described how they were in the process of negotiating with all the major shipping companies, the key governments from the WTO, the major insurance companies, most of the fortune 500, a number of freight forwarders and on and on and on.

What were they negotiating, you ask? They were attempting to devise standards for mapping all the pertinent data related to a trade transaction. Their idea was nothing less than the complete automation of trade transactions. Their theory went like this: No matter the type of transaction, a letter of credit, a documentary collection, an open account transaction, once we have agreed on the data standards for all the potential documents in a trade transaction we will be able to have the machines take over (think of Hal in 2001 Space Odyssey… “Are you comfortable Dave?”) . All the data would be sent electronically to the banks and it would be easy peasy for the banks’ systems to take that data, do automatic checking of the documents against the L/C, compare the data in the doc collection or compare the P.O. to the invoice in the case of an open account transaction. Viola! All trade processing is automated! Nirvana reached; we can all go home!!!

All of us on the call knew that getting all the potential players in trade transactions to agree on data standards would never happen. Easier to boil the ocean, right? But today there is a way to create the same affect without all the fuss. TradeSun has invented a way to capture all this divergent data through intelligent scanning and machine learning so that they are indifferent to the format of the documents. An ‘anything goes’ approach to automation. TradeSun’s technology has eliminated the need for standardization because it captures the pertinent data regardless of where it sits in the documents.

Over the years many companies and banks have tried to automate trade processing. Some tried the data standardization approach (think Bolero). Others tried the simplification approach. Once when I was running trade operations at a major West Coast bank my boss, a very bright lady, came to me and asked me, in so many words, to invent a simplified L/C. Her view was that the L/C process was too complicated and we could significantly cut the cost of processing if we could just make it more simple. Well the bad news is I failed to invent the simplified commercial L/C; but the good news is that she didn’t fire me. In my defense I believe that the reason banks have not significantly simplified the L/C is that by even thinking that way we have committed a major marketing faux pas. We have failed to listen to our clients.

As Kirk Lundburg, the CEO of Trade Technologies, recently said, “Contracts between importers and exporters are not simple or standardized because trade is complex. For trade to happen, agreements must be reached across legal systems, cultures and languages for an infinite number of parties, products and services. These agreements cannot be made, and trade cannot happen, without trust, experience and nuance. Creating a simplified, minimized or digitized transaction format makes banks happy because it is cheap and easy to process, but if it fails to support the complexity required to complete trade transactions, what good is it? Instead of dumbing down trade payments, tomorrow’s trade finance solutions will be rigorous and flexible enough to support exporters and importers in the complex environment where global trade happens.”

Lundburg is definitely on to something, and I’m proud to say that I’m part of this new solution, as I’ve recently joined TradeSun. With TradeSun, instead of making everyone conform to globally agreed upon standards (the impossible dream), we start with the documents themselves. Whether it’s an invoice, a SWIFT formatted L/C, an inspection cert, an insurance certificate, a B/L from a major shipping company… Whether it’s the carbon copy of the airway bill from a package delivery company, some rarely heard of freight forwarder, or that rare case of an onion skin document still smelling of curry, it doesn’t matter. Our software uses AI and machine learning that can read those documents. Is it 100% accurate the first time through? No, but it starts around 80% and quickly (with the help of a knowledge worker (read: bank document checker)) and the system’s AI capabilities, it jumps to a near perfect accuracy range.

“A miracle,” you say? No, not a miracle, but a proven technology from TradeSun. This small but powerful company has created this technology that uses image recognitionand natural language processing to read and automatically create document templates that replicate every document it sees. That means that the next time it sees that document, bingo! There’s a match. And any time it sees a close approximation it presents that document and its data to our friend ‘the knowledge worker’ who confirms or corrects the system, thereby solidifying TradeSun’s knowledge.

Imagine, a number of banks using this system every day, feeding their documents (i.e., scanning, uploading word or PDF docs, etc.) into TradeSun. Each of those banks has a secure space for their data while having the benefit of sharing the system learnings, so that when Bank A feeds a new doc into the system and the next day Bank B uploads a similar document, Bank B benefits from the system learning from Bank A and receives a template match thereby extracting all of the pertinent data. And therein lies one of the many beautiful components of the TradeSun system. It operates on the cloud and supports multi-tenancy and multi bank document learning. However, if you’d prefer to opt out of the multi bank learning or have an in-house version, that’s perfectly ok as well.

Once the system has all the correct data from the documents, the real magic begins. At the click of a button it compares all the data against the original L/C and any amendments. That comparison is displayed in a user friendly matrix, dubbed the “K Matrix” by the geniuses at TradeSun. The K Matrix shows the data comparison and highlights in green the matches; orange, the potential discrepancies; and in red, identified discrepancies. The document checker reviews the highlighted fields, makes a call on the orange and red fields and then completes the document exam. Ok, not quite Nirvana but pretty close and a lot easier than boiling the ocean. In fact some would argue that it’s a different way of boiling the ocean. Same effect, but without all the headaches associated with trying to reach universal agreement on data standards.

In addition to this automated checking process, the TradeSun technology has the ability to do a compliance check against either external or internal databases. So, yes, it can check the SDN list, the sanctions list, and any internal or other external list your bank may use. It can also be programed to review your red flags, i.e., things like under- or over-invoicing, dual use goods, etc. And the beauty is that it does all this in record time. TradeSun says that its technology can speed up the processing of letters of credit from 3 to 7 times.

The system is operating today in a major Asian bank after TradeSun won a global RFP against a half dozen competitor AI companies and although they are not willing to share their results publicly (contractual concerns) I have heard from a reliable third party that the bank in question is very happy with the results they are achieving and they are currently implementing the system globally.

Again, the beauty of this process is that the importers and exporters can continue to be as nuanced and detailed as they want; and the banks can significantly increase their margins in the business by adopting a fast and efficient technology that automates most of the process, speeds up the exporter’s cash conversion cycle and still leaves the banks in control of how they service their customers. Yes indeed, a way to boil the ocean without ever lighting a match. But don’t take my word for it, contact TradeSun and see for yourself.

Originally published on LinkedIn