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The Role of Technology in Trade Finance
Published 16th July 2024 by Kishore Patel in Blogs
In a rapidly evolving trade finance landscape, global economic challenges have tightened banks’ technology budgets, hindering their ability to meet customer demands. To stay ahead, banks are increasingly partnering with third-party technology providers, leveraging their expertise to deliver superior products while maintaining high security and compliance standards.
Challenges in Technology Investment
Banks are facing significant budget constraints, with fewer reporting budget increases and more experiencing cuts, as highlighted in Demica’s 2024 benchmark report. Many rely on aging technology, struggling to keep up with evolving customer demands. Fortunately, many banks expect budget increases soon, potentially reviving delayed “trade transformation” projects.
Banks are increasingly turning to third-party technology providers over in-house development. Specialised vendors can invest more resources into platform development than most banks can manage internally, and this allows banks to offer superior products with better CX, and that still meet the stringent security and compliance requirements of banks.
Development Priorities
The focus banks have on their customer experience was made clear when, in Demica’s 2024 benchmark report, many banks reported that ERP integration is considered critical for the success of their programmes. Banks strive to streamline data access and facilitate quicker onboarding and product delivery for their customers, and this is increasingly considered a must-have feature when using technology in trade finance transactions.
While some banks are cautious about using APIs for integration, many technology vendors are exploring this secure option to modernise the market and improve implementation times. Banks often take a cautious approach due to the complexity of integrating legacy systems. To address this, many are focusing on middleware solutions. This strategy helps decouple front-end systems from older back-end systems, making it easier to introduce new third-party technology.
The right partner can help banks improve customer experience (CX) and operational efficiency. Customers now expect digital platforms that allow for self-service and instant access to information. Developing such platforms in-house can be expensive and time-consuming, whereas third-party solutions often offer ready-to-deploy, user-friendly alternatives.
Future Outlook
Technology is crucial in the evolving trade finance landscape. Despite current budget constraints and aging systems, banks remain optimistic about future investments. The shift towards third-party solutions is shaping the future of trade finance, helping banks meet customer demands and regulatory requirements. Trade Finance Technology will continue to be a key enabler of growth and efficiency in the sector.
Kishore Patel joined Demica in 2001. An experienced system architect and application developer, Kishore is responsible for the design, development, security and maintenance of all components of the platform.
Published 16th July 2024 in Blogs