For one global trade finance bank, redesigning the trade finance ecosystem required an end-to-end approach to digital transformation. To adopt a holistic stance to its transformation framework and develop a unique, overarching digital strategy, the bank scrutinized each layer of its trade finance function, from cost and control to customer experience, to deliver maximum value across the transformation program.
Using EY’s wavespaceTM to curate innovation sessions, the bank’s product, operational process and technology specialists restructured their thinking on their digital transformation framework – from core banking components to engagement channels, existing digital capabilities and analytics platforms.
On average, a large trade finance bank can spend anywhere from US$25m to US$42m annually on risk, compliance, sanctions and anti-money laundering (AML) tasks – all without growing its business. In addition, the especially complex and distributed nature of trade finance means that it is highly exposed to financial crime.
Banks can harness the power of advanced analytics and robotic process automation to transform the way trade finance teams identify and control risk, including by detecting patterns of illicit trade finance activity. Risk analytics tools leveraging natural language processing, text analytics and third-party data to underpin a risk analytics scoring engine can support the analysis of large volumes of trade transactions.
Embracing the ecosystem
Given the importance of small-to-medium enterprises (SMEs) to the global economy, banks need to also ensure they are serving this largely underserved market. Late payment for services and long invoice maturity can hamper both short-term agility and long-term growth and investment. To develop a solution that would help raise finance against already-issued – but as yet unpaid – invoices, banks can seek outside resources whose teams can tap into an ecosystem of technology partners and start-ups , enabling better management of SMEs’ cashflow capabilities.
Read the case study: How a new technology platform can help banks unlock financing for SMEs.
Overall, banks must move quickly toward developing digitally advanced products and customer engagement practices. Banks that are scrambling to survive in an increasingly digitized environment must view disruption as an opportunity to phase out legacy systems in favor of new operating models. No matter the market, the challenge of coping with swift technological change, along with the laborious overhaul of processes, can be a source of concern and frustration. Yet, with the right partners, this can be achieved.
For example, one large, traditional Central European bank that EY worked with discovered that having a flexible, adaptable digital foundation was increasingly essential in this fast-paced, digital age. As a result of this work, it was able to enhance its lending processes through a custom-built, mobile-first and AI-enabled digital platform.
New models like these will empower banks to fundamentally rethink and reframe their futures based around an entirely new customer relationship from the inside out, by accurately capturing and representing the voice of the customer.
Read the case study: How both banks and customers can seize the upside of disruption.