Three steps to global service leadership in Trade Finance
8 July 2014
So how can you capture global opportunities to finance world trade and deliver the most competitive services locally to clients, while ensuring a global level of consistency and the ability to deliver new products and services to keep up with the pace of change? We recently had a chat with the head of trade finance at Barclays Bank to discuss these issues.
Emerging trends in trade finance and supply chain finance are forcing banks to re-evaluate their operating models to address the needs of an increasingly global corporate client base. They are faced with increasingly strong competition in local markets from banks and non-bank providers. These changing dynamics, along with the evolution of new rules and standards and the entry of innovative financing providers along the supply chain are highlighting the need for banks to find the scale and product delivery capabilities to compete both at home and away. So how can you capture global opportunities to finance world trade and deliver the most competitive services locally to clients, while ensuring a global level of consistency and the ability to deliver new products and services to keep up with the pace of change? We recently had a chat with the head of trade finance at Barclays Bank to discuss these issues - watch that here.
Trade finance is no longer a commoditised business carried out across regions. We see the major players want to put in place an infrastructure that enables them to deliver process automation and standardisation - alongside customer service differentiation. Leading trade finance banks are looking to centralise their trade businesses but also provide regionally differentiated services delivered via local branches and online banking, and by creating and managing tailored SLAs down to the individual client level.
1. Moving from cost centres to relationship centres
The cost-reduction policy of locating trade finance processing teams in lower-cost countries in the accepted model of global processing is still a valuable operating strategy. Banks can manage the peaks and troughs of trade finance business in each region more efficiently by moving work to teams in different regions, while maintaining central oversight and control. Legacy system cost and by association, inefficient transaction processing, can be offset with new offshore processing centres that reside on a centralised platform to provide global visibility and control. This allows banks to focus spend and resources on relationship expertise and differentiated service delivery at the local level.
2. More productive SLA management
Banks can win new customers and additional business from existing customers by offering round-the-clock trade services based on global/multi-regional processing. Customers will also be attracted by the prospect of tailored SLAs, based on the platform’s ability to monitor performance and streamline workflows. A global processing technology backbone must have SLA management at its core to improve performance and productivity and prioritise service delivery based on client need. With this in place, banks are able to manage customer business more proactively to meet pre-agreed levels of service.
3. Service consistency with local compliance
An effective global processing approach enables banks and their clients to implement best of breed procedures globally, while still allowing them to roll out or transact according to regulatory compliance on a country by country basis - including across subsidiaries, other bank brands and ‘white label’ entities. This ensures that all areas of the bank conform to the same high standard of control and clients benefit from service consistency and local compliance. Any global change to policy can easily be rolled out to all areas of the business. This consistency in approach has been shown to reduce or eliminate fines and penalties. Flexible global processing helps to reduce operational risk across locations. It enables cross-market best practices to be implemented more easily and efficiently. In addition, global systems and processes can make internal re-organisation and integration efforts more manageable.
To read more analysis of how banks can re-define their operating models in trade to steal a march in global transaction banking, read more in our recent whitepaper, “Local Focus, Global Opportunities”