Corporate lending and trade finance are undergoing a transformation – that much, everyone can agree on. Digitisation, AI, and a market that is in constant motion make the industry one of the most exciting sides of finance, ripe with opportunities as much as challenges. 

However, how to overcome these challenges – especially in a complicated geopolitical landscape – and evolve with the opportunities remains a hot topic.

Finastra, a global provider of financial software applications, hosted its annual Europe Corporate Banking Day along with sponsors Microsoft and Tech Mahindra to discuss just that.  In London, senior executives from across the banking, technology and sustainability sectors came together to discuss the key market and technological trends in the industry: here are 5 of their main insights.

​​1. The market is shifting

Institutional investors and private credit are increasingly dominating the market, with growing appetite for direct lending as borrowers seek the best financing options. However, the lending industry still faces many challenges related to transparency, interconnectivity, inefficiencies and balancing regulation with innovation. 

Global political and economic fluctuations are also creating new trade corridors, requiring institutions to be agile and flexible and driving a shift from payables to receivables finance. 

2. Corporates expect seamless services, but digitisation remains a challenge

Corporates demand banking services that are personalised, digital, instant, and both local and global. However, an audience poll identified digitisation as the biggest challenge and opportunity, cited by 44% of institutions. Across the industry, data remains largely in paper form, creating significant barriers. 

Banks must invest in customer-centricity by implementing truly digital customer journeys, straight-through processing and automation and reduce loan approval time. Technologies such as cloud, microservices, APIs, digital ecosystems, and agentic AI will play an important role in banking’s evolution.

3. Industry expertise is declining 

As the next generation enters the workforce, institutions must capture knowledge from experienced workers before they retire, storing it in a structured database. More admin-focused roles must be migrated, upskilled, and digitized to attract younger talent. An audience poll revealed that talent attraction and retention were the biggest challenge and opportunity for almost a quarter of respondents.

4. AI is here to stay

When implemented correctly, AI can augment human capabilities, deliver automation and increase efficiency and speed in ways that would have been unthinkable just a few years ago. Large language models serve as a valuable resource for information, bridging knowledge gaps and facilitating faster decision-making. With AI, institutions can, for example, issue more letters of credit and digital trade agreements and better track, report, and fulfill sustainability commitments. 

AI can speed up document processing, compliance checking, and contract approval times. In the future, we may see autonomous supply chains and transaction processing as well as augmented smart contracts with instant settlement, all thanks to AI’s constant evolution.

5. Tokenisation experiments in trade finance 

Although it has been discussed for many years, banks today are increasingly experimenting with tokenisation. Innovations such as smart contracts and stable and risk coins can drive greater efficiencies in trade settlement and post-trade processing, improve risk management, and provide more effective access to capital. With routers, multiple use cases can be created.

However, despite the opportunities, the lack of industry standards remains a challenge. On the other hand, some argue that standards can stifle innovation and therefore should only be established once market connectivity is achieved.  

The event speakers included leaders from Finastra’s Lending business unit, such as Andrew Bateman, Lekshmi Nair, Robert Downs, Anastasia McAlpine, Sandrine Markham, Elena Sankova and Julian Lee. Other speakers represented institutions such as Microsoft, Tech Mahindra, ING, Loan Market Association, ITFA, Crédit Agricole CIB, Norddeutsche Landesbank Girozentrale and CredAble.

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The responses assume 2025’s key financial trends: digitalisation through generative AI (GenAI), cloud adoption, and API-driven ecosystems. These come with a strong emphasis on regulatory compliance and environment, social, and governance (ESG) initiatives, and better integrating small and medium-sized enterprises (SMEs).

Andrew Bateman: Lenders will focus on driving productivity and efficiency to reduce risks and increase profitability  

Digitalisation: 2025 will see banks increasingly turning to generative AI (GenAI) to “plug lending and technology knowledge gaps and optimise processes,” said Bateman. The technology’s capacity to curate tailored content enables the creation of personalised, interactive learning experiences for upskilling teams. 

“With large language models (LLMs), banks can, for example, process and interpret Letters of Credit and instantly perform checks on the documents to make quicker, and potentially more informed trade finance decisions,” Bateman explained. “In customer-facing applications, corporates could ask for a breakdown of their loans and ways to optimise their finances, thereby enhancing their own user experience while also reducing bank resource requirements.”

Partner ecosystems underpinned by Open Finance principles will be essential. By integrating value-added services through application programming interfaces (APIs)—such as automated ESG scoring, document verification, and GenAI assistants—lenders can maintain competitiveness and reduce time to value. A microservices approach will likely become increasingly prevalent, enabling greater organisational agility and risk mitigation.

Sustainability mandated by regulation: “Sustainable, inclusive, and responsible lending will high on the boardroom agenda in 2025, particularly as deadlines for Section 1071 of the Dodd-Frank Act and Basel 3.1 approach. These regulations mandate complex lending data reporting and more accurate risk calculations,” said Bateman.

A growing market demand exists for ESG solutions, including sustainability-linked loans, bonds, and supply chain finance. Bateman said, “Cloud and SaaS will play a big role here, providing the necessary agility to navigate this rapidly evolving market.”

SME integration: “Modernisation efforts are crucial, particularly for SMEs, since manual processes, siloed operations, and outdated technology can render SME lending risky and unprofitable. Banks must consolidate loan portfolios onto contemporary platforms to address this.”

Siobhan Byron: To keep pace in 2025, institutions must reimagine banking through innovative technology and ecosystems

Digitalisation: Institutions must reimagine banking to remain competitive. Adopting the right technology—implemented to maximise innovation while minimising risk—will be paramount. Strong growth is anticipated regarding cloud adoption in the US, UK, Germany, France, Singapore, and UAE, amongst others. Institutions recognise the benefits of cloud and Software-as-a-Service (SaaS) solutions in increasing agility and innovation whilst reducing risk, time to market, and overall ownership costs.

“Fintechs, neobanks, and technological innovation have flourished worldwide, technologies are being adopted by the masses at a pace we haven’t seen before, and Open Finance is a reality. This has led to heightened demand for instant, digital, seamless, and personalised services,” said Byron.

Conversely, regions with slower cloud adoption due to regulatory constraints require alternative strategies. “For these banks to remain competitive, they must invest in on-premises solutions that provide robust security, scalability, and data analytics. Ideally, solutions that can easily migrate to the cloud as and when the regulatory concerns are addressed,” said Byron.

A “flexible, modular transformation strategy” is increasingly preferred over the disruptive “rip and replace” approach for upgrading core systems. “More banks will adopt a Symbiosis approach, where a next-generation core banking system is deployed alongside existing infrastructure,” explained Byron. 

Microservices architecture and APIs allow banks to implement functionalities such as lending or Islamic banking services. AI-driven analytics further enhance insights into customer needs, operational performance, and growth opportunities.

ESG: ESG initiatives are increasingly supported by Open Finance ecosystems. “For example, a bank can bring together the services that a homeowner needs to fit solar panels on their house – from advice on selecting the right ones, choosing the installer, applying for the grants, complying with the rules, and so on.” These holistic, customer-centric approaches will continue to drive innovation and competitiveness.

Wissam Khoury: Automated workflows and real-time technology will be key

Regulation: Industry and societal transformations are occurring at unprecedented speeds, creating new opportunities and risks for banks to navigate. Continued volatility in capital markets, increasingly stringent regulatory requirements—including upcoming Basel 3.1 reform deadlines—alongside growing demand for ESG services and technological adoption pressures are reshaping the financial landscape.

AI ubiquity: GenAI will help drive the movement towards fully automated trading workflows. Its ability to analyse extensive historical data and real-time events offers deep market sentiment and positional insights. 

“By embedding natural language capabilities within interactive workflows and GenAI-powered assistants, institutions benefit from streamlined processes and elevated user experiences. As LLMs become a popular search engine for trading and analysis, access to information will become faster, simpler, and more intuitive,” said Khoury. 

“Traders can, for example, retrieve real-time market data, quotes, or transaction details – such as a detailed summary of all the FX spot trades executed – and run APIs to automate tasks such as booking trades and calculating risk measures,” he explained.

By embedding GenAI-powered assistants into trading platforms, institutions can automate tasks like trade booking and risk calculations; decisions about liquidity, cash management, investment strategies—including ESG criteria compliance—and comprehensive risk mitigation will grow faster and more informed.

“Modernisation efforts are also increasingly occurring via a microservices-based environment, allowing institutions to pick and choose functionality while reducing the potential risks of a large migration from a legacy system,” said Khoury.

Collaboration: Recognising that neither banks nor technology partners can independently deliver comprehensive functionality, robust partnership networks and ecosystems founded on Open Finance principles will be instrumental to success.

Barry Rodrigues: As instant payment volumes grow in 2025, banks must prioritise resilience, scalability, and speed of recovery

Digitalisation: From software to instant payments, digital transformation is inevitable.

“More than 80 countries today have domestic instant payment systems, such as FedNow in the US, SEPA Instant in Europe, SIC5 in Switzerland and FAST in Singapore,” said Rodrigues. Consequently, global instant payment volumes are anticipated to continue growing, encompassing both wholesale and retail transactions. 

Central bank digital currencies (CBDCs) are also gaining traction; over 60% of banks recognise their additional revenue opportunities, and 134 countries are exploring tokenised fiat currency versions that could disrupt cross-border markets.

Regarding payment modernisation, said Rodrigues, “more banks are looking to consume smaller, standalone components that can be easily integrated through APIs. With containerised, composable microservices and cloud deployment, institutions benefit from faster deployment cycles and greater efficiencies, with scalability and agility, while reducing risks associated with large-scale migrations from monolithic systems.”

GenAI will play a crucial role in anti-money laundering compliance, sanctions screening, and fraud detection—increasingly critical for instant and irrevocable transactions. With regulators mandating near-universal payment availability—in some instances up to 99.9%—institutions must upgrade capabilities to maintain compliance and provide secure solutions.

Regulatory deadlines: “With the US Federal Reserve’s March 2025 deadline for ISO 20022 migration approaching, financial institutions must ensure compliance and strategise their instant payment approach.”

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In their words, enhancing operational efficiency, productivity, risk management, and profitability will be top priorities for financial institutions across the industry in 2025. Since digitalisation is inevitable, preparation is vital for those who want to best take advantage of its promised benefits. Regulation has forced companies to reassess strategy, particularly ESG, while remaining innovative and competitive. Finally, SMEs are being increasingly recognised as crucial to the financial ecosystem.

Taking heed of these expected developments could allow financial institutions to best insulate themselves from the usual ups and downs of the industry.

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• Accessing trade finance is one of the three most significant export barriers for SMEs.
• Technological trickle-downs from larger companies have also been limited.
• Collaborative technologies which incorporate AI and OCR can empower smaller players.

According to Allied Market Research, the global supply chain finance market was worth $6 billion in 2021 and is projected to reach $13.4 billion by 2031, growing at a CAGR (Compound Annual Growth Rate) of 8.8% from 2022 to 2031.

So, what are the drivers behind the growth of the supply chain finance market? What are the remaining barriers preventing small and medium-sized enterprises (SMEs) in particular from taking full advantage of supply chain finance, and how will new technologies support deep collaboration between different parties and propel the market forward in the next few years?

Market drivers

The forces behind the adoption of supply chain finance include the need for safety and security in global supply chains in an uncertain world. The COVID-19 pandemic exposed the fragility of cross-border supply chains, while also encouraging the use of more automated processes instead of manual tasks performed on-site or in banks’ branches. In fact, during the pandemic, automated processes became a necessity.

With Asia-Pacific, notably India and China, expected to grow their economies significantly, the region will provide huge opportunities for organisations engaged in the supply chain finance market globally. Several large corporate enterprises in Asia-Pacific are actively evaluating advanced supply chain finance solutions to strengthen their technology infrastructures and overcome the long-standing issue of high transaction and processing costs.

Another driver is the emergence of strategies by major players in the technology industry to collaborate across the sector to provide differentiated and innovative platforms that will serve to reduce the supply and demand chain gap, currently valued at $1.7 trillion.

Barriers to adoption

According to the World Economic Forum (WEF), inadequate trade finance measures rank among the top three export barriers for SMEs. More than half of SMEs worldwide say they are underserved when it comes to working capital financing.

A second challenge is regulatory uncertainty, including late payments regulation in the EU and changes around accounting and disclosure requirements. A third is a lack of maturity in the understanding of supply chain finance, especially in developing economies. This has traditionally created a level of inertia, holding back progress and impacting corporates’ and banks’ appetite for risk.

Finally, the uptake of technology to support trade finance has tended to be limited to large suppliers and large companies, with the benefits of automation failing to flow down to micro businesses or SMEs. This is because a lot of the platforms used do not provide the capability to onboard large numbers of suppliers at scale.

Organisations also feel less comfortable dealing with high numbers of smaller invoices, many of which can still be supplied as physical documents that need to be managed manually.

The role of collaborative technologies

When done properly and inclusively, supply chain finance is all about managing high volumes of transactions being processed as quickly as possible. It means that technology is imperative to the success of any supply chain finance program, as well as to lower the barriers to entry for smaller organisations.

Recognising this need, major players in the sector are collaborating to offer a feature-rich platform integrated with a proven and comprehensive supply chain finance system. Using integrated solutions, banks can accelerate their revenue growth, expand their businesses and increase customer satisfaction using a single supply chain finance platform.

One such example is the platform created by CredAble and Finastra, which corporates attest to providing the ability to optimise their working capital, maintain real-time liquidity for long-term growth, and access data to support detailed decision-making.

The solution incorporates technologies such as artificial intelligence (AI) and optical character recognition (OCR) to remove friction from processes such as onboarding and invoicing, opening up the possibility for banks and corporates to include SMEs in their supply chain finance networks.

One example of where this has worked in practice is Axis Bank, a leading private sector bank in India. Having worked with CredAble to develop its supply finance platform, Axis Bank onboarded a white-label version of the software to support its own client base.

Within a year, Axis Bank brought in more than 50 new suppliers to its corporate clients, representing close to $500 million worth of business. The program is ongoing and has demonstrated how transactions can be executed more efficiently while simultaneously satisfying all regulatory requirements.

Examples of successful roll-outs like Axis Bank demonstrate the vital role that the digital public infrastructure (DPI) will play in countries like India in leveraging access to resources such as value-added tax or company real estate records. This will not only improve process automation further and reduce the need for manual checks, but it will also prevent fraud carried out through fake invoicing.

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Vendors like CredAble and Finastra are focused on developing their platforms to meet the needs of all players in the supply chain, from the self-employed farmer at the bottom to the banks and large corporates at the top.

Deep financing is just one of the most exciting trends in this area. Along with adhering to environmental, social, and governance compliance as standard within supply chain finance, all roads really will lead to collaboration in this fast-moving, ever-more inclusive sector.

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In 2024, the year of dramatic elections, tectonic shifts in governing power, and heightened tensions worldwide, Sibos attendees are keeping their eyes squarely on the road ahead. This year’s theme, Connecting the Future of Finance, has two letters hot on everyone’s lips: AI. 

Alongside the conference in Beijing, Finastra’s Trade and Supply Chain Product Management Head Anastasia McAlpine joined Trade Finance Global’s (TFG) Deepesh Patel to discuss how the use of artificial intelligence will reshape trade.  

AI is nothing new, and it’s already transformed the trade finance space. But who will really benefit from the next wave of AI integration? Finastra—one of the world’s largest fintech companies and an early adopter of automation—is characteristically excited about what AI can do for SMEs in supply chains. 

In conversation, McAlpine explored how AI can address innovation deficits for smaller players as well as the challenges for the big banks.

Addressing the innovation deficit

Recently, Finastra’s product team began expanding their Loan IQ platform – a software solution already servicing 75% of all syndicated loans (large-scale financing provided by multiple lenders). 

According to the World Trade Organisation, around half of trade finance requests from SMEs are rejected, compared to only 17% for larger players. McAlpine has a lot of sympathy for those trying to keep up with a market that is perpetually in flux. “One of the big differentiating points is the vast amount of data… the vast amount of the players… you’ve got the buyers, suppliers, and we’re talking about hundreds of thousands of invoices floating on a daily basis.”

AI will play a huge part in transforming the supply chain finance (SCF) space, with many optimistic about how automation could make the market as a whole more accessible, especially for smaller players that are struggling with the challenges of the cost and scale of supply chain finance best practice.

For the team at Finastra, collaborations with platforms like CredAble are instrumental to ethically-focused digitisation, a challenge that McAlpine is acutely aware of.  

“We need to think about the cost-of-serve from the bank perspective to the SME… It’s very paper-based, very labour-intensive, and cost-ineffective. This is one of the key points and barriers that the industry needs to face.”

Through the Finastra Trade Innovation-CredAble Working Capital Finance integration, McAlpine hopes to streamline supply chain financing processes and enhance the customer experience. 

AI plays a huge part in elevating this experience, with three key components:

• Improving optimisation by helping to streamline the process of onboarding new partners in the supply chain ecosystem.
• Processing and analysing data and using predictive models to assess optimal financing times (for instance, evaluating cash flow needs and supply chain dynamics).
• Tools like Copilot AI to expand the knowledge base of financial institutions with education and query resolution via real-time, global databases. 

A seat at the table – ESG best practice en vogue

Bloomberg Professional Services estimates that global ESG assets will exceed $53 trillion by 2025, accounting for more than a third of the projected $140.5 trillion total assets under management. This significant proportion represents the growing importance of ESG initiatives in the financial industry – a trend which McAlpine has long observed.

For the industry at large, McAlpine is interested in how Finastra can help to address contemporary pressures of environmental, social and governance (ESG) initiatives. 

“With AI, a lot can be automated. That, coupled with all the digital initiatives that are happening in the market, will help us to move forward. It will lower the cost of serving [customers], and with the likes of ESG scoring, it will hopefully de-risk the business for the banks.”

In recent years, McAlpine has watched the corporate approach to ESG turn on its head. Once a matter of mandatory compliance, leadership teams are now more engaged than ever in building robust, conscientious practices—not just for their bottom line but increasingly for the sake of the planet, society, and their partners.

“Over the last few years, there’s definitely been a shift into more of a social aspect and how we can actually improve the industry,” McAlpine was happy to say. “This social part, I think, is very prominent.” Considering the ‘S’ in ESG extends to job creation: McKinsey predicts that the green transition could result in a gain of 200 million jobs by 2050, to the significant benefit of SMEs.

While the Loan IQ platform’s standing in the complex lending market is well understood, its expansion in managing high-volume bilateral and SME loan servicing is in its advent; hopefully, Loan IQ can eventually provide a “one-stop shop” for vast amounts of supply chain data. This comprehensive risk assessment capability will enable major lenders to better serve SMEs. 

Several leaders in trade and supply chain finance innovation (including Finastra) have called on financial institutions to embrace the ethos of sustainable finance, for two main reasons.

Firstly, investor demands are swinging, as new understandings of the economic benefit of sustainable growth are giving way to a more politically minded generation of shareholders. This is coupled with governing pressures. From Basel IV to the 2030 UN Agenda on Sustainable Development or the UN Principles for Responsible Investment, regulatory bodies have a palpable interest in ethical, sustainable financial frameworks.

Ethical AI and the future of sustainable finance

For more than a decade, AI has been utilised by SCF providers, largely to the advantage of the trade finance market, with innovation and optimisation reaching exciting new levels (SpringerLink). But while AI no doubt nurtures growth, ambitious ESG goals will sustain the industry above all else, thus raising questions about data inaccuracies, overreliance and a loss of human expertise (IBM). 

McAlpine remains confident that the benefits vastly outweigh the risks, but she understands industry wariness. “We’re really talking about the tip of the iceberg because I think the potential of AI is huge. But we need to be comfortable with the use of AI. Today, I think, in the market, there is a fair bit of healthy scepticism… Can it be really trusted?”

For those thinking strategically about the future of trade finance, it is not a dilemma of trust but a question of risk and reward. 

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Corporate banking is undergoing a transformative shift, with artificial intelligence (AI) and the array of next-generation technologies linked to it playing a pivotal role. However, the industry is still exploring ways to fully harness the technology’s potential; to evolve quickly with change while managing associated risks.

At a recent Finastra event, industry experts debated this topic. Below are some insights shared about the opportunities for AI in corporate banking and how to use it to unlock the full power of data.

Driving back-office efficiencies 

When it comes to driving efficiencies in the back-office, Marc Smith, CEO of Conpend said, “The focus is increasingly shifting from robotic process automation (RPA) towards the ways in which AI can help with decision making. This is fundamentally transforming document processing and enabling straight-through processing. For example, imagine a world in which you submit a loan application, it’s approved, and you receive the money – all within five minutes. This is being made possible with AI. In fact, everything that is workflow-driven can potentially be replaced with a large language model.”

Dermot Canavan, COO, Trade and Trade Commodity Finance at ING, explains how AI is driving efficiencies in ING’s compliance checking processes. Canavan said, “Compliance checking has traditionally been an extremely paper- and people-heavy, tedious process, with lots of room for error. AI and large language models enable a much more automated compliance checking process, resulting in better data with fewer mistakes and gaps.” 

As described in these examples, consider that corporate banking is very much driven by document processing. And to implement AI properly, complementary technologies are needed to make the overall strategy work. 

For document processing, AI must be coupled with OCR (optical character recognition) technology to translate documents into data, and this will continue until such a time when the industry data standards can fill in the gaps. 

Enhancing customer experiences  

AI, and generative AI (Gen AI) specifically, could fundamentally change how corporate banks engage with clients. Enrico Muti, partner at McKinsey & Company, stated, “Gen AI can semi-automate pitch and proposal preparation, mine data to suggest client-specific actions, summarise insights from client interactions, and draft client emails. These technologies are also being used to vastly improve the ways in which chatbots can support clients with queries, acting as virtual assistants to help them navigate the bank offerings.”

McKinsey & Company’s partner Markus Röhrig added, “By automatically interpreting and completing technical documentation, Gen AI offers many opportunities to improve key processes like time consuming onboarding.”

Software developers are also using AI to enhance operational efficiency and elevate client experiences, such as writing code, creating unit tests, and automatically documenting work.

Implementing and scaling AI effectively: The three P’s

Russ Rawlings, Regional VP, Financial Services and Public Sector Leader UK&I, Databricks argues that to execute a data and AI strategy effectively, there are three key focus areas: people, process, and platform.

1. People

It’s important to consider the entire organisation when designing and implementing an AI strategy, Rawlings said, “This requires having a clear understanding of the roles and needs of all the different users of AI – including data scientists, data analysts and data engineers, as well as business users. You also need key people at every level to help drive change and ensure that AI is being embraced across the business.”

Although AI can automate manual processes and assist with decision-making, it still needs people to be truly effective. Canavan said, “The human element is always going to be key. For example, an AI system can extract data and correct it where it made mistakes, but you still need human oversight to ensure that process is robust – and to be able to step in at the appropriate points if it’s not going so well.” 

Rawlings added, “To get everyone on board with the shift to AI, it’s imperative to communicate your plans, seek alignment on methodology, and build a strong community and culture where best practice and success stories are recognised and celebrated. Most importantly, it’s about being agile and flexible so that everyone can respond to changes effectively.”

2. Process

Adopting AI and large language models requires a robust plan with clearly defined processes. Not least of which coming from the fact that AI requires big data management and large computational capabilities, and this means that cloud adoption is necessary to integrate AI solutions. Separately, Rawlings said, “Implementing an AI and data strategy involves significant change, and planning the course of your change is essential. Big process change starts with defining the principles and rules; going back to those helps to make decisions and to move things along.”

Lewis Liu, Chief AI Officer at Sirion, added “This should include a framework to test AI models and clear rules to support validation. Human oversight and intervention are also crucial, particularly in terms of facilitating end-to-end data processing.”

Effective governance is also key. “To develop a clear governance framework for AI – and its associated data – an FI needs to understand what it’s doing, record what it’s done and have the evidence to support its actions. Good governance is about more than just ensuring you meet the necessary data privacy rules – it’s also about responsible AI, having high quality data, and ensuring the ethical use of AI,” said Canavan.

3. Platform

Finding the right platform is also essential for a good data and AI strategy. Businesses across all industries are increasingly moving towards platforms based on ‘data lakehouse’ architecture – an open, unified foundation for both unstructured and structured data.

The concept blends the benefits of data lakes and data warehouses, allowing institutions to better scale AI. Rawlings explained, “When built on an open foundation, a data lakehouse can easily integrate with the entire AI ecosystem to enable machine learning, business intelligence, and predictive analytics. What’s more, when combined with generative AI, this model provides a powerful data intelligence platform that can democratise data and AI across the entire organisation.”

Embracing the future

AI – and Gen AI in particular – is referred to by many as the fourth industrial revolution. Rawlings added, “It’s democratising data for users across the world. FIs can’t fall behind and must think carefully about how they embrace the revolution.”

Smith said, “Because of the amount of data they hold and the processes they manage for the economy, banks have a massive opportunity to move the needle. The future of our industry could look very different. So even though implementing change at this scale isn’t easy, the best thing to do is just to start – just do it.”

The key point here is moving forward, in small steps wherever possible. Legacy systems are a showstopper for AI adoption (and, in truth, most technology adoption), so there is a need for every stakeholder to be committed to staying at the cutting edge and to drive that culture. 

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Finastra, a global provider of financial software applications and marketplaces, today announced its partnership with CredAble, a working capital finance platform. This partnership aims to enhance the functionality of Finastra Trade Innovation by integrating CredAble’s feature-rich platform, offering both new and existing customers a comprehensive supply chain finance solution. 

As a result, banks will be able to boost their revenue growth, expand their operations, and enhance customer satisfaction by providing corporates with a broader range of financial services through a single platform.

“In today’s tough economic climate, it is more important than ever that corporates optimize their working capital and maintain real-time liquidity for long-term growth,” said Satyam Agrawal, Global Head of Product & Retail Business Lending, MD ASEAN & ME at CredAble. 

“By combining our AI-powered supply chain finance platform with Finastra’s leading trade finance solution and global reach, we are delivering a holistic, front-to-back trade and supply chain finance offering to more banks worldwide. This enables them to broaden and enhance their operations to facilitate business growth, while ensuring the services they offer continue to meet the demands of corporates today.”

Trade Innovation is a trade services platform that leverages straight-through processing, digitalisation, and data analytics to foster intelligent trade growth while adapting to compliance, customer, and market demands. 

CredAble is a working capital platform that empowers banks to offer comprehensive supply chain financing solutions to a wide range of enterprises, including small and medium-sized businesses (SMEs), thereby unlocking valuable revenue opportunities. Together, the partnership delivers top-tier functionality, creating an improved, comprehensive solution for trade and supply chain finance.

“To facilitate truly innovative, relevant and open trade finance services, our partner ecosystem plays an important role,” said Anastasia McAlpine, Head of Product Management for Trade and Supply Chain Finance at Finastra. 

“By augmenting the functionality of Trade Innovation with CredAble’s feature-rich supply chain finance offering, we are giving our current and future customers access to a wider array of services that allow them to meet the growing needs of their customers. The partnership ensures institutions can continue to innovate at speed, decrease time to value and utilise data for decision making across the whole of their working capital and supply chain finance portfolio, ultimately supporting increased growth for both their business and that of their customers. It’s another example of how Finastra is harnessing the power of open finance and APIs to build powerful ecosystems that deliver additional value.”

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Finastra, a global provider of financial software applications and marketplaces, announced it has been selected by LGT to implement instant payment services in Austria and Liechtenstein, with plans to expand to other markets. 

LGT will deploy Finastra’s payment hub using a model bank implementation approach to expedite its compliance with the EU instant payments regulatory timeline. By separating payment processing from its core banking platform and utilising Finastra’s future-proof solution, the bank will be positioned to handle the expected increase in instant payment volumes while ensuring 24/7 service availability.

“Payments are becoming increasingly sophisticated, and it is crucial that we continue to evolve to meet our customers’ business needs and regulatory requirements,” said Bernhard Strauch, Head Securities & Payments Services at LGT Financial Services Ltd. “We selected Finastra’s payment hub as it supports multiple payment types within one standalone system, while enabling seamless integrations of new services as and when we need them. With Finastra’s solution and industry expertise, we will gain the necessary agility required to keep pace with regulatory and industry demands.”

Finastra’s payment hub offers banks a future-proof, scalable, and resilient payment processing system. Financial institutions can meet current regulatory requirements, respond faster to future changes, and provide personalised services to their customers. 

Combined with a model bank and best practice implementation, the solution will enable LGT to meet the fast-approaching EU regulatory deadline for instant payments swiftly. Once in place, the bank can easily adopt other schemes, such as SIC5 IP in Switzerland, and pursue ongoing modernisation, innovation, and growth. 

LGT also utilises Finastra Kondor, a bank treasury management system, and Finastra’s Total Messaging platform.

“Many institutions need to urgently assess whether their current payment processing environment can support the expected increase in volumes and the need to operate 24/7,” said Neil Macro, Vice President, Managing Director – EMEA mid-markets, Payments at Finastra. “This has been a huge priority for us at Finastra; ensuring that banks are fit for the future with our sophisticated payment hubs, including with the option to pay as you grow. Underpinned by open architecture, APIs, and our partner ecosystem, our solutions enable banks like LGT to innovate at speed, boost risk management and deliver enhanced services to end-users. For example, the bank can seamlessly implement new functionality to strengthen its instant payments offering, such as Verification of Payee and real-time sanctions screening. We look forward to supporting LGT on further developing its payments services.”

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Trade finance has a long, varied and rich history, with well-established rules. For a long time, the goal has been to create process flows that can work across different jurisdictions and can accommodate various standards around the world. 

The paper-based nature of trade finance makes processes inherently slow, error-prone and susceptible to fraud, adding more complexity and widening the gap between supply and demand. However, the current journey to full digitalisation in trade finance has not been easy, and even after the most recent legal changes, there are still ongoing challenges.

In recent years, another significant and growing challenge for the trade finance sector has been the loss of talent, which has created skill and resource gaps, particularly in documentary trade. For decades, documentary trade has relied on the market expertise of Trade Departments to address the needs of corporate customers. To this end, there can still be a large number of manual processes, which can be expensive and error-prone.

Additionally, geopolitical volatility, high inflation and interest rates, and economic prospects have reduced the capacity of banks to provide trade finance. Noting that the trade finance gap is now at $2.5tn, and in the last 2 years this has widened by 800 billion dollars. 

The challenges are significant for small and medium-sized enterprises (SMEs), who often face greater barriers when it comes to accessing finance. To address these challenges, banks need to leverage technology, transform their trade finance and supply chain offerings, and achieve interoperability through a robust trade finance stack. 

A modern trade finance stack 

Trade finance involves three main elements: the physical movement of goods, a documentary flow, and a financial flow. Thus, it is crucial to integrate these ecosystems, as well as digital islands within each flow, and technology is a vital enabler to this challenge. 

To achieve interoperability, banks need a robust trade finance stack that covers infrastructure, technology applications, and business operations. 

For interoperability to be successful, infrastructure plays an important role. Cloud-based infrastructure provides a strong foundation that gives banks the necessary agility to adapt to new demands, seamlessly integrate new functionality and services, and scale resources at a lower cost and faster time to market.

The second layer of the trade finance stack consists of applications, which include third-party offerings provided by specialist fintechs. These applications utilise the latest technology to solve particular challenges. 

For example, although it has been around for a while, blockchain technology still holds great promise. By enabling the transfer of ownership from one party to another, with all transactions recorded on the blockchain, it can replicate the concept of paper on a much more advanced level, allowing documentation, as well as title, now to flow digitally and transparently.

Other applications are utilising Generative AI (Gen AI). Although still an emerging technology, the industry has already started to use Gen AI in areas such as document compliance checking, and we can see the excitement around the potential of Gen AI in financial services. 

Finastra’s 2023 State of the Nation survey revealed that 36% of respondents plan on using it to collect, process and analyse data for decision-making, 34% are looking at Gen AI to automate manual or repetitive tasks, while 33% are planning on using this technology to collect and aggregate data for KYC (Know Your Customer) or Anti-Money Laundering (AML) purposes. Gen AI can help banks harness the power of data, improve trade finance processes, and generate legal documents with ease.

The third layer is business operations, which includes resourcing and day-to-day working practices. The technology used in the first two layers can also help streamline processes through automation and plug any skill gaps – for example, using Gen AI for manual tasks to boost human productivity and value-added services.

Robust technology at all layers of the trade finance stack can enable banks to overcome challenges, including the cost to serve customers, legacy technology infrastructures, the increasing impact of the “brain drain”, process optimisation, providing seamless digital customer experiences, and increased interoperability across the market. 

Accelerating interoperability in the global trade finance ecosystem 

Industry interoperability is a key objective for trade finance, and by using data and standards, as well as technology enablers such as open APIs, we can move closer to this essential goal. 

An important ongoing activity is the adoption of the Model Law on Electronic Transferable Records (MLETR) framework across multiple jurisdictions. This model aims to digitise documentation, reduce cost and risk, and provide real-time trade and settlement. 

In 2023, the UK passed the Electronic Trade Documents Act and a number of other countries are following closely behind. The United States, Germany and France are in the process of adopting MLETR-inspired bills. This is laying the groundwork for a more cohesive industry and creating opportunities for further digital transformation efforts.

When it comes to modern trade finance platforms, scalability, interoperability, performance, ease of deployment, extensibility, and resilience are key features to keep in mind. 

While regulation plays a crucial role, technology is, without doubt, the key enabler, so we need to ask ourselves how we can best apply it to harness data and accelerate interoperability. 

The solutions are already available and ready to be integrated – banks need to leverage them to drive their businesses forward. In support of open finance, financial institutions and fintechs can work together to bring the best-of-breed technologies and solutions, accelerate time to market, and deliver the real benefits of digital trade finance.

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As the echoes of this year’s Sibos conference begin to fade, the transformative ideas and groundbreaking discussions that took place continue to reverberate throughout the industry. 

Trade Finance Global (TFG) was at the heart of these conversations, offering a unique and insightful perspective on the future of trade finance. After some time to reflect, here are our top takeaways from the jam-packed conference.

1. The API revolution: A promising future, with work to be done

When TFG attended the “Corporate to Bank APIs for Guarantees – Are we Future Ready?” panel with Samuel Mathew from Standard Chartered Bank, Baptiste Audren from Komgo, Juliette Kennel from Swift, Joon Kim from BNY Mellon, and Samuel Mathew, it became clear that APIs are the best way forward for the industry.

But the question is, how and when do we implement the new language, and what are the next steps for industry standardisation?

Standardisation is no longer a mere buzzword; it’s an imperative for an industry that has long grappled with fragmentation and inefficiency. This is a revolution that’s here to stay, but it’s not a finished product yet.

2. The industry has a lot that keeps them awake at night

TFG’s roundtable discussion with the BAFT Global Trade Industry Council was a reminder that technology alone won’t solve the industry’s challenges. 

From geopolitical tensions to the looming threat of fraud, these are the existential questions that are keeping industry leaders awake at night. 

These aren’t just challenges; they’re variables that will define the future trajectory of trade finance. It’s a wake-up call for the industry, urging us to look beyond technology and consider the human elements that drive trade.

But we all need a wake-up call sometimes, and it is not a negative thing. Sibos 2023 was a sign that the industry is already starting to come together to address these overarching challenges.

3. A borderless payments industry: More than a dream

Visa’s vision for next-gen cross-border payments, as covered by TFG, is a reality that is closer than many might think. It’s a glimpse into a future where financial borders are less of a barrier and more like formalities. 

The idea of sending money across continents as easily as sending a text message is not just a pipe dream; it’s a tangible future made possible by rapid technological advancements. 

This is a future that’s within our grasp, and it’s reshaping the way we think about global trade.

4. AI and collaboration: The new frontier

Red Hat’s approach to combining AI with federated learning introduces a new way of thinking about technology in trade finance. Rather than viewing AI as just another tool for automation, the focus is on its potential for collaboration with human operators. 

In this setup, AI systems can learn and adapt based on human interactions, creating a more dynamic and responsive environment. This goes beyond simply automating routine tasks; it opens the door for a more nuanced interaction between human expertise and machine capabilities. 

The result is a more flexible and adaptive approach to problem-solving in trade finance, offering new avenues for innovation and efficiency.

5. The beyond the cloud

The cloud is evolving from a mere storage solution into a platform for innovation and collaboration in trade finance. The discussion with Finastra and IBM experts highlighted how the cloud is becoming a foundational element in this sector. 

It’s not just about moving existing systems to the cloud; it’s about using its capabilities to enable real-time data sharing, enhance security, and facilitate agile development.

This shift turns partnerships from tactical alliances into strategic imperatives. Financial institutions are finding that cloud-based collaboration allows for quicker responsiveness to market changes and faster innovation. 

Additionally, the cloud’s data analytics capabilities are making it easier for institutions to align with the growing demands for sustainability in trade finance.

In essence, the cloud is reshaping the way work gets done in trade finance, offering new avenues for collaboration, innovation, and sustainability.

6. Digital-first: The new normal

The collaboration between Lloyds Bank and Enigio, highlighted during Sibos, marks a significant step toward a digital-first approach in trade finance. With the Electronic Trade Documents Act now in effect, digital trade is becoming a standard practice rather than an optional feature. 

This collaboration is not just about adopting new technologies; it’s about integrating digital processes into the core of trade operations.

This move toward digitalisation is making transactions more efficient, reducing the need for physical documentation and streamlining workflows. It’s also enhancing security by leveraging digital signatures and encryption, thereby reducing the risk of fraud.

The shift to a digital-first approach is not just a trend but a practical response to the evolving demands of the trade finance industry, offering benefits in efficiency, security, and compliance.

As we look back at our experience at Sibos, it’s evident that the future of trade finance is not just unfolding organically; it’s being actively shaped by these critical discussions and innovations. 

These top Sibos takeaways serve as a roadmap for navigating the complexities of a rapidly evolving industry. 

The post Looking to Beijing 2024: TFG’s 6 key takeaways from Sibos 2023 appeared first on Trade Finance Global.

The integration of these solutions will enable CQUR Bank to launch a new online banking portal, enhancing the digital experience for corporate clients, introducing efficient digital workflows, and providing host-to-host integration solutions.

Justin Kenny, Chief Operating Officer at CQUR Bank, said, “To truly meet the complex demands of our customers, we needed to upgrade our online banking solution to deliver greater connectivity, faster onboarding experiences and access to sophisticated trade finance services that accelerate growth.” 

“We selected Finastra due to its market-leading solutions that enable us to introduce a comprehensive front-end open architecture to provide access to a variety of fintechs. By broadening our offering and streamlining existing processes, we will be able to create more service value and deepen the relationships with our clients.”

Hussam Alkokhon, Head of Trade Finance at CQUR Bank, said, “Finastra is a market leader in trade services globally, which plays to our ambition of being the best trade finance provider in GCC, with the highest standards of risk mitigation and compliance.”

Corporate Channels, Finastra’s digital banking platform, will provide CQUR Bank with a unified portal that consolidates trade, cash, supply-chain finance, lending, and treasury services for its corporate clientele. 

Trade Innovation, on the other hand, is a comprehensive solution designed to streamline trade and supply chain finance. It leverages straight-through processing, digitisation, and data analytics to bolster the bank’s growth and adaptability to emerging demands.

Kamal El Khoury, Managing Director, MENAT Lending at Finastra, said, “CQUR Bank has extensive expertise in financial services and in empowering international trade.” 

He elaborated, “Corporate customers are increasingly demanding faster, digital and connected services from their bank that truly elevate how they manage their finances and pursue new avenues for growth. By delivering new services and improving the end-to-end customer experience, the bank can future-proof its business while continuing to enhance economic growth through trade and sustainable development.”

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