The New Wave of Business and Operating Model Transformation in Corporate Banking
How Data Became the Third Leg of Bank Business Models
From its inception, banking has always been a business of data—its movement and processing, and the insights derived therefrom. As financial intermediaries, banks survived for centuries based on data at the heart of a two-sided business model: taking deposits (liability ledger) and making loans (risk assets). Profit was the lucrative spread between these two pillars.
Unlocking B2B Data Insights is Driving Banking Transformation
Trade finance is a natural starting place for bank modernization. It is unusually rich in untapped B2B details, it is super relevant to a bank’s overall commercial banking proposition, and it offers the most easily addressed "low hanging fruit" for return on investment (ROI) due to the prevalence of so many manual processes.
A Benefits-Driven Roadmap for Trade Finance Modernization
The roadmap that banks are adopting for trade finance modernization follows five simple steps, starting with the basics of helping colleagues do their work better:
Step 1: Generative AI Copilots
Generative AI copilots can transform operations and drive new efficiencies in many powerful ways. For example, copilots can help front-office trade sales and relationship managers identify new financing opportunities when advising clients.
Step 2: Improved Internal Collaboration
Improved internal collaboration can be achieved with modern office tools. Many banks have legacy processes designed for linear workflows—for example, sending credit applications as email attachments to multiple stakeholders for approval.
Step 3: Operational Efficiencies
Operational efficiencies can be greatly enhanced with AI. Consider Letters of Credit processing, a mainstay of classical trade finance which remains paper-based to this day, with literally billions of pieces of paper circulating between parties at any given time.
Step 4: Knowledge Management
Knowledge Management tools using natural language can advance the effectiveness of staff and banking operations. Retrieval Augmented Generation (RAG) technology will reason over a bank’s broad SharePoint catalogue of material and surface only relevant information for a given request.
Step 5: Customer Service Tools
Customer service tools can enhance the customer experience. One of the greatest areas for improvement with natural language processing and copilots is client service problem resolution.
Get Started on Your Modernization Journey
Trade finance AI is not just for big banks that finance global supply chains. In fact, the impact of AI automation could be greater for regional and smaller banks where skilled staff are fewer and transactions are less frequent, but where client needs require receivables discounting, performance bonds, or other working capital assistance.
Conclusion
The benefits of modernization impact banks of every size and geography. To help understand how your organization can explore the new opportunities, begin by engaging with your Microsoft representative. They can help develop strategies and solutions that deliver immediate and long-term benefits to meet your bank’s unique needs.
FAQs
Q: What is the main driver of trade finance modernization?
A: The main driver of trade finance modernization is the untapped potential of B2B data insights, which can be unlocked with AI and cloud technologies.
Q: What are the benefits of trade finance modernization?
A: The benefits of trade finance modernization include improved operational efficiency, enhanced customer service, and increased revenue growth.
Q: Who can benefit from trade finance modernization?
A: Banks of every size and geography can benefit from trade finance modernization, including regional and smaller banks that finance local supply chains.
Q: How can I get started with trade finance modernization?
A: To get started with trade finance modernization, engage with your Microsoft representative to develop strategies and solutions that deliver immediate and long-term benefits to meet your bank’s unique needs.
