- Anthony van Vliet
- Global Head of Trade Finance and Working Capital Solutions, ING
Now is the time for treasurers to future-proof their organisations’ methods of instruction to their banks and embrace digital channels of communication. Here, in the second in a series of TMI guest columns written by leading experts from ING Transaction Services, Anthony van Vliet, Global Head of Trade Finance and Working Capital Solutions, examines why it is time to swap the ageing inbox for a cutting-edge platform.
It takes time to build trust, but trust is very quickly lost. As Johan Thorbecke, a founding father of the Constitution of the Netherlands, put it: “Trust arrives on foot and leaves by horseback.” This is especially true for trade finance in the digital age. While banks and fintechs are investing heavily in modern technologies to disrupt and connect the silos of trade ecosystems, persuading our clients to adopt these digital solutions is not as simple as we might hope.
In this column, I will explore some of the reasons behind their hesitation, and what’s necessary to gain treasurers’ trust in digital solutions, which is, of course, essential for their adoption.
Let’s take emails as an example. For years, treasurers have used them to instruct their banks on a transaction or to request instruments like standby LCs. This can all be done much quicker and easier using digital channel solutions such as Swift MT798, for example, which can connect corporate clients with multiple banks simultaneously. But, stepping away from the trusted and familiar requires us to overcome a few hurdles.
One is the reliability of emails. There’s a certainty that when an email is sent, the documents will arrive. Treasurers therefore want the reassurance that any new digital channel they use will be just as safe and reliable.
Transforming at scale
And, when treasurers work with multiple banks, each with its own digital channels, it is essential that these different platforms can work together so users can switch seamlessly between their various financing products and providers. This requires industry-wide standardisation and harmonisation – and this is also necessary at a regulatory level.
Given these challenges, it is clear that it is not enough for banks to merely offer treasurers myriad digital solutions. Rather than having to onboard multiple solutions from all their banking providers, the path to adoption could be made smoother through standardisation and digitisation, which can be achieved through greater collaboration.
We have the digital channels and documentation tokenisation technologies available for issuing and sending trade finance instruments, and industry bodies such as the Bankers Association for Finance and Trade (BAFT) and the International Chamber of Commerce (ICC) are making progress in setting the standard. What’s lagging in the application of the technology and standards is the collaboration between fintechs, banks, and their clients to create a digital ecosystem that really works to digitise trade finance at scale.
Collaborative journey
By working in partnership, it’s easier for treasurers to see the added value of making that initial investment and operational redesign to future-proof their businesses.
These are partnerships built on trust, transparency, and a shared commitment, which ultimately make clear the benefits that digitisation can bring. And once companies overcome the initial hurdles surrounding onboarding a new system, they are liberated from complexity because payments, trade finance, and liquidity management become quicker, easier and more efficient, and, at the same time, operational risk is reduced.
In conclusion, there is much to be gained by swapping emails for platforms that provide a seamless and beneficial digital experience and scalable operations.
