For decades, trade finance has been caught in a web of paper-based documents, creating bottlenecks and friction at nearly every point of the process, from onboarding to financing payouts. As the industry pushes to modernize, it’s also facing scrutiny over its relationship with credit risk. Critics argue that some trade financing products have actually encouraged large corporates to pay their vendors late or force those suppliers into expensive financing arrangements. At the same time, as witnessed in the ongoing Greensill Capital saga, the success of trade finance largely relies upon insurers’ ability to cover for losses in the case of non-payment.
In general, the industry is rooted in the ability of cash to flow efficiently and appropriately between entities. And yet, its continued reliance on paper and the correspondent banking system can impede that flow.
“There is no illusion to the fact that a paper bill of lading is a completely anachronistic piece of paper in the 21st century,” said Galani, pointing to a staple of trade finance workflows that facilitates the movement of freight and acts as a receipt once a carrier completes that shipment. That proof of a completed job is key to exporters, buyers and their banks releasing funds in the form of payment or trade finance.
Meanwhile. PNC Bank is taking the Trade Finance initiative:
PNC Bank has just become the latest financial institution to loop into The Clearing House's CHIPS network to facilitate the clearing of high-value cross-border payments, The Clearing House recently announced. Global high-value payments will be sent via the CHIPS network, which the bank said operates on infrastructure that can help to clear more transactions earlier in the day. It's a wire transfer system that PNC Treasury Management Executive Vice President and Head of Product and Operations Chris Ward said helps to enhance the bank's own payment solutions, with CHIPS able to automatically match and net payments for greater settlement efficiency.
Trade finance is just one example of the "paper problem" that many organizations face -- and isn't going away anytime soon. OrboGraph understands the need for electronification of paper documents -- whether its automating paper check processing with our Anywhere Recognition v4.0, delivering over 99% read rates with accuracy levels of 99.5%, or electronifying healthcare EOBs/EOPs and correspondence letters through our secure, HIPAA-compliant cloud computing. We continue to invest in our OrbNet AI technologies to help industries and organizations overcome the paper problem.