Trade finance is one of the most complex procedures in enterprise finance. According to Maersk, 200 documents are exchanged regularly among supply chain entities. These include payments, letters of credit, foreign exchange, board of compliance documents, shipping documents, and import and export documents. They must be approved by multiple entities including suppliers, manufacturers, distributors, customers, and government agencies. Processes such as determining credit for a potential trading partner are complex and time consuming. And these processes are almost entirely manual.
At best, this is expensive, time consuming, and frustrating. It adds complexity to every step of the trading process, opens the door to potentially costly errors, distracts staff from more valuable tasks. There must be a better way.
Applying digital technology
In fact, there is. Artificial intelligence (AI) and machine learning (ML) and their analogs, natural language processing and chatbots, promise to revolutionize business. They are good at exactly the processes where humans are poor – complicated, well defined tasks that demand constant attention to detail. Humans tend to get bored, minds wander, and errors are made. AI can do them much faster than humans and never miss a beat. These systems can make fairly complex decisions based on well-defined parameters (such as recommending a potential trading partner’s credit limit based on data automatically gathered from multiple trusted sources).
With natural language interfaces, it can communicate recommendations directly to the manager responsible for the final decision. You can ask ad hoc questions and get answers based on the best available data. Predictive analytics can help you anticipate and plan for specific problems and opportunities in the market rather than constantly reacting after the fact. AI can help you understand your trading partner’s concerns and probable actions, recognize patterns in orders, and better anticipate demand.
AI can automate completing all those trading documents and make sure that the right electronic forms are received by the right entities at the right time in the trading process, without missing anyone. At any time it can produce a detailed report showing exactly where each active trade is in terms of what is filed, what has been processed, what still needs to be done. And this all happens literally at the speed of light, cutting the time required to the fraction of what it is today.
Natural language processing (NLP) can understand both spoken conversation and printed documents, translate them fill them out, and send them to the correct people in the supply chain in the language of the recipient. AI and block chain can be used to increase transaction security using smart contracts that have can use embedded computer intelligence to strengthen the trust on which trading is based.