Tech

Automation process is the new normal

The ongoing slowdown in global trade intensified by the US – China trade tension. It reduced the transaction volume and increased the competition and battered margins in the trade finance business. This situation may have unintentionally accelerated banks’ quest to reduce costs and improve profitability. There was a growing demand for shorter processing the time and greater visibility and automation of processes, coupled with the urgent need to mitigate the growing risk from the trade based fraud and anti-money laundering and sanction violations have driven trade finance providers to explore and implement agile digital trade solutions. Survey of trade finance trends highlights row of challenges such geopolitical uncertainty impacting trade relationships, associated shifts in supply chain patterns, tighter know your customer (KYC) legislation, emerging technology and lack of wider adoption of industry standards, all making trade digitalization is a rather tough climb. These are recognized by the commercial banks and are rolling out customized and tailored trade finance solutions to cater the specific client needs. They are also accepting the innovative electronic and paperless trade processes and upgrading online product services to re enforce core bank enterprise relationship. Amongst these the best practice was found to be the conversion of the manual procedures to reduce processing time across wider eco systems, strengthening KYC processes for earlier risk detection and streamlining due to diligence process.

Banks in Hong Kong are leveraging closer proximity to Mainland and lowering the funding costs from stronger USD liquidity to expand their cross-border trade finance facilities. Both, Bank of China (Hong Kong) and Hang Seng Bank commenced processing of transactions with customers to submit trade documents and apply for trade finance application on eTra- deConnect, a cross-bank trade finance block chain platform. There is a push from the Reserve Bank of India (RBI) to reduce over- reliance on domestic instrument by local banks, underscoring the need to shift toward globally accepted trade finance instruments. To drive new synergies and value creation, Kotak Mahindra Bank observes that fintechs are becoming an integral part of trade ecosystem. Recent partnership with a fintech for extending financing solutions, leverages its expertise in doing the underlying documentary checks. Yes Bank deployed predictive analytics and data management tools to monitor fraud detection at various levels. Southeast Asia, United Overseas Bank (UOB) offered solutions to help clients manage their physical and financial supply chain. Others such as Metro bank and RHB Bank Group are focusing attention to ease clients’ pain points at the back of changing macro-economic dynamics and the structural impact on specific industries.

Banks are betting high stakes on the promise of block chain technology to increase automation, transparency and manage risks from trade and supply chain financing, it includes the bank’s correspondent partners and their corporates client. To remain competitive, domestic banks such as Vietcombank invested in new trade finance software to deal with the surging transaction volumes and mitigate operational risks. No doubt that the pace of transformation has quickened, although meeting common standards to achieve interoperability of solutions remains a big hurdle. Progress remains largely silted with the multifaceted nature of trade transactions, each with specific legal requirements with more than one participant in each transaction.

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AI role in customer experience in banking

The concept of banking first sprung up around 8000 BC. Then, there came various drastic changes to expand their services and innovate their business models. Artificial Intelligence (AI) and Machine Learning (ML) are applied to help banks and financial institutions nowadays. A survey by the Economist Intelligence Unit (EIU) showed that 77% of banking executives believe that the use of AI will ultimately differentiate between winning and losing banks.

This pandemic has triggered a sudden socioeconomic shift from physical to digital. There is a rapid switch to digital channels. Recent research by YouGov was conducted in June 2021. And that revealed that digital services have become the de facto way of conducting business and access services during the pandemic. EIU’s survey showed that enhancing the user experience through better personalisation ranked first in the most valuable uses of AI.

Customer propositions are no longer fit-for-all. It involves both banking and non-banking products and services. To identify the customers’ needs the banks must take an entirely new approach to innovation. They should adopt a customer-centric view. This starts with understanding the customer needs. AI makes it much easier to analyse customer preferences. The redesigning of customer loyalty program gives banks an accurate understanding of customer. Effective personalization offers customers not only better leads but also a more unique experience. The customer experience can be improved by applying AI. Banks must also build out their capabilities to strike new partnerships.

Businesses across all industries are working hard to retain their customers, including banks. AI can become a banking institutions’ superpower. This can take the customer experience to new heights, resulting in happier and more loyal customers. It will also reduce a bank’s operating costs and enable increased revenue per customer. To become AI First, banks must focus on streamlining their technology layer. They also require a strategy to engage customers through channels owned by them and their non-banking partners. Business and technology must work hand in hand, with cross-functional teams breaking up organisational silos.

Tech

Amazon to offer insurance to UK businesses

The technology giant’s first foray into business insurance in the country, broker Superscript said that Amazon is going to start offering insurance to small and medium-sized UK business customers. Members of Amazon’s Business Prime program will be able to buy cover from superscript such as contents insurance, cyber insurance and professional indemnity insurance. Superscript spokesperson said that those would be underwritten by major UK insurers. A discount of 20% will be offered to current rates. This is to entice the businesses over to them.

50% of customers are prepared to buy insurance from non-traditional players. A recent survey of 12,000 people globally by consultants Capgemini showed this. Cameron Shearer, co-founder and CEO of Superscript, said in a statement that the insurance industry needs to bridge the divide between insurers and customers. Amazon’s move into UK business insurance comes after U.S. insurtech Next Insurance said that it was offering cover to U.S. small businesses. And that too via Amazon Business Prime. Molly Dobson, Country Manager for Amazon Business UK & Ireland, said in the statement that as the businesses come out of the pandemic, they want customers to have the best-in-class tools to run their business.

Financial institutions are worried that tech firms will steal their business. But industry sources said that the insurers and tech firms are more likely to forge partnerships. Because of the given difficulties and expense for outsiders in entering the highly regulated finance sector. Amazon also offers warranty insurance and “buy now, pay later” services in Britain.

Tech

In NFT fantasy soccer game, SoftBank leads funding

Blockchain-based fantasy soccer game Sorare has raised $680 million. This is through a funding round, which is led by SoftBank. According to the company, it includes players such as ex-England international Rio Ferdinand and Spain’s Gerard Pique. Paris-based Sorare said that the investment valued the company at $4.3 billion. Sorare is an online game, since 2018. Here players buy officially licensed cards that represents soccer players. They can build teams and play against each other. This is based on the players’ performance in real-life games.

The cards are traded in the form of non-fungible tokens (NFTs). The market for NFTs has seen major growth in 2021. Michel Combes, president of SoftBank Group International, said that they think NFTs represent a new paradigm in the collectability, usability, and engagement with assets. This evolution from physical assets to digital assets is very powerful. This also creates a lot of exciting potential business models. NonFungible.com is a website that tracks NFT market data. According to them, Sorare is the largest sports-based NFT platform by sales volume. They are planning to open an office in the United States. So that they can expand into other games out of Sorare.

Nicolas Julia, CEO and co-founder of Sorare said that they saw the immense potential that blockchain and NFTs brought to unlock a new way for football clubs, footballers, and their fans to experience a deeper connection with each other. They believe that this is a huge opportunity to create the next sports entertainment giant. Since January 2021, there have been $150 million of sales on Sorare. The fundraising round was SoftBank’s first time investing in Sorare. SoftBank’s Latin America fund also contributed. Other investors in Sorare’s raise are such as venture capital firms Accel and Bessemer Ventures, Pique, Ferdinand, Antoine Griezmann and Spain’s Cesar Azpilicueta.