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How Artificial Intelligence saved Global Commerce | Technology

How Artificial Intelligence saved Global Commerce | Technology
How Artificial Intelligence saved Global Commerce?

How Artificial Intelligence helped Save World Trade?

Business is being severely disrupted due to the impact of the Covid-19 pandemic.  Yet few trade finance banks had the foresight to plan for such an event, using capabilities that exceeded market-wide limits on documentary trading.  As the appetite for business digitization grows, Coinpend CEO, Torben Sauer explains how banks are increasingly turning to technology to automate their document checking using AI - remote work due to the pandemic  Elimination of logistical challenges after the boom in the economy, and streamlining paper-based processes and transforming operational efficiency.

Over the past two years, financial institutions (FIs) have experienced unparalleled disruption as the COVID-19 pandemic continues to impact sectors across the globe.  What they haven't experienced, however, is a major drop in functionality.  While the crisis initially sent shock waves through financial markets in March 2020, operations at most of the world's major banks began working from home without loss of a single day in service.  In fact, customers hardly noticed the fact that bank buildings had been evacuated and – in many cases – the entire workforce was asked to work from home.  Many continue to operate this way, or a hybrid model.

While much of the credit for this massive effort to provide seamless normality should go directly to the technicians and operators involved, the digital journey that many financial institutions have embarked on over the years deserves recognition as well.  If the pandemic had occurred in March 2010 instead of 2020, it would have been a completely different story.

Unless you focus on trading.  Trade finance – or more accurately documentary trade finance (backed by bank-issued letters of credit or similar instruments) – remains a mixed picture with respect to digitization.  Much of this is paper-based, not least because of the supply chains that often arise in developing countries with limited access to digital infrastructure.

Yet global trade volume in 2020 defied early forecasts, which predicted a potential 20%-plus drop, instead falling by 5.3%, apparently after nearly devastating declines in March and April.  Contains a strong mid-year recovery.  This recovery continued into 2021, with the World Trade Organization forecasting a 10.8% increase in global merchandise trade volume - up from 8% originally forecast in March.  In addition, the value of world imports and exports of goods reached US$5.6 trillion in the third quarter of 2021, setting a new quarterly record.  So, is there business left?

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Documentary verification remains paper based

The documentary trade, traditionally dependent on a courier system for necessary documentary processing, has certainly been disrupted by the pandemic.  Documentation verification, which is an important part of the process – not only facilitating the movement of goods but releasing financing and (importantly) ensuring compliance with concerns related to sanctions, money-laundering and fraud – in “service centres”  It is largely dependent on the humans doing the work.” Carrying out manual procedures.  These centers were forced to severely reduce their physical (i.e. on-site) capacity or, at the very least, close down.  In addition, many of these service centers are in countries in Asia.  With limited resources and weak health services, these countries experienced some of the most severe lockdowns.

Yet many financial institutions have been able to continue their operations, mainly because of implementing robust business continuity plans to protect their operations from such disruptions.  Banks' fears regarding catastrophic business-disruption incidents were fueled by the incidents of IRA bombings in London in the 1990s and the tragedy of 9/11.  And while this has prompted many people to develop secondary or offsite operations and/or data centers, these will still be affected by a global phenomenon such as a pandemic.

Global disruptions required a different level of thinking – at least with respect to the challenge of operating paper-based trade-documentary checking service centers alongside work-from-home orders.  While large-scale digital banking tasks such as payments or capital markets trading can be overcome by remote working, what about the need for service centers to physically process and read the paper while working remotely?

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How Technology and Digitization is saving Business?

Banks that have been able to continue uninterrupted have already made the leap towards automation of document checking – using artificial intelligence (AI) or machine learning software.  Here, labor intensive service centers were employing technologies to verify all documents seamlessly.  In turn, this allows operators to focus on discrepancies noticed by automated checks, rather than reading the entirety of physical documents.

No matter where the operators are operating, banks using AI capabilities can centralize the courier system for all business documents before scanning them into the system to make them machine-readable.  The software then automatically checks these documents for compliance with ICC regulations (UCP 600 etc.) - which are programmed into the AI ​​solution and can be updated accordingly - as well as other agency requirements, such as BAFT,  ITFA and OFAC.  The technology then learns itself from observed and resolved discrepancies over time – steadily increasing the efficiency of the process.

Of course, the need for human intervention is not gone, and it is vital to address the discrepancies generated by such solutions.  But operators are spared the monotony of reading every word of every document, which is a huge efficiency gain.  And, importantly with regards to the pandemic, they are screen based, which means they can work remotely.

These machine-learning AI solutions for business document verification, such as our Trade AI app, have therefore become an important part of continuity planning - and indeed execution - against business interruption risk.  So, should the remote and hybrid stay here to work, it means no loss of efficiency.  In fact, the efficiency gains from adopting such technology in the new era of working can be clearly seen.

Quietly, such apps and technology solutions would have saved world trade from a far more devastating disruption than was predicted by many, including the WTO.

Source: Finextra, Direct News 99