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11 October 2021

CGI: The path to trade Nirvana is built on a foundation of APIs

Head of Trade, Treasury and Risk
APIs deliver critical functionality for banks driving towards full end-to-end digitisation in trade. Patrick DeVilbiss, offering Manager, trade and supply chain solutions and Colin Zeglen, product manager for Trade and Supply Chain Solutions at CGI explain the evolution and the importance to trade banks.

End-to-end digitisation is the Nirvana state for efficiently financing trade. But there are steps along that road that will ease that path to the ultimate destination, including taking a more API (Application Programming Interface)-centric approach. “APIs are the foundations on which the future of trade will be built,” says Patrick DeVilbiss, Offering Manager, Trade and Supply Chain Solutions at CGI. “It may appear more technically focused, but APIs are an enabler when it comes to digitisation. Bank and corporate strategies need to be built to include APIs as they open up channel partner networks and the emerging trade ecosystem all of which contribute to true end-to-end digitisation.”

And when DeVilbiss talks about APIs, he is typically referring to RESTful APIs [where REST stands for REpresentational State Transfer, an architectural style for distributed hypermedia systems] as the backdrop for enabling connectivity. In addition to the roll out of APIs, the team at CGI sees immediate opportunities in the digitisation space, particularly when it comes to artificial intelligence, automation, digital signatures, and new industry messaging standards.

 Near-term solutions for end-to-end digitisation 

What steps can a bank take today to ensure that they are digitising incrementally on a broader route to full end-to-end digitisation?

  • Artificial Intelligence projects – data capture, OCR, etc.
  • Digital signatures
  • Email and electronic presentations

CGI continues to encourage tactical solutions along the route to end-to-end digitisation. “Taking anything where there is a manual process, an offline spreadsheet for instance, and shifting to more of an end-to-end digital process offline where you own it is important,” DeVilbiss says. “There are certain components in the trade world, physical documentation, that has not gone away and we don't expect that to go away anytime soon, even if we're seeking that Nirvana state.”

“Nonetheless, incorporation of digital signatures into your platform and intelligent data capture, intelligent automation, artificial intelligence projects are really important so that you can start to decrease the low value work that you may have to do and increase the high value work that your trade employees can deliver back.”

SWIFT changes should be embraced

  • New Guarantee/Standby Letters of Credit (SBLC) changes are happening and are impacting operational changes
  • New messages and impacts – automatic extension, claims, local undertakings
  • ISO 20022 standards coming – benefits for data and compliance
  • GPI (Global Payments Innovation) service that allows for near real-time payment tracking

Tactically, banks need to be on top of the modifications to SWIFT messaging types on trade in November 2021 – particularly as the digital trade envelope messages in Standby LCs and guarantees are moving from unstructured to a much more structured set of methods and messages. “Operationally this has been a nightmare in the short term for some banks, but it will be a good thing in the long term and people need to embrace that change,” says DeVilbiss. “It's difficult because it feels like we haven't had much breathing room between the changes on the commercial LC side and then the pandemic and now this. Fundamentally, it's going to create opportunities to standardise some of the banks’ approach internally. It leads to more automation and more seamless transactions due to the standardised datasets and workflows.”

Risk reduction benefits

Colin Zeglen, Product Manager for Trade and Supply Chain Solutions, adds that these changes will also help to reduce risk. “Banks can reduce risk through more standardisation. Banks are not going to have free forms that are essentially an email. Also, there will be better tracking of these items. For instance, banks will be able to extract structured data in a SWIFT message more easily than from a free form. Overall, better tracking and better ability to pull out data is a recurring theme.”

That, combined with changes with ISO 20022, which is also about creating better structured data, will have important implications for compliance screening in the future, Zeglen says, and will create a worldwide standard for payments. “In some countries the standard is not there yet exactly, but the potential is there for much greater standardization. All of this blends together as the better banks are able to track things, the better standards there will be, and it creates a much more seamless experience.” That will impact operations in a positive way and then in turn, reduce costs and make resolutions faster. “It's better for everyone in the long term. But there will be more near-term pain with all of the operational changes, system changes, etc.”

Trade spiderweb: Interconnectivity with different ecosystems and Fintechs

Looking further ahead, what should banks be thinking about in terms of how to provide value to their customers through multiple channel partners? “Looking back 15 years, banks were at the centre of business,” says DeVilbiss. “Now they are realizing that their corporate customers are using some of these new platforms, perhaps tying in through an existing treasury management system, or through a B2B platform where they interact with a supplier, or a channel where a Fintech has some funding for supply chain finance (SCF), or one of the bank consortia. Banks need to be able to deliver their own value through that ecosystem on any of those networks.” 

And the way that they can achieve that is through API capabilities, particularly using real-time transactions that provide both visibility into what is happening at any time and also allow users to transact on those networks. “We view that as core and critical to what banks will be doing in the future, because some of these new networks haven't yet reached high volume,” DeVilbiss says. “There are banks sitting on the outside waiting to see the [networks deliver the] value promised in press releases, etc. But in reality, once that value hits, they need to be able to move quickly. And in order to do that, they can't be reliant on legacy architecture.”

That means those banks may not yet be able to meet modern standards or to achieve the API connectivity they need. “Strategically, banks may be in a ‘wait and see’ mode, but even then, they should still be planning for future architecting and to be able to meet the needs of the marketplace for tomorrow, and that's just on the trade ecosystem side,” DeVilbiss says.

The multichannel future 

More widely, banks need to decide how they will engage with corporate customers and this comes down to their perspective and strategy with respect not only to trade, but also more broadly connecting clients and delivering value to them. In many cases, strategy has shifted to more of an omnichannel approach.

Corporate portals are taking in data from other systems, and companies want a seamless user experience through APIs or other integration. The future is certainly one of multiple layers with integration points to your back office and front office trade systems. Those layers include centralised corporate portals, treasury, cash management, trade and data, mobile channels and transaction banking core actions. “In order to really drive that further or to deliver a more holistic view, banks can utilise things like web services, which are, in effect, APIs that allow abstraction of some of trade data up a layer and present it back to customers and potentially transact through it as well,” DeVilbiss says.

They will need a broader strategy in place for how they interact with customers and what kind of information and customer user experience they want. “Things like ERP connectivity are going to become more important. That's going to all be API driven. Some of that exists today in terms of basic flows, but you could see that broadening out. You can provide services and API functionality such as generalised financial services or directly through an ERP for your corporate customer. We're only touching the surface of what this could look like in the future. There is a mountain of opportunity when it comes to the seamless push and pull of transactions and customer data.”

A call to action for banks in trade

So where are we in the process of achieving end-to-end digitisation of trade and the creation of a trade ecosystem? “At CGI we have retooled our CGI Trade360 back-office systems to be API centric. It's certainly something we're talking with our customers about in terms of their strategy. We know it's critical to the market going forward,” DeVilbiss, says.

“Our rationale is twofold. One element of the criticality is that the ecosystem is changing and there are many consortia and network platforms developing to connect the spiderweb of trade together. That multitude of networks may reduce at a certain point, but no matter what, to achieve the goals we’ve outlined it’s necessary to be capable of connecting to new platforms both flexibly and quickly. APIs are the way to enable that connectivity in a relatively short timeframe using modern integration patterns.”

The big message for banks is they cannot simply develop or plan for trade as a standalone. “There's a much bigger mindset that you would have at a bank. And in order to deliver seamlessly to your corporate customers, from a UX perspective, you need to understand where your bank is headed directionally both in terms of its technology and in terms of its experience for corporate customers. That is where trade can sometimes get left behind. Yet, understanding that will help you in terms of not getting sideswiped by a project that gets started at a central level and bleeds down to [trade] much later than it should.” At the moment, the impact is mainly focused on commercial banking, and it is still early days, but that change is afoot.

Standards needed to underpin the opportunity

As the landscape evolves and it becomes more clear what APIs may need to be constructed, standards need to be considered. Lessons can be learned on the consumer banking side and through the Open API movement. Corporate customers today might see multiple different banks constructing an API for the same service. “That's where we're going to see frustration,” says DeVilbiss. “Hopefully, initiatives like the ICC’s Digital Standards Initiative (DSI) and others will be able to create a common API framework to use. Ultimately, it will be a question of what banks can expose through those API channels from either their back office or trade portal to be able to continue to meet customers where they are now and create a seamless user experience.”

The responsibility for API standards should be an industry one, not simply the banks. “Everyone has skin in the game,” DeVilbiss notes. “The more collaboration we see creating a standard, the better. We're in an ecosystem and many of those partners are important to that ecosystem. Corporate input and insight can also be helpful.”

Evolution in this area is fast, the development of a plethora of APIs is happening rapidly and as standards are developed, banks and Fintechs are going to have to adjust to reach them at pace. “On standards, the market isn't going to wait.”

Nobody said the road to trade digitisation Nirvana was going to be easy.

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