Sustainable Trade Finance Management for Banks

Manish Bharucha, CEO and Founder - Kyzer Software

Manish Bharucha, CEO and Founder - Kyzer Software

The  below article is authored by Manish Bharucha, CEO and Founder – Kyzer Software:

What is the true meaning of sustainability as per you?

Sustainability for me refers to reducing waste and reusing materials; promoting inclusive research and making information more accessible; reducing the carbon footprint for my company, through our technological solutions for our bank customers and developing learning opportunities around more sustainable growth.

How can we incorporate eco-friendly measures in the corporate world?

International trade is an engine for economic growth and development, but it also accounts for some 80% of the world’s carbon emissions.

Trade finance has a significant role to play in sustainable development. Unlike other asset classes, such as bonds, no standards currently exist to allow banks to grade the sustainability performance of trade finance transactions.

The banking industry is certainly making progress towards its sustainability mandates, which is no longer a ‘nice to have, rather, a business imperative. A study conducted by Bank of America reveals that a complete shift to paperless communications will reduce about 37,000 metric tons of GHG emissions and 136 million gallons of blue water consumption.

But if we are to jointly work towards Sustainable Development Goals, truly understanding the benefits of sustainable trade, understanding the appetite from the bank customers and sharing best in class practices that are being applied locally and globally is critical.

A single trade transaction can involve as many as 20 different parties and different types of goods, services and raw materials crossing multiple jurisdictions, with each using different forms of transport and documentation. Green banking is fast emerging as one of the cornerstones of digital transformation. Banks must consider both the front and back-office operations and define a unified paperless strategy that aligns capabilities with operational practices.

What sustainable measures has your organisation undertaken. And how will this benefit the ecosystem at large?

They have always jointly worked with Indian and Multinational Banks towards Sustainable Development Goals. The framework breaks through the complexity of handling every Trade Finance transaction from customer request initiation, document management, account verification for limits/trade flags, checklists for trade products, bank scrutiny/sanction screening / AML checks, quality improvements for Audit and Compliance, etc.

  • Ensuring elimination of paper used for documentation and request submissions.
  • Offering a digital frontend to eliminate bank customer visits to banks, saving on travel and fuel.
  • Provision of auditable communication to customers for their transactions via emails and SMS. The need for paper-based mailers and notices are completely eliminated.
  • Redirecting Customers to Digital Channels.
  • Creation of smart statements that allow customers to get additional transaction details.

The framework we have developed is intended to cut through the inherent complexities of transaction management, customer communications and regulatory reporting, establishing a standard methodology for banks and their customers to reliably function and benefit from both customer-facing and backend systems.

Closing statements*

They aim to avoid adding any further complexity for bank customers, particularly small businesses, whose activities are often the least measurable in terms of sustainability by offering a best-in-class portal interface for complete trade business management.

We need to ensure we land an approach that sets a high bar on sustainability, while still being capable of being implemented in the real world by banks and their customers.

Leave a Reply