While the rest of the world has moved to smartphones and the cloud, trade finance has remained practically in the stone age, continuing to work with physical documentation and manual checking. However, that may be set to change with the rise of artificial intelligence (AI) technology.
Yes, AI has started to creep into trade finance due to its ability to provide banks with a proactive layer of security against potential AML (anti-money laundering) risk, as well as the potential to speed up the transaction process and automate the work of analysts. Using a mixture of machine learning and big data analytics, banks have started to explore ways of putting this new technology to use.
HSBC announced that it was working with IBM to create a cognitive intelligence solution aimed at extracting key data from trade documents before entering the bank’s formal system. The bank typically processes over US$500 billion worth of trade documentation for customers and must manually review an estimated 100 million pages of documents annually.
“The average trade transaction requires 65 data fields to be extracted from 15 different documents, with 40 pages to be reviewed,” comments Natalie Blyth, HSBC’s global head of global trade and receivables finance. “By digitizing this process we will make transactions quicker and safer for both buyers and suppliers, leading our industry forwards, and we will reduce compliance risks through an enhanced ability to manage huge volumes of data.”
In Singapore, financial technology firm Silent Eight has alternatively proposed using AI solutions to support bank analysts and investigators with their fight against AML violations and terrorism financing. “Banks need to do a lot of due diligence and they have to dig through a lot of data and always need to be smarter than criminals,” highlights Martin Markiewicz, CEO of Silent Eight. “We can go through huge amounts of data, understand it and make our system think like an analyst.”
Silent Eight was recently part of OCBC’s fintech accelerator programme focused on tackling AML issues. The recent partnership is another sign that banks are increasingly becoming comfortable with leveraging AI technology. For Markiewicz, it’s not about changing what the bank is currently doing, but enhancing its due diligence process by using AI to spot false alerts and not waste time investigating them.
“There is a lot of discussion over whether rule-based systems are good or bad. We can just skip over that discussion and go over what these bank investigators are doing,” says Markiewicz. “If we can try and replicate what they are doing using AI, then maybe it will be useful for banks. We want to automate the investigation part.” According to Markiewicz, Silent Eight’s platform takes two to three months to fully understand the transaction due diligence process of a bank, based on historical data.
While it is clearly early days, AI has the potential to not only impact trade finance but also a number of industries. The AI industry is estimated to double yearly economic growth by 2035, according to Accenture. Moreover, Accenture projects that AI technologies will increase labour productivity by up to 40% by 2035.