Simone Del Guerra, Global Head of Financial Institutions Cash & Trade Sales, UniCredit and Raphael Barisaac, Global Co-Head of Trade & Working Capital Solutions, UniCredit
With the potential for innovative correspondent banking platforms to combine forces in the near future, UniCredit’s Simone Del Guerra, Global Head of Financial Institutions Cash & Trade Sales, and Raphael Barisaac, Global Co-Head of Trade & Working Capital Solutions, explore the ongoing transformation of correspondent banking.
The correspondent banking sector has made significant strides in recent months. With a number of innovative digital platforms already live and streamlining working capital and trade processes, the industry must now consider the benefits of making these systems interoperable.
The vision is clear: a world in which transacting corporates can negotiate and execute smart contracts on one platform, whilst transferring seamlessly to another to feed in value-added financing solutions. It’s a scenario that will appeal to both corporates – who stand to enjoy a superior client experience – and banks, who benefit from new sources of revenue.
Moving on from transaction-based banking services
Answering the call from banks and corporates for a more efficient and cost-effective way to trade internationally, we.trade already provides small and medium-sized enterprises (SMEs), as well as large corporates, with an efficient, cost-effective and secure means to execute national and international trade transactions. It does so by utilising blockchain technology to digitally map the entire process – leveraging smart contracts to automatically activate payments as soon as pre-agreed conditions have been fulfilled. As a result, transactions are faster, safer, and more transparent– increasing the connectivity of the entire ecosystem.
Clients can also use the platform to bring in financial services such as invoice discounting or pre-export finance – simplifying the financing process for corporates and creating new ways for banks to support businesses. This represents a departure from the traditional transaction-based model, whereby the role of the bank shifts from payments processing and financing, to facilitating, managing, accelerating and standardising entire interactions between trading partners and clients.
Successfully completing its first international transaction in August 2018, we.trade is now undergoing commercial roll-out.
Facilitating trade from end to end
These benefits to both banks and corporates could be augmented by connecting we.trade with another of the corporate-to-bank platforms now available on the market.
After securing the terms of a trade deal via we.trade, corporates would be able to send the associated data to the corporate-to-bank platform. From here, corporates would not only have the opportunity to submit invoices and purchase orders, but also to choose from a broader selection of banks and solutions to meet their particular financing needs. Successfully harmonising the eco-system in this way would represent a major step toward positioning banks as facilitators for entire commercial relationships.
This would also represent the first step towards building a wider “network of networks” – seeing various digital platforms become interoperable, thereby enabling transacting partners and their banks to streamline their unique workflows and needs.
By offering corporates more transparency surrounding financing options and allowing banks to inject timely and effective working capital solutions, this kind of collaboration is exactly what’s needed in the trade finance space today.