A survey of trade finance professionals in banks and corporates by Surecomp indicates the growing need for trade finance as more and more corporates demand liquidity and financing support in the wake of post-pandemic trade growth, supply chain recalibration and economic turmoil: the majority of respondents (71%) stated that their trade finance transaction volumes were growing. 20% said that they were staying the same, and only 9% said they were contracting.

Among corporates, 87% said they are experiencing transaction volume growth, while only 63% of banks said the same. This could potentially indicate a lag in their capture of market opportunity due to insufficient digital support and a lack of SME support.

The widespread growth in trade finance transaction volumes requires the support of scalable and efficient digital trade finance solutions. Developing or enhancing trade finance processes to accommodate increasing transaction volumes will be key to enabling growth.

Satisfaction with finance approval time

Only 27% of respondents indicated that they were happy with the amount of time taken for finance approvals – nearly equal to the proportion of those who said outright that they are unhappy (26%). Nearly half (47%) said they feel there is room for improvement.

Both banks and corporates cited room for improvement though corporates exhibit a slightly higher level of satisfaction compared to banks.

This could be because banks face more significant challenges in streamlining their finance approval processes, possibly due to regulatory constraints or legacy systems. Corporates, on the other hand, might have more flexibility to optimise their processes.

The average time for finance approvals varied widely. Over half of respondents (54%) said that it takes fewer than three days, while a small number (4%) said that it takes over four weeks. With the vast majority (62%) stating it can take up to one week (between 1 and 7 days), it is clear that digital solutions offering real-time collaboration and transaction resolution within a matter of hours rather than days can be hugely beneficial. Particularly for banks keen to address approval time inefficiencies, this could significantly enhance overall customer experience and streamline their operations.

Unsurprisingly, the satisfaction with processing times correlates with the average time taken. More than half of those who said it takes less than 24 hours indicated that they are satisfied, while half (50%) of those who said it takes more than four weeks said they were not happy.

The time taken to issue or receive financial approvals also correlates with a firm’s perceived ability to support transaction volume growth.

Of the organisations with growing trade finance transaction volumes, the shorter their average issuing and receiving times, the better able they felt to support the growth they were experiencing in their volumes.

Of those that take less than 24 hours, nearly all (92%) felt able to support growth, while none of those taking over four weeks feel the same.

Management of trade finance processes

The survey showed a diverse range of approaches to managing trade finance processes, with nearly equal proportions of respondents indicating that they use digital, hybrid, or manual methods.

Corporate respondents were more likely to manage their processes manually, with 46% indicating that is the method they use. In contrast, 44% of banks reported that a hybrid process is their current method.

The prevalence of manual processes among corporates highlights a potential area for improvement through digitalisation. By adopting automated solutions, corporates can enhance process efficiency, secure faster financing to bolster liquidity, and, in turn, secure faster trade agreements to bolster supply chain resilience and growth.

Organisations that manage their trade finance processes digitally use a variety of solution types. The majority said they use either in-house-built solutions (32%), on-premise vendor solutions (32%), or private cloud-hosted vendor solutions (21%). Of the organisations that currently manage their trade finance processes manually, the vast majority (93%) indicated that they would be willing to consider switching to a digital solution. Those who said they would not be willing to consider a digital solution pointed to IT constraints, costs, regulations, and low volumes generating insufficient need as their reasons.

Primary drivers for digitalisation 

The majority of respondents (52%) selected operational efficiency as their primary driver for digital trade finance processing. The next most commonly selected drivers were customer demand (15%) and cost efficiency (11%).

Among corporate respondents, sustainability and paperless processing was the second most commonly indicated driver for digitalisation (after operational efficiency). emphasising the global trend towards environmentally conscious business practices.

Digital processing methods tend to lead to shorter processing times, and the inverse with manual methods. Nearly half (47%) of all firms that reported processing times of less than 24 hours used digital methods, while half (50%) of those taking more than a week currently use manual methods.

Furthermore, firms using digital methods are far better positioned to handle trade finance transaction volume growth. 76% of digital firms reported feeling capable of supporting such growth, compared to only 42% for hybrid firms and 38% for manual firms.