CIBC has outsourced its trade letter of credit operations to Bank of New York, partly to take advantage of BoNY's suite of Web-based L/C products.
The three-year deal, which took effect in January, allows importers to pull up a hyperlink from CIBC's Web site to BoNY's system, where they can complete an online L/C application and send it directly to BoNY's processing center. BoNY will process 10,000-12,000 L/Cs for CIBC customers this year. CIBC had previously performed its own L/C processing, using software developed by an outside vendor.
CIBC still issues the L/Cs, but BoNY handles the front-end processing and back-office accounting. The deal will enable CIBC to reduce its number of processing centers from six to four.
"The key benefit for CIBC is it reduces our costs of providing these services to our clients," said David Robbie, vice president at Toronto-based CIBC's trade finance division. Another reason to partner with Bank of New York was "to take advantage of their technology platform, which they built up over years."
The technology allows CIBC and its customers to track current or previous transactions in real time, explained Morgan Brassler, executive vice president at Bank of New York.
"This is live. We're up and running and doing the business," Brassler said.
CIBC had solicited proposals from several large banks, Robbie said. Ultimately it chose BoNY because of its experience as an international bank, including a strong presence in Asia, and its reputation as a service provider to financial institutions.
"It's part of their strategy...they have a mindset around that," said Robbie.