Corporate Clients Increasingly Looking to Banks to Mitigate Trade Finance Risks

The current environment requires a rigorous focus on compliance and regulatory policies, such as Know Your Customer, Sarbanes-Oxley and Basel II. Corporations operating in such an increasingly global economy are seeking banks' assistance in managing cash forecasting, liquidity management, risk mitigation and transaction processing. In addition, clients will look to leverage global banks' footprints to mitigate trading partner risk and finance their supply chains through automated trade finance and cash management platforms.

Importers and exporters in many vertical industries are requiring global banks to serve as financial intermediaries between them and their trading partners. This is a particular requirement in the emerging markets where banks are providing the technology to connect those sellers and buyers. In an open-account trading environment, it is critical for financial institutions to provide commercial risk mitigation and supply chain financing across these relationships. In an economic environment characterized by scarce liquidity and working capital, the ability to obtain non-debt trade financing becomes critical to the financial viability of a company's supply chain. The increase in open-account financing across different jurisdictions necessitates working with a financial institution that can manage the differing legal, tax, accounting and compliance requirements of those markets.

In response to these market trends, major global banks are increasingly investing in technology, product capabilities and human capital to provide a comprehensive suite of traditional and Web-based cash management and trade finance capabilities worldwide. q

Trade Finance The global credit crisis has emphasized the importance of cash management while intensifying the spotlight on corporate governance and banks' risk management practices. The consequences likely will be a tighter regulatory environment, which could have an impact on banks' trade finance processes and their relationships with business customers. What new demands will corporates place on their banks in the current uncertain economic environment, and how can banks pursue growth opportunities in global trade finance in, for example, emerging markets? What technology investments must banks make to meet these new demands and capitalize on these opportunities?