Understanding the Digital Transformation of Trade Finance

Virender Jeet, Senior VP – Sales, Marketing, & Products, Newgen Software is an industry leader who is observing the exact trend of the industry from being in the middle of  all the action. With close to 30 years of experience, Mr Virendra holds credibility when it comes to technology and it's acceptance in the enterprise.

In an exclusive interaction with Virender Jeet, CEO, NewGen Software, key contemporary trends were discussed. Here are the edited excerrpts:

• Why do banks need a solution for streamlining their trade finance processes?

Trade financing is a vital function for banks. In trade finance, banks provide capital and address payment-related risks to facilitate domestic and international trade transactions. It generates large margins for banks. However, there are numerous challenges associated with the process as it is document-intensive and requires compliance with various regulations. 

Most banks manage all these processes through different applications involving manual hand-offs, leading to inefficiencies. So, banks must invest in a comprehensive solution to streamline their trade finance processes, including documentary products, guarantee products, payments, SWIFT, purchase order financing, and invoice discounting.

• What is the current market size and expected growth for trade finance products? 

The trade finance market is growing rapidly. Most banks are undertaking various digital transformation initiatives and are investing in smart, agile technologies for modernizing their product lines. Today, trade finance has become an important area for banks and they are looking to transform processes and eliminate inefficiencies.

The current overall trade finance software market revenue stands at $1.7 billion, and it is projected to grow to $2.9 billion by 2027.​ With our brand-new platform, we are looking to tap into this market. 

• Newgen has recently launched a trade finance offering. Can you share some highlights of the product? 

Newgen’s trade finance platform streamlines and automates end-to-end trade finance processes. The platform is blockchain-enabled and has cloud-native architecture and a low code integration engine that facilitates the unified processing of transactions. It is compliant with various Indian and international regulatory requirements, including SWIFT, ISO 20022, and GPI. 

By implementing Newgen’s trade finance platform, banks can easily manage processes like letter of credit issuance, remittances, tax collected at source calculations, open account trade, bank guarantees, invoice discounting, purchase order financing, and more. Banks can expand their reach through the portal and document collection centers at branches to talk to experts when required. 

It helps automate trade origination while reducing turnaround times by around 50%. Also, the platform can be configured easily to launch any new structured trade finance products. 

• What are the company’s expectations through this trade finance product launch? 

Currently, there’s a big opportunity in the trade finance software market as banks are looking to shift to the cloud or replace their systems. With a modern, low-code trade finance platform, we are well-poised to capitalize on this opportunity and venture into more mature markets like the US, Europe, and Australia. Our platform is a perfect fit for banks as it enables last-mile automation, catering to the evolving needs of businesses and customers. 

We have received a good response, and some implementations have also begun. We are really excited about this launch and are confident that this will play a pivotal role in accelerating our company’s growth.