Cash & Liquidity ManagementTrade FinanceMind the skills gap: the changing trade finance workforce

Mind the skills gap: the changing trade finance workforce

Skills gap could threaten trade finance, but there are plenty of reasons why young people should choose a career in the sector

Trade finance is a key focus area in today’s economy; people are starting to challenge the paper-heavy, manual process status quo, and are looking at the benefits that emerging technology such as artificial intelligence, the internet of things and natural language processing will bring. This is before we even get into the potential that blockchain or distributed ledger might have, once automation of this field has been addressed.

However, there is a problem looming large in our industry that is being overlooked; one that threatens to reach a critical point if it is not tackled shortly and globally. It is a challenge that no amount of blockchain is going to solve, whilst artificial intelligence will only dilute some of the issues being faced…

In the trade finance industry, we have a highly experienced workforce that will soon be retiring en masse. Couple this with a lack of young talent and future leaders entering the industry and you have a threatening skills gap.

Turning to tech

Is technology the answer? There is no doubt that, used correctly, it can help to soften the blow of losing such an experienced asset. However, it will never fully replace the human element of processing, which still requires significant industry knowledge and a hands-on approach.

Take document checking, for example. Machines can learn to take data from documents and match that data to transaction information or run it through compliance engines. Those machines can even learn as they see more data to spot common patterns or update the very rules they check against.

However, the application of the Uniform Customs & Practice for Documentary Credits (UCP 600) rules is subjective; it varies from region to region and institution to institution. Only a human (possibly augmented by an automated scan) could make the final decision on whether there are discrepancies. And given that a letter of credit guarantees payment if documents match transaction details, those discrepancies – if managed incorrectly – could cost banks dearly.

Another example is guarantee wording. While in theory, distributed ledger technology (DLT) could be applied to the agreement of wording between applicant and beneficiary, only an experienced specialist could confirm whether non-standard wording conforms with bank processes and requirements.

So where does the root of the problem come from? And more importantly, how can it be solved before a skills gap takes hold?

Attracting the next generation

It’s fair to assume that university graduates looking for a career in finance would be attracted by the high risk, high return world of investment banking, and those entering corporate banking would look to debt finance and complex deal structuring as ‘the place to be’. Mention trade finance, however, and things might fall flat.

Trade finance likely conjures up images of people in operations centres, poring over vast quantities of paper, before endorsing them by hand. It’s hardly the fast-paced world that today’s millennials want to work in.

Thanks to a growing profile in the public eye due to Brexit and the Trump administration, trade is more relevant than ever and, with technology advances changing the game in this sector, for the first time, trade is current… and it is sexy.

“Thanks to a growing profile in the public eye due to Brexit and the Trump administration, trade is more relevant than ever.”

Although we’ve established that technology cannot completely solve the problem, it is also technology that is attracting the brightest young minds to the trade finance space. Tech-savvy people who would never have previously considered a career in trade finance could be attracted to a space that allows them to make a tangible difference to the world, at speed and using the latest innovations and gadgets.

My own career probably reflects the majority of the younger generation working in the industry today. Before I joined Finastra, in my role on a rotational graduate scheme at a large UK bank, I was placed into a project management role in trade finance. After completing the graduate scheme, I went back to the role that most interested me, had given me the most scope to grow and the manager who had believed in me the most. Part of this is also about nurture and encouraging the next generation of workforce and their new ways of thinking.

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