It was Joseph Schumpeter, the Czech economist who first used the term ‘creative destruction’ to describe the process whereby old sources of competitive advantage are destroyed and replaced with new ones.
He explained that the essence of entrepreneurship is the exploitation of ‘shocks’ that change the balance of power in the competitive landscape. Innovative trade banks are those that use economic shocks, technology advances and changing trade flows to their competitive advantage.
When it comes to innovation in banking, it is important to distinguish between invention – the creation of new products and processes through new knowledge or new combinations of existing knowledge – and innovation which is the initial commercialisation of the invention. While innovation in modern payment systems have transformed the cash and trade services banks provide, there is more to the innovation story than simply infrastructure. Winners of this award distinguish themselves by finding new ways of delivering value not only for their shareholders, but for their clients in a way that takes the whole trade finance sector forward.
Gold medal winner J.P. Morgan has demonstrated its sustained focus on the evolution of trade and trade finance. Dani Cotti, global trade executive at J.P. Morgan’s treasury services explains: “As times change and business becomes more global, we dedicate our technology and talent resources to understanding our client’s needs and challenges in a complex, ever-changing environment. Any client solution we design and implement is based on that understanding. Our solution-building process includes considerable consultation with multiple advisory teams, where we often find opportunities to innovate, both in the design phase and in our delivery.”
“We are working across regions to create truly global solutions for buyers, suppliers, and banks in our network”
DANI COTTI, J.P. MORGAN
A key example of recent innovation, according to Cotti, is the bank’s Trade Channel user dashboard, which allows users to analyse their trade flows using underlying transaction data. J.P. Morgan also offers a dashboard for its financial institution clients, providing a platform for white label opportunities. On both dashboards, the data is ‘real time’ and gives a global perspective for our clients; for example, data views for corporate clients include parent and subsidiary levels.
For financial institution clients, similar views are captured at the head office and branch levels. Users can actively measure their performance against previously agreed upon service levels. Future plans include the addition of mobile capabilities to these dashboards, enhancing client experience. “Our significant investment in technology is facilitating client self-service and clients’ proactive management of their global activity”, says Cotti.
The other key impact of innovation is collaboration with industry bodies such as the International International Chamber of Commerce (ICC), SWIFT and BAFT-IFSA, where J.P Morgan is an advocate of trade harmonisation and transparency.The bank has also been a leading advocate for the use of SWIFT-enabled solutions for its corporate and financial institution clients.
Cotti concludes: “J. P. Morgan’s Trade innovations range from trade platform functionality to thought leadership to creative structuring and advisory solutions for ECAs and corporate clients. We constantly strive to improve our business, as our clients consistently expect the best.”
The silver medal goes to Deutsche Bank. “As financial market turmoil continues, corporate clients are increasingly focusing on improving supply-chain sustainability, as well as improving working capital management in order to decrease dependency on capital market funding,” says Jon Richman, head of trade finance North America and financial supply chain Americas, Deutsche Bank.
“Deutsche Bank has developed a number of next-generation financial supply chain solutions designed to address these needs,” he adds. “Supplier fnance is one example of this where major buyers may, in exchange for extended payment terms, engage the bank to support their smaller suppliers to obtain more favourable credit terms and operational efficiencies than they could in a bilateral situation.”
“Global trade is a relationship-dependent and solution-driven business, and our bank is committed to invest in trade innovation on behalf of our clients.” concludes Richman.
Citi collects the bronze medal. Citi’s pioneering innovative products, such as its electronic trade offering through the Citidirect trade product information module, supports customers at global and local levels. The bank has embraced the mobile world with its CitiDirect BE Mobile launch, providing businesses with convenient and secure portal for receiving notifications and authorising payments.
J.P. Morgan Deutsche Bank Citi