Bolero: Corporate Clients Come First - Arthur Vonchek
The changing mechanisms of global trade are leaving banks with an increasingly marginal role. Arthur Vonchek of Bolero International tells Jim Banks why banks must put the needs of their corporate customers first.
As corporates increase their focus on supply chain management, they are changing the way they approach international trade. Many are also re-evaluating their relationships with banks, which contributes to the complexity of transactions. So, now is the time for banks to clearly define their role in the supply chain.
One reason that banks are finding that their role in trade finance is declining is due to the move away from letters of credit, which now account for just 30% of global trade, towards open accounts.
Another reason is that banks have historically invested in proprietary bank-centric solutions aimed at reducing transaction processing costs, providing a common technology base for all of their customers, up-selling and cross-selling other services, improving competitive differentiators and, in some cases, deliberately locking customers into a proprietary platform. In short, the banks were the centre of the economic universe.
BRIDGING THE DIVIDE
Arthur Vonchek, CEO of Bolero, says: ‘When you look at trade finance and the supply chain you find that corporates do not use just one bank, so their problem is integrating their banking activities. Corporates need to be at the centre of the relationship, but at the moment they are forced to go into each of their banks’ worlds. It is a very big disconnect.’
Bolero’s goal is to automate trade processes and remove all paper from global trade, including regulatory documents, by extending standardisation to the bank/supply chain space. Founded in 1998 as a joint venture with SWIFT, it offers a neutral, on-demand, online, multi-bank platform to support paperless trade between buyers, sellers, banks and logistics service providers.
Vonchek believes that: ‘Banks believe that they are relevant to the supply chain and that corporates have always needed them, but you cannot assume that. Banks must find unique services that cannot be offered by a customer’s logistics partners, for instance, and they are increasingly realising that they must be more deeply involved in their corporate customers’ worlds. We’ve seen a 180° turn away from proprietary systems towards standardised multibank platforms, which are an absolute requirement for banks.’
Many banks have so far looked for an off-the-shelf supply chain finance solution, but soon came to understand the sheer complexity of their customers’ finance needs. Corporates need to automate financial supply chain processes, consolidate their activities with all banks, reduce manual effort and bank fees, eliminate problems associated with finance tools such as letters of credit and integrate trade finance with the treasury function.
Bolero’s multi-bank solution, based on its tie-in with SWIFT’s messaging protocols, can help corporates achieve these goals, as leading companies, including Siemens, Glencore and Nokia, have found to their advantage.
As well as the management system for multi-bank relationships it provides the communication infrastructure to securely link the corporates to partner banks, which resolves issues around data ownership, liability, security, non-repudiation, guaranteed delivery, auditability and compliance.
BOLERO CUTS WASTED COSTS AND OFFERS AUTOMATION OF BANK SERVICES
Vonchek says: ‘Bolero is a revolutionary technology. It cuts wasted costs from the supply chain, offering full automation of banks’ services, especially in trade finance. Instruments such as letters of credit are good for risk protection, but they are expensive and cumbersome. Automate processes and you remove many of the problems associated with these instruments.’
This system has also found support among leading banks such as Standard Chartered Bank, which is proactively driving the multi-bank channel for its corporate customers. As banks prove the advantage of developing new services through multi-bank platforms and customers see the efficiency gains such systems promise, the rate of adoption is likely to continue accelerating.