PYMNTS MonitorEdge May 2024

Finastra and Tesselate Team on Digitalization of Trade Finance

trade finance

Financial software firm Finastra has teamed with consultancy Tesselate to make trade finance digitalization easier.

The Tegula Trade Finance as a Service offering, powered by Finastra Trade Innovation and digital banking platform Corporate Channels, lets banks in the U.S. automate manual processes and adapt to new demands with a faster time to market and value, the companies said in a Monday (Feb. 12) news release.

Using Finastra’s, banks can also integrate FinTech applications with technologies such as artificial intelligence (AI), blockchain and automation tools. 

“Trade finance is a complex industry that is still reliant on manual and often fragmented processes,” said Jim McMahon, managing director, head of enterprise sales and strategic partnerships, Americas at Finastra. “Our combined service with Tesselate delivers the automation and intelligence needed to increase efficiencies and decrease processing times, risk, errors, and total cost of ownership.”

McMahanon added that the solution also “promotes interoperability of trade finance processes to reduce friction and complexity,” while letting banks enhance existing services or launch new ones. 

“Adopting new technology can be costly at every stage, and it can be challenging to resource IT teams with the right skills to manage it,” added Alexandre Arnoux, Tesselate’s chief revenue officer and managing partner.

“By delivering our all-in-one joint solution as a highly secure managed service, banks do not need to invest in significant amounts of additional resources or take them away from their core business to pursue digitalization,” Arnoux added. 

Monday’s announcement follows a trade finance partnership launched in September between Finastra and Microsoft.

It’s also happening at a time when the trade finance sector is facing a foundational shift, as PYMNTS wrote last month.

“That’s because trade finance is evolving from simple, often singular, financial instruments to ecosystem-based offerings that cater to the complete customer journey and include trade loans, discounting loans and supply chain finance, as well as services like letters of credit, performance guarantees and documentary collections,” that report said.

Among the key trends in the sector is the rise of digital trade platforms as hubs connecting various stakeholders in the trade ecosystem, facilitating end-to-end digitization of trade documents, communication and financing.

Debopama Sen, head of payments at Citi Services, told PYMNTS in January that as more commerce moves online, companies that had historically been part of “traditional” supply chains are now demanding that trade financing be embedded in the technological infrastructure that link buyers and suppliers.

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