ANZ automates trade finance

ANZ took a significant step in the automation of its trade finance business this month when it completed a transaction for a shipment of iron ore to China using a bank payment obligation with an electronic bill of lading.

BHP Billiton was selling iron ore to trader Cargill and ANZ was the obligor bank.

In normal circumstances the flow of documents, such as bills of lading (a document transferring title to the goods), are normally separated from BPOs, which are payment undertakings that one bank gives another.

In this transaction the BPO was coupled with an electronic bill of lading and invoices in a way that allowed the data to flow through all participants' systems without any data re-entry.

ANZ's global head of trade and supply chain product, Vivek Gupta, said that since the International Chamber of Commerce came up with uniform rules for BPOs in the middle of 2013 banks have been working towards electronic trade solutions.

Gupta said: "We were the first bank in Australia to go ahead with it. This could be transformational for trade."

By combining electronic bills of lading with the BPO transaction, ANZ and its clients were able to submit original data and supporting documents as trade data to be matched against the BPO payment terms on SWIFT.

They were also able to automate the release of original documents to the buyer upon data match.

"The integration of this functionality with the SWIFT network allows seamless BPO execution by providing straight through processing of key data," Gupta said.

The bank expects to see benefits for itself and its customers in the form of faster transactions, more efficient data handling, quicker payments and better risk mitigation.