JP Morgan has announced its partnership with Cleareye.ai to bring ClearTrade, a digital trade finance solution, to banks. The platform will be integrated into JP Morgan’s proprietary trade processing system rolled out in the APAC region and will be launched globally in the coming months.
Head of Global Trade at JP Morgan, Stuart Roberts, CEO of Cleareye.ai and Maria George discuss how ClearTrade aims to make trading and compliance operations easier and more efficient for banks.
Digitization has been a heavy discussion in trade finance for years, and Roberts explains that JP Morgan’s path toward a solution has involved challenging multiple technology providers and spending many hours developing a rule-based algorithm.
“If you think about the rules of the algorithm, and you start with the five hundred rules that we need to make sure we capture, then we need to extend it across the whole set of documents and possible variables around. You are looking at hundreds of thousands of possible outcomes. The machine needs to go through this quickly so it can from arriving at the correct conclusion,” details Roberts. “This technology, although talked about by many participants over time, we haven’t seen a physical proposal – even Cleareye.ai.”
George explained how ClearTrade works as a producer of trade finance and compliance automation: “There are paper documents that travel between banks, shippers and issuers. What we’re trying to focus on is the ability to automate the ingestion of these paper documents and the understanding of industry documents.
“There are rules and regulations that a trade has to abide by in order to check all those regulations, understand if there are any potential red flags, which entities are subject to sanctions, and any compliance issues. ClearTrade can highlight all of that and generate a report to make it easier for someone to carry out trade operations. his work.”
ClearTrade provides a solution to the gap in trades, where people manually manage hundreds of pages of documents that newcomers in the industry do not want to participate in. George explains that banks are somehow being forced into automation because of this gap in the industry. Most important, she adds, is that trade finance must be adopted as quickly as regulatory requirements and sanctions, and it is essential that the sector adapts.
Roberts adds that banks may find it difficult to comply with incoming regulations without new technology to match their needs. In the current geopolitical climate, new penalties are constantly being imposed, costs are increasing, and people in business offices need help to keep up. George and Roberts believe that ClearTrade offers a solution to these operations.
George expands on the solutions the platform provides: “People are manually browsing assets at many banks today. It’s human-centric; people can make mistakes. When the system does this, everything is auditable, everything can be tracked, and every transaction is monitored.” We have a complete audit trail and a full history of everything that happened, so it’s stronger than it was with a human doing it. That also helps from the regulator’s point of view.”
JP Morgan receives approximately 4 million individual documents in its offices which, while digital, still require human participation; ClearTrade offers the ability to cut the three hours it takes humans to review these documents down to about ten minutes. Roberts explains that this process unlocks a whole host of new features, such as identifying fraud trends, commerce-based money laundering, workflow checking, and building a compliance unit collectively.
Roberts believes that the solution will improve the efficiency of trading services that will allow more banks to stay in the sector for longer than they would have been able to without ClearTrade. He continues, “Through this partnership, the commercial framework, the deployment, and then the rollout across all of our global locations, ClearTrade will dramatically improve efficiency within JP Morgan. But most importantly, I believe it has the potential to become an industry standard.”
Roberts spoke of the future development of trade services in the process of document examination and handling of letters of credit and collections: “I believe that the technological aspect of trade services will go through the platform realization around one or two industry-wide standards. This will then create economies of scale and allow banks to join on the basis of OpEx instead of the CapEx base”.
“Our goal with this first step with Mariya and ClearTrade is to build this industry platform. The first and most challenging part is the efficient rules-based document testing engine and compliance module. From there, the challenge is how to use the JP Morgan trading platform itself and make it cloud-native and able to use it. As an industry wide platform by ClearTrade”.
Roberts expresses that the most difficult aspect of mastering ClearTrade was achieving a robust, high-level, straight-through processing platform with the right workflow and positive results. It is reported that the Cleareye.ai technology has emerged in the ability of their devices to learn from previous mistakes and improve to reach higher efficiency ratios.
Roberts concludes, “ClearTrade should be the first solution where you see a completely seamless solution from OCR to document testing, compliance checks, ship inspections, military use policies and then ultimately, a state-of-the-art trading platform for all our clients.”