Patrick DeVilbiss, director and head of product for trade and supply chain finance, and Merlin Dowse, director and senior product manager for trade and supply chain finance, at CGI, explore why banks are taking a more pragmatic approach to trade digitisation amid shifting investment priorities, operational pressures and growing interest in AI-driven transformation.
The global trade finance industry finds itself at a critical inflection point. After more than a decade of digitisation initiatives, evolving regulatory frameworks and shifting economic conditions, banks are reassessing where and how they invest. While technological capabilities have advanced rapidly, adoption across the ecosystem has been uneven, creating both opportunity and friction. This disparity stands in contrast to earlier expectations that digital trade would help close the trade finance gap, which has grown to US$2.5tn, according to the Asian Development Bank.
From CGI’s close collaboration with global banks and industry partners, it is clear that the industry is grappling with a fundamental question: how to modernise trade finance in a way that delivers measurable value while navigating operational constraints, economic uncertainty and competitive pressure.
A shift in investment priorities
One of the clearest trends shaping today’s market is a shift in where banks are allocating capital. Traditional trade products such as commercial letters of credit and collections have faced declining momentum, with some institutions reducing their exposure or exiting. In contrast, structured trade finance, working capital solutions and open account transactions are seeing growth.
This shift reflects both market demand and economic reality. Structured solutions and open account trade offer greater flexibility, scalability and alignment with the needs of modern supply chains. Meanwhile, the traditional trade business, long considered the backbone of trade finance, has become more challenging, with lower margins, increased regulatory oversight and operational complexity.
At the same time, standby guarantees and related instruments continue to show resilience, highlighting that not all traditional products are in decline. The market is fragmenting, with growth concentrated in areas that support today’s dynamic trade environment.
Platforms such as CGI Trade360 are helping banks support this shift by enabling more flexible, scalable trade finance operations across all products, with a focus on improving efficiency and client experience.
The digitisation paradox
Despite years of focus on digitisation, transformation has been slower than expected. While banks have made significant strides in digitising internal processes, broader ecosystem-level transformation, particularly across networks and counterparties, has struggled.
Internally, institutions have successfully leveraged intelligent process automation and other technologies to streamline operations, reduce manual workloads and address resource constraints.
However, the real promise of digitisation lies beyond the four walls of the bank. True transformation requires interoperability across institutions, platforms and geographies, a challenge that remains largely unresolved. Instead, fragmentation persists, with multiple platforms, standards and approaches competing for adoption. This has created friction and slowed progress.
CGI tackles this challenge head-on through the collaborative power of its community and agnostic approach to third-party integrations.
Efficiency as a driving force
If there is one theme consistent across the industry, it remains the relentless focus on efficiency. Banks continue to explore every possible lever to reduce costs while maintaining service quality.
This has led to a surge in automation initiatives, outsourcing strategies and process optimisation efforts. Technology is central to these efforts, but the goal is not to innovate for the sake of innovation but to quantify improvements in productivity and cost management.
The efficiency imperative is shaping the trajectory of digitisation itself. Projects that cannot clearly demonstrate return on investment struggle to gain traction, particularly in a constrained economic environment.
The role of AI and its limits
Overlaying these trends is the rapid emergence of artificial intelligence (AI), particularly generative and agentic AI. The potential applications in trade finance are significant, from document processing and compliance checks to decision-making and workflow automation.
Looking ahead, trade finance could begin to resemble payments in terms of speed, automation and straight-through processing. Within the next five to 10 years, AI-driven systems may be capable of interpreting complex trade transactions at scale, enabling greater efficiency and reducing reliance on manual intervention.
Technology and legal reforms alone are not enough to overcome cultural and behavioural barriers, such as resistance to adopting new processes or removing the paper.
There is a critical caveat: AI cannot deliver its full potential without a solid foundation. Many banks still lack the basic integration layers and core infrastructure needed to support advanced technologies. As one industry expert aptly noted, investing in cutting-edge AI without addressing foundational gaps risks “putting lipstick on a pig.”
CGI’s approach emphasises strengthening these foundational layers – data, integration and core platforms – so that advanced capabilities such as AI can be deployed effectively.
External pressures and investment constraints
Beyond technology, the broader economic and geopolitical environment is also influencing decision-making. Ongoing uncertainty, driven by geopolitical tensions, shifting trade policies and concerns about a potential global recession, has made banks more cautious.
At the board level, priorities are shifting toward risk management and capital preservation. As a result, discretionary spending on large-scale transformation initiatives is under increased scrutiny.
AI has emerged as somewhat of an exception. The current AI wave has captured executive attention, making it easier to secure funding for AI-related projects compared to more traditional digitisation efforts. However, this can create imbalances, with resources diverted toward high-profile initiatives at the expense of foundational work.
Overcoming barriers to digital transformation in banking
A primary impediment to digital transformation in banking is the difficulty in articulating its value. Unlike revenue-generating projects, the benefits of digitisation, such as cost savings, risk reduction and operational efficiency, are often harder to quantify. This challenge is compounded by the need for complex, cross-functional alignment across product, operations, technology and compliance teams, which can stall initiatives without strong internal champions.
To move forward, banks must adopt a pragmatic and persistent approach. Rather than waiting for a perfect, fully digital future, institutions should prioritise incremental improvements in areas like process automation and data integration. These targeted gains deliver meaningful value over time and depend on continued investment in modernising core infrastructure and maintaining long-term transformation momentum.
Perhaps the most critical, yet underappreciated, component is change management. Technology and legal reforms alone are not enough to overcome cultural and behavioural barriers, such as resistance to adopting new processes or removing the paper. Conquering this requires strong leadership, clear communication, and investment in training. By shifting the organisational narrative from simple cost reduction to one of growth and opportunity, banks can demonstrate how digitisation enables them to scale their business and deliver superior value to clients.
The road ahead
Despite the challenges, there is reason for optimism. The building blocks for a more digital, efficient and interconnected trade finance ecosystem are already in place. Advances in technology, legal reform and increased collaboration across the industry have built a strong foundation.
The next phase will require strategic clarity, disciplined execution and sustained commitment. Banks that can balance innovation with practicality, by investing in both foundational capabilities and emerging technologies, will be best positioned to succeed.
Ultimately, the goal is not simply to digitise trade finance, but to reimagine it. By reducing friction, enhancing transparency, and enabling seamless global transactions, the industry has the potential to unlock significant value.
CGI, through solutions such as CGI Trade360 and its broader trade finance expertise, is supporting this evolution by helping banks future-proof operations, enhance connectivity and prepare for a digital and integrated future.
The journey may be longer and more complex than initially anticipated, but the destination remains clear and worth pursuing.
