Two of Canada's largest banks have shored up their trade finance systems to boost market share in corporate services.
Royal Bank of Canada and Bank of Montreal, along with the latter's Chicago-based subsidiary, Harris Bankcorp, have begun using new software that lets corporations apply for and amend letters of credit electronically.
American Management Systems Inc. of Fairfax, Va., developed the software and provided systems integration and consulting services.
Kurt Cavano, vice president of American Management Systems, said the company has increased its work among banks and businesses to foster back- office interaction across multiple applications.
Annual bank revenues from trade finance were estimated at just over $1 billion in a study last year by the New York-based U.S. Council on International Banking.
In North America, the revenues are heavily concentrated among the largest 20 institutions.
Banks want to reduce their overhead and lower their customers' costs of business transactions, thus "making it hard ... to be kicked out and disintermediated," Mr. Cavano said.
Officials of Royal Bank said its effort capped off a multiyear, multimillion-dollar systems reengineering project in trade finance operations.
"We are targeting quite a range of clients and potential clients," said Naznine Lakha, director of sales at Royal Bank of Canada.
Royal Bank of Canada, Toronto, has "exclusivity" on some versions of its new software and may license them to other institutions, she said.
Royal Bank and American Management Systems jointly developed Internet and direct-dial software for importers and exporters to apply for and update letters of credit. Royal Bank offers wholesale banking services- either directly or through correspondents-in more than 180 countries.
The Internet software, called Tradeview, is based on Sun Microsystems Inc.'s Java computer language and can serve businesses using Microsoft or Netscape Web browsers.
"The significance is that it allows Royal's customers to hook up any way they want to," Mr. Cavano said.
Bank of Montreal's system, called Tradevenue, is "expected to fuel substantial growth in our trade service business," said Peter Wren, managing director.
The $182 million-asset Bank of Montreal, also based in Toronto, wanted to provide its multinational customers with Windows-based software for electronic access to letter of credit information.
Its trade system is electronically linked to corporate services in Canada and the United States.
Corporations want the "same look and feel," Mr. Cavano explained.
