Once banks decided they were no longer simple underwriters and adopted a retailing model, it was just a matter of time before they grasped the wisdom of modern logistics.

Logistics is one of those invisible, computer-driven sciences which not only drives retailing today, but also is in the process of reforming the landscape of urban America by deciding where new warehousing facilities are being built.

Among the revolutions being wrought by logistics at the ideal level: making suppliers and retailers part of the same cooperative process, instead of discrete elements striving in a zero-sum game. Royal Bank of Canada took this approach when it launched TradeView, a system designed to electronically link exporters and importers via the Internet or private communications network. Using a Java-enabled browser, Web-savvy customers can directly access the bank's letter of credit (LC) operation to apply for LCs from any location around the world. Royal Bank's strategy: shorten LC process and increase volume. "These products are delivery channels for the ultimate product itself, which of course is the underlying letter of credit. So it's a channel to increase the volume of LCs we use, to add to our customer base and add more value to the customer we already have," says Michael Taylor, RBC's svp of financial institutions and trade.

RBC currently has an average outstanding balance of about $10 billion (Canadian dollars) in letters of credit and of guarantee, making it the largest Canadian underwriter of export LCs, Taylor says. He hopes RBC's market share will grow 15 or 20 percent as a result of TradeView. "We want to be the dominant trade bank in Canada. This is a method by which we can achieve that."

The TradeView system is presently limited to Canadians, but will be expanded soon. "When you sign on for the service, a pre-set series of LC numbers are assigned to you. So if you're in a negotiation, you could get on anyone's computer anywhere, and since you have the LC number, you can give it to your supplier on the spot and begin the tracking process immediately" he adds. "That's a real competitive advantage."

Taylor confesses that despite the whiz-bang of TradeView, he doesn't expect the LC businessothe foundation of international bankingoto become wholly electronic anytime soon. "The LC business is still dominated by paper," he says. "The future will be entirely electronic, but it's not there yet."--reinbach tfn.com

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