By using image technology to share documents with its foreign-trade clients, ABN Amro Inc. has refashioned its relationships with customers and begun to reshape its international operations.
Michael Klausner, a senior vice president and head of corporate outsourcing in the documentary services area of the Dutch banking company's global trade unit, said one of Amro's biggest problems is "we have so many systems and so much information separated into silos that we're not very good at sharing the information with our customers - or even with ourselves."
By converting important customer data into electronic files, Mr. Klausner said, ABN Amro can more easily move the information between different business lines and deliver it to customers.
The ability to deliver this type of information to clients is becoming a "market differentiator," Mr. Klausner said.
Lee Kidder, the director of wholesale banking at TowerGroup in Needham, Mass., the market research unit of MasterCard International, said more big banks are discovering that information is becoming a powerful tool.
This is especially so in crossborder transactions, which tend to involve larger payments and where the participants often have little contact because they are in different parts of the world.
"I believe that is the way of the future for banks in the international trade business," Mr. Kidder said. "Information itself will become the new currency."
JPMorgan Chase & Co.'s deal announced last month to buy the logistics firm Vastera Inc. of Dulles, Va., which provides document services, inventory management, and payment tracking services, is an example of a bank attempting to improve its data management capabilities, Mr. Kidder said.
Other leading international banks, including Bank of America Corp., Wells Fargo & Co., and Wachovia Corp., have taken advantage of document imaging technology and the Internet to speed the delivery of forms and data to international clients, Mr. Kidder noted.
ABN Amro worked with Citigate Hudson of New York, a unit of the British marketing and communications firm Incepta Group PLC, to develop a business intelligence system that would let the bankers track transaction volume and similar information in Amro's systems.
Mr. Klausner said that having more information available is helping ABN Amro win back its place at the table in trade transactions. Banks have struggled to maintain their position in trade transactions as corporations have shifted more to open account financing.
Historically, corporate customers have used letters of credit to finance purchases. These letters put a bank in the middle of a trade transaction, not only providing cash management, foreign exchange, or liquidity services to a corporate client, but also vouching for the buyer in a crossborder transaction and guaranteeing payment if the seller delivered the specified products. This frequently involved line-by-line reviews of purchase orders, invoices, shipping manifests, and other documents to ensure that what was ordered was delivered.
But with the rise of the Internet and the emergence of more reliable communication systems, as much as 80% of crossborder trade uses open accounts rather than letters of credit, Mr. Klausner said. That has largely removed the bank from the business of verifying the transaction.
Banks may no longer be as crucial in the financing of international deals, Mr. Klausner said, but ABN Amro's electronic data service can still give corporate customers access to the information they need to verify that these deals are proceeding as they should.
"The corporates, our clients, were taking on all that work," Mr. Klausner said. "They weren't necessarily getting rid of the paper. They were just doing it themselves." But now ABN Amro hopes to win some of that data management work.
ABN Amro has used a variety of data formats, including both electronic data interchange and imaging, to deliver information to its clients. For example, it can translate information from a proprietary corporate database system into a more universal file format, which could allow an American importer, for instance, to view an invoice online from its supplier in Hong Kong.
Sometimes ABN Amro may not even process the payments. Mr. Klausner cited a setup where Amro supplies a settlement file to the buyer, which then executes the payment through another bank.
"We're in the business of moving information, not money," Mr. Klausner said. "More importantly, the bank sits in the middle between buyer and seller again."
TowerGroup's Mr. Kidder said such changes ultimately could lead to a new role for banks acting as trusted advisers to their corporate clients in crossborder deals, including financing for sellers as well as buyers.
"The business won't be called trade finance anymore," Mr. Kidder said. "Now you hear a lot of people talking in terms of trade management."
