Director of business development for financial services at Microsoft, Peter Hazou, has been explaining how the global technology giant has been working with partners to develop new letter of credit (L/C) and other trade finance solutions.

In an interview with Technology Record magazine, Hazou highlights how Microsoft's suite of products is helping financial services organisations to improve decision-making, customer service and back-office processes

AI-powered solutions

Microsoft is collaborating with various partners, including Cleareye.AI, Conpend, and Traydstream, to develop AI-powered solutions for digitising trade documents, according to Hazou.

He says these platforms utilise Microsoft's Azure cloud to streamline processes, allowing for the automatic processing of documents such as L/Cs in trade finance and bills of lading in supply chain finance.

Legislative impact

Hazou also looks at the impact of the UK's landmark Electronic Trade Documentation Act in 2023. It replaced 1882 legislation that required wet signatures and paved the way for digital trade finance processing. Similar legislation is being adopted in the US and Europe.

"For example, a[n] L/C is traditionally printed out on paper, signed, dated and mailed to the bank," says Hazou. "The big move at the moment is to scan those documents into a system through optical character recognition and apply rules related to L/Cs to check the documents for compliance and identify trade-based money laundering with AI", he adds.

Efficiency and savings

Microsoft is additionally partnering with Finastra, a major player in the financial technology sector, to introduce AI into L/C processing.

This collaboration leverages Microsoft's Azure cloud and OpenAI services to enhance efficiency, streamline workflows, and reduce the manual labour involved in L/C processing.

Banking benefits

By integrating advanced AI models into banking operations, this partnership aims to improve productivity, automate processes, and offer better customer service in financial transactions where L/Cs are frequently used​.

This move is part of Microsoft's broader strategy to help banks and financial institutions modernise their operations by using generative AI to drive improvements in areas such as document processing, risk management, and compliance.

The interview with Peter Hazou, In with the new: how banking systems can use data more effectively, can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.