The Trolley Problem Comes to Trade Finance

One random night, my wife and I stumbled onto what became one of our favorite TV series: The Good Place. For those who haven't seen it, the short version is that it applies ethics and moral philosophy to modern life in a way that is funny, smart, and surprisingly useful. Of the many thought experiments the show covers, the one I keep coming back to is the trolley problem. Partially because it is very interesting, and partially because they made it so real and funny in the show. In the thought experiment, a runaway trolley is heading toward a group of people. You as the driver can either pull a lever and divert it to another track with one person on it, or do nothing and let it hit the many. Every choice has consequences. More to the point: doing nothing is still a choice.

In the original thought experiment, pulling the lever is the harder choice. You are actively diverting harm rather than simply letting it happen. But it saves the many. In trade finance, pulling the lever meant accepting some short-term disruption — opening roles, investing in training, bringing in younger talent before it was urgent. Nobody pulled it, and the trolley hit the many.

We start here, with the lever nobody pulled.

The Trolley Was Always Moving

The generation that came into trade finance in the 1980s and 1990s loved it and never left. That is not a criticism. It speaks to the depth and complexity of the work. Limited turnover looked like stability. Banks always had enough trained people. Staff moved between institutions chasing better opportunities, but there was always a deep enough bench to fill the roles.

The problem is what that stability prevented. No turnover meant no openings, and with no openings there was no pipeline. The next generation looked at trade finance, didn't see a way in, and went somewhere else: payments, investment banking, and more recently sanctions, AML, and financial crime. The result is a profession where the senior cohort is in their 60s and ready to move on, and the people who would naturally replace them simply aren't there in sufficient numbers. There is almost no Gen X presence in trade finance. I'm 49, and I'm frequently one of the younger people in the room.

Nobody made a bad decision in real time. Staying in a job you're good at and that you love is not a mistake. But it didn't stop the trolley from moving down the track.

So Who Got Hit?

The retirements aren't just coming. They are already here. I get emails nearly every week from colleagues winding down, looking to stay loosely connected but stepping back from full-time roles. The challenge isn't just headcount, though it is that too. The deeper problem is what those people are taking with them.

It's well-earned judgment: the pattern recognition to look at a transaction and just know, from having done it a thousand times, that something is wrong, and what to do about it. It is 30 years of knowing when to push back and when to pay.

Consider what the best document examiners of a generation ago could do. A FedEx envelope arrives. They tear it open, pull out the documents, and begin their examination. First, they would sniff the documents. Maybe the smell is wrong: no salt air, no ship oil, not even a trace of the crew chain smoking. Whatever it was they smelled or didn't smell, they knew something was wrong. The rest of the process was documenting the discrepancy. Not because they were geniuses, though many of them were, but because they had done it thousands of times. That is Malcolm Gladwell's 10,000 hours applied to documentary trade, and you cannot write it into a manual.

Document examination today is not what it was. You can't smell a PDF. Yes, the fundamentals remain: does the presentation comply, are the documents consistent, do the goods descriptions align. But layered on top of that is a full sanctions screening, adverse media checks, related party reviews, and an ever-growing list of regulatory requirements that did not exist a generation ago. A junior examiner handed the UCP 600 and told to figure it out would quit on the same day. They need someone experienced enough to show them what right looks like. That takes time, repetition, and a senior person in the room.

One common approach, bringing in someone else's retiree to fill the gap, really doesn't solve this. It just kicks the can down the road. Your junior people need to check documents (lots of them), with someone senior enough to catch what they don't yet know they're missing. When the senior people retire and that oversight disappears with them, you are stuck.

In response to the skills cliff, some banks have actually exited the commercial LC business altogether. SBLCs are somewhat more forgiving since drawings are the exception rather than the rule, but even there, the expertise required to handle exceptions well is exactly what's walking out the door. Technology has stepped in as another possible solution. And as capable as current AI-assisted document examination tools are, they are not yet a substitute for seasoned human judgment. In some institutions you now have a situation where neither the people nor the technology are fully there, because action on both fronts was deferred too long.

The business has changed, but the skill it requires has not. And the people who hold that skill are leaving.

The Lever Was Always There

So what are the bridging options? How do we get to the other side of this cliff? Digitalization, structured training programs, fractional expertise models. None of these are new ideas. They have existed but the urgency to adopt did not. Until it was almost too late. Here is a thought experiment: where would digitalization in trade finance be if not for COVID-19?

That is not an indictment of any individual institution, but rather a structural observation about an industry that confused stability with sustainability and ended up standing at the edge of a cliff wondering how it got there.

The trolley has hit something. The question now isn't whether to act. It's whether the response will be as passive as the original inaction. As Kant would have it, the moral weight of inaction is equal to action when the outcome is foreseeable. Banks could see this coming. They were in the driver's seat of the trolley. They must have been looking at their phone.

Next month: What the damage actually looks like up close, and why the industry's default response may be making it worse.