The launch of new trade finance platforms is gaining momentum across the world. Market players have been offering blockchain-based platforms for trade finance for gaining various benefits including transparency, traceability, and efficiency.
The entire documentation related to shipments, factoring, and receivables can be analysed without any threat posed related to data tampering and the threat of compromising passwords. A great deal of trust can be built as the information on the network can be distributed without being copied. Moreover, blockchain offers simplicity in tracking information regarding contracts for multiple businesses with various stakeholders. As the decentralized model is employed in the blockchain, it improves the efficiency of the entire trade cycle. In addition, monitoring time is reduced, bills are generated automatically, and settlements can be carried out with the intervention of any agent.
Firms have been taking advantage of blockchain for launching their trade finance solutions. CryptoBLK, a Hong Kong-based blockchain firm launched a trial of its trade finance solution known as ATLAS Alpha Network by partnering with Microsoft. With the launch of this platform, nearly 25 organisations have signed up for the four-week trial for hands-on experience. These organizations include banks, enterprises, and financiers. The company aims to digitize the end-to-end process of factoring, invoice financing, purchase order financing, and others. In the trial, participants are expected to gain training, highlight business cases, and test the platform with real-world problems. Financiers and banks are the primary target audience and they are expected to bring SME clients with them.
The firm developed the platform with an aim to offer a single platform for suppliers, buyers, financiers, and stakeholders to serve their trade finance needs. With a portal providing an at-a-glance overview of open loans and connections across all trade parties, this platform would reduce the cost and risk for financiers. An ease in access to credit is provided through this platform. Duncan Wong, CEO of CryptoBLK, outlined that the new solution offers enhanced trust and transparency in the process and opens up new opportunities in the trade finance industry. According to the report published by Allied Market Research, the global trade finance market is expected to reach US$56.06bn by 2026.
Flowing with the current, CaixaBank launched its blockchain trade finance solution known as we.trade. This digital platform had been launched by nine founding banks. CaixaBank becomes a new shareholder with Erste Bank and UBS, which makes a total of 12 shareholders. This platform is developed on the IBM Blockchain Platform with the help of Hyperledger Fabric. It provides a user interface for monitoring operations. The target audience for the platform is SMEs and micro-businesses that offer open-account trade finance for improving the cash flow. Moreover, it would offer KYC of clients, bank payment undertaking, real-time settlement for traders, and tracking and tracing of goods. The blockchain platform would offer traceability and security for transactions. The delivery of goods has been linked to payment systems through smart contracts. One of the striking features is the real-time monitoring of trade transactions for enabling enterprises to manage the cashflow in a better manner. Patrick Klijnjan, Managing Director at steni Benelux, highlighted that we.trade offers a degree of certainty related to payments following the delivery and eliminates the worries for the future.
Along with launching new platforms, market players have been adding new solutions to existing platforms. LiquidX, an online marketplace, launched its supply chain finance solution to its platform. This platform is expected to structure the supply chain finance programs, manage funding, and monitor supply onboarding. It is available on the cloud-based web portal of LiquidX. The technology is supported by a legal agreement, which enables users of the network to carry out transactions with multiple players. Clients of LiquidX can scale up their supply chain programs, which was difficult due to intricacies related to SCF. Andrew Chu, head of product at LiquidX, stated that its new offerings provide a different range of options for integration. Its interface offers personalisation option along with an easy-to-use onboarding portal. He further added that this platform is a progression for fulfilling capital needs for the clients. The details would be fine-tuned through collaboration with corporate and bank clients. The initial program of the platform included the suppliers from the US, Canada, and Mexico. It will expand to the European and Asian countries. Chu highlighted that the countries will be decided according to the customer requirements and they will have extensive coverage for both regions in the coming years.
Source: The Fintech Times
To find out more about blockchain and its impact on supply chain finance industry, please join us in Amsterdam on 29-31 of January, 2020 at BCR's Blockchain Supply Chain Finance Masterclass and Supply Chain Finance Summit.