The power of connecting trade finance to everyone
This blog forms part of a series of insights from our recent corporate and transaction banking conference, which took place at OP Bank in Helsinki, organised by the FFE Fintech Ecosystem Ltd together with Standardised Trust and ITFA.
During the conference, Surecomp´s Enno-Burghard Weitzel, Senior Vice President, Strategy, Digitization & Business Development, gave a practical view on collaborative trade finance; what it means in practise to engage, connect and enrich with a focus on the importance of connecting everyone in the trade finance ecosystem.
In some of our recent blogs, we’ve looked at how Surecomp is committed to supporting seamless, sustainable trade, as well as the importance of enabling ESG tracking and minimising the risk of fraud. In this blog, we’ll take a closer look at how trade finance technology can connect all participants, empowering more efficient trade while supporting collaboration across the trade finance ecosystem.
We believe that trade finance technology should be open to everyone, therefore increasing access to trade finance and in turn facilitating trade. Our definition of ‘everyone’ includes a vast group of corporates, from small businesses to MNCs, as well as banks, non-bank financial institutions including insurance companies, investment funds and asset managers.
Insurance companies, for example, can act as providers of finance or security to trade finance transactions. Under Basel IV, banks will need to set aside more capital for their trade finance commitments – but insurance companies, which are managed under Solvency II, won’t be subject to the same requirements. Unlike ERP systems, we - as a dedicated trade finance provider - include insurance companies on our RIVO platform to provide a holistic platform for corporates already doing business with insurance companies and even to support smaller companies who might otherwise struggle to find a bank to finance their guarantees.
Then there’s a single point connection to the expanded fintech ecosystem; corporates can access everything from vessel tracking and ESG scoring to Legal Entity Identifiers (LEIs) to validate the identity of their trading partners more easily, thereby enhancing security, data transparency and trust within the trade transaction.
By connecting all these trade participants via a centralised platform, every corporate and their respective financiers can communicate to execute a guarantee request more efficiently.
Efficiency and collaboration
Trade finance efficiency gains are one half of an important story; with guarantees often being hindered by inaccurate and insecure data sent back and forth via email, the result is multiple amendments, risk of fraud and delayed approvals. But a connectivity platform such as RIVO enables the applicant and beneficiary to collaborate on the details of a guarantee right from the beginning of the transaction lifecycle. Details can then be agreed before the financier even gets involved, therefore accelerating and facilitating the process for everyone involved.
And there’s more to be gained by bringing together buyers and sellers, importers and exporters. If trade finance technology is to be accessible to everyone, it’s essential that cost is not a barrier. At Surecomp we believe that the power of connectivity isn’t just about providing a central hub through which everyone can communicate; it’s about providing a platform with free onboarding; a platform where corporates can gain holistic visibility of finance requests in real-time, manage credit limits and utilization across multiple financiers, and benefit from the most competitive rates to optimise cost per transaction and drive growth.
By connecting everyone and enabling all parties to collaborate more effectively, the potential to drive growth is enormous. In Europe there are around 24 million corporations, but only 8 million of them are currently benefitting from trade finance. This presents a huge gap, with many companies not able to fulfil their growth potential.
The future is green
In conclusion, we believe in driving sustainable and seamless trade by enabling companies to optimize their trade process as easily as possible. We believe the key to driving increased global trade is through the power of connection. By opening up access to technology, by facilitating the extensive use of quick, easy and cost-sensitive technology to everyone across the ecosystem, by providing a collaboration tool which not only connects but enriches communication and operational efficiency, companies of every size and type will be able to access finance and trade more effectively. And let’s not forget, all of this in support of one of today’s most pressing concerns, sustainability. A growing number of financiers is providing preferential rates for sustainable finance. External stakeholders are requesting greater transparency on the ‘sustainable’ portfolio of both banks and corporates. Digital trade finance not only reduces the use of paper documents, but the provision of ESG scoring raises company awareness. It helps them mitigate the reputational and financial risk of engaging in unethical trade, while empowering them to actively manage their trade related ESG profile and monitor the environmental and social impact of their business. The future is green, and the enabler is connection.
Enno-Burghard Weitzel, Senior Vice President, Strategy, Digitization & Business Development at Surecomp