There is something wrong with the Trade Finance sector. Something that prevents businesses from accessing essential solutions that could fuel their growth.
As BCG and SWIFT rightly underlined in their joint report Digital Innovation in Trade Finance — Have we reached a tipping point?, the Trade Finance industry is woefully inefficient due to complex, paper-based processes. The large number of actors involved in each transaction (buyer, seller, lender, insurer, shipper, customers…) generate a messy paper trail as data is shared and re-shared; authenticity is checked and re-checked; and version control is managed (more or less successfully).
It is estimated that the average transaction involves more than 5,000 data interactions of which only 1% create value. A few weeks ago, a banker boasted issuing an “8 kilogramme letter of credit” at a trade finance conference. Most SMEs cannot afford the indulgence of dealing with such complex financial instruments. And none of them wants to be asked the same information by the import bank, the export bank, the insurance company, the transporter, the customs… This has got to end!
Unfortunately, incumbent players are unable to upgrade their legacy technology platforms; or unwilling to adapt the systems which have made them so much money over the years. Instead, a new wave of well-funded and experienced newcomers is on a crusade to reinvent the industry using cutting-edge technology.
One of them is Centrifuge who share our view that core Trade Finance processes have to be radically rewired and digitized. Centrifuge is building a digital, frictionless operating system that allows all the parties involved in a trade to safely and easily share the fundamental data needed to transact. Visionary Centrifuge’s co-founders Maex Ament and Philip Stehlik already explored this space with Taulia, a successful Supply Chain Finance platform which facilitates B2B trades through working capital and invoicing solutions. With Centrifuge they’ve brought it to the next level, using blockchain technology to create a secure and highly scalable ecosystem, which provides the meta layer of data for partners to connect to and start offering value-added services via API.
At Hokodo, we truly believe that such an ecosystem will contribute to the standardization of the industry, making global trade faster, cheaper, simpler and more secure. This will make trade finance products accessible to a wider audience and unleash the true potential of the industry.
Centrifuge’s ecosystem requires digitally advanced partners to reach its fullest potential — so Hokodo’s platform-friendly insurance API is a perfect match.
That’s why we are proud to announce a unique partnership whereby Hokodo will offer its seamless invoice protection solution to receivables transacted via Centrifuge’s platform.
This partnership is a key step in our journey to help businesses obtain the protection they deserve and we are thrilled to work with a partner that shares our vision for the future of B2B trade.