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Reinventing Trade Finance with first blockchain-based credit insurance

Reinventing Trade Finance with first blockchain-based credit insurance

Hokodo, the world’s first dedicated provider of commercial “Insurance-as-a-Service” and Centrifuge, the first decentralised operating system for the supply chain, have gone live with a prototype which will be backed by the Channel Syndicate, a unit of SCOR Global P&C. It is the first time an end-to-end invoice protection solution is seamlessly offered on blockchain to protect receivables transacted on Centrifuge’s platform.

In this first prototype, consulting company Oxbow Partners (the supplier) used Centrifuge OS to insure their receivables in a completely automated way. Oxbow Partners used Centrifuge’s ability to create unique verifiable transaction records and Hokodo’s instant trade credit insurance API to secure their invoices. The transaction involved assessing and pricing the risk of Oxbow Partners’ counter-parties in real time before delivering an insurance cover recorded on the Centrifuge network, relying on the public Ethereum blockchain. You can read more about the technology behind the prototype on Centrifuge’s blog here.

A recent report from Bain & Company “Rebooting a Digital Solution to Trade Finance,” reiterated the potential upside from adopting blockchain in B2B trade, citing benefits of increased trade efficiency, mitigation of risks and expanding trade to smaller companies and regions with less robust trade mechanisms. The report goes on to say automation through blockchain could reduce processing time by 80%.

Creating opportunities for partners to seamlessly offer insurance and financing solutions to their business customers is why Hokodo was founded. Partnering with pioneering companies like Centrifuge and Hokodo gives users access to innovative products and allows them to tap into the latest technology to solve traditionally manual and paper-based tasks. The main issue that market operators face today is the extreme complexity of trade and financial services processes, which haven’t evolved for centuries. The large number of players involved in each transaction (buyer, seller, lender, insurer, shipper, customs…), generates a messy paper trail and numerous interfaces as data is shared and re-shared and authenticity is checked and re-checked. With an open, decentralised operating system like Centrifuge OS and API-based service providers such as Hokodo, B2B trade processes are fundamentally digitised — and become more efficient.

Louis, Hokodo co-CEO and co-founder commented: “We are delighted to go live with this partnership. The integration has been extremely smooth thanks to the combination of Hokodo’s APIs and Centrifuge’s natively decentralised architecture. This launch will be a landmark in the history of how financial services are delivered to businesses. Ultimately, Centrifuge and its partners are creating the new infrastructure for B2B trade, with the app store that goes with it.” Read more about our partnership with Centrifuge in our blog post here.

Maex Ament, CEO of Centrifuge, highlighted: “the pilot use case of Invoice Protection is just a first step. Centrifuge and Hokodo are both actively exploring other use cases around financing and cargo insurance. We’re glad to partner with Hokodo as they make it incredibly simple to offer different insurance solutions through our platform.

About Hokodo
Hokodo’s insurance solutions are delivered via Application Programming Interfaces (“APIs”) which can be easily integrated into the cloud accounting platforms, online marketplaces, and other technology platforms used by corporates. Hokodo recently launched its operations with an invoice protection product insuring businesses against the risk that their customers might fail to pay the covered invoice when it falls due. The insurance products underwritten and distributed using Hokodo’s technology are backed by the Channel Syndicate, a unit of SCOR Global P&C.

About Centrifuge
Centrifuge is an open, decentralised operating system to connect the global financial supply chain. It allows participants to transact on a global network while maintaining ownership of their data, including their validated company details, reputation, business relationships, and subsequent transactions.