Author: Sanne Wass

R3’s KYC blockchain app completes fourth trial, but will remain a prototype

From Global Trade Review (GTR) | By Sanne Wass

Five French banks and 21 firms, together with blockchain firm R3, have completed a fourth trial of the CordaKYC blockchain application for sharing know your customer (KYC) data. But R3 now reveals it does not intend to bring the solution to market. CordaKYC is a prototype designed and built by IT and consulting company Synechron on R3’s Corda blockchain platform. It works as a “self-sovereign” model, where corporate customers can create and control their own identities, including relevant documentation. Banks can request access to the data, whilst customers can approve requests and revoke access. Any updates that are made become automatically visible to the banks that have permission to access the data. The new trial is the fourth in a series of tests that have been conducted for the solution. The first were known as Leia 1 and 2, and more recently as “CordaKYC”. A total of 26 firms participated this time around in what was a regional trial only, in which KYC requests were simulated amongst the group. Participants included AFTE, Allianz France Insurance Company, Alten, BNP Paribas, bioMérieux, Crédit Agricole CIB, Daher, Danone, Engie, Natixis, Natixis Assurances, Natixis Investment Managers, Ostrum AM, Pierre et Vacances, RCI Bank and Services and Société Générale. The trial saw 232 updates sent to banks through Corda, with data sharing being approved 185 times between corporates and banks, according to Estelle Roiena, a senior associate at R3 and responsible for its business development for France. Roiena tells GTR that the focus of this particular trial was on ensuring that the corporates’ experience of meeting KYC requirements through Corda was effective and aligned with their needs. “While previous trials have been focused on KYC from the standpoint of banks, with this trial we’ve focused on how the service will work for the corporates,” she says. “The trial involved companies from across a very wide variety of industries, including department stores, pharmaceuticals, finance and even aerospace. This allows us to demonstrate to corporates how KYC on Corda can be responsive to the challenges of any industry and helps companies to feel confident in the process to ensure the solution is fit for the needs of all businesses.” She adds that France was an “ideal country” for such a regional trial, given that enterprise blockchain activity in France is “accelerating”. While R3 describes the trial as a “big step forward in making blockchain-based KYC a common reality for corporate banking”, it says the CordaKYC application is “not a product in its own right” and the goal is not to take the solution to market. Instead, the aim is to “demonstrate the benefits” of running KYC through the blockchain for both corporates and banks, explains Abbas Ali, director of partner solutions at R3. “Our plan has always been to develop the ‘operating system’ on which other firms will build applications to tackle enterprise challenges,” he says. “By helping the community develop a greater understanding of how KYC applications on Corda operate, we are able to support the wider ecosystem and share our learnings with partners developing applications for end users.”   Blockchain’s perfect use case? A number of KYC applications are already live on Corda, including Tradle and Gemalto Trust ID Network, with other firms, such as Norbloc, currently in the process of implementing similar solutions on the platform. What they all have in common is that they see blockchain as a route to making KYC– a task that is mired by time-consuming and labour-intensive manual processes and the duplication of efforts – more efficient. The figures speak for themselves: some major financial institutions spend up to US$500mn annually on KYC and customer due diligence, according to Thomson Reuters. And the amount of time dedicated to KYC efforts is growing: Thomson Reuters’ 2017 survey found that the average corporation spends 26 days a year providing KYC regulatory information, up from 23 days in 2016. In contrast to centralised solutions that currently exist in the market, such as Swift’s KYC Registry and IHS Markit’s KYC.com, blockchain technology eliminates third-party data aggregators and centralised repositories of data. Instead, it utilises the power of the distributed, immutable ledger to drive greater operational efficiency through a digital process flow and a streamlined way to access real-time up-to-date customer data. Founded in 2014 in New York, Tradle’s solution caters to a broad range of sectors, including trade finance. Speaking to GTR for its recent Fintech Issue, Gene Vayngrib, CEO and co-founder of Tradle, said he is convinced that a decentralised model can make the trade finance sector more agile and significantly speed up the time it takes to set up a deal. The main goal, he added, is to help banks turn compliance pain into a commercial advantage for the banks, which can then serve their customers better. “The majority of the conversation in trade finance is that KYC is such a pain and that it’s stopping business,” he explained. “The way we approach it is: it’s a commercial advantage. The information is sitting in a silo and we are taking it out of the silo and making it available for commercial business. Now two companies that are KYC’d by different banks can engage in trade much faster.” Meanwhile, the idea of a blockchain-based KYC solution has been met with cautious interest from established players. For one, Bart Claeys, Swift’s head of the KYC registry, recently told GTR that KYC “seems like the perfect use case for distributed ledger technology”, but argued that it doesn’t yet solve the real issues faced by banks today. Swift itself has helped banks tackle the burden of KYC since it launched its KYC Registry in 2015. Of Swift’s 11,000 members, 7,000 have correspondent banking activities and are therefore the target of the registry. Around 5,000 have joined the centralised, non-blockchain-based solution thus far. The challenge, Claeys said, is that blockchain initiatives have thus far been driven mainly by technology rather than compliance. “For us, at this stage, I haven’t yet seen the value addition of the distributed ledger technology related initiatives compared to what we have in our centralised solution,” he says, bringing up a widely expressed scepticism in the industry: can technology alone get banks onboard and make them want to work together towards better KYC? “In my view, a lot of these initiatives have been initiated from a technology perspective, yet today little has been said around the level of acceptance from a compliance perspective within the banks. Ultimately, be it a distributed ledger technology-based or centralised utility, you will be required to have the backing and support from the compliance side within each of the banks,” he said. The post R3’s KYC blockchain app completes fourth trial, but will remain a prototype appeared first on Global Trade Review (GTR).

EBRD’s growing focus on SEMED: “Economic reform enables us to invest more”

From Global Trade Review (GTR) | By Sanne Wass

The Southern and Eastern Mediterranean (SEMED) region is now the biggest region of operation for the European Bank for Reconstruction and Development (EBRD). Founded in 1991 after the collapse of the Soviet Union, the development bank initially focused on the nations of the former Eastern bloc, but has since expanded to support development in 39 countries, from central Europe to central Asia. Since entering SEMED – initially being Egypt, Jordan, Morocco and Tunisia – in 2012 in the aftermath of the Arab Spring, the bank has invested over €7.8bn in 179 projects in the region – ranging from wind farm developments in Morocco to supporting dairy producers in Egypt. 2018 has seen the EBRD expand to Lebanon and the West Bank, under the leadership of Janet Heckman, who took on the role of managing director for the SEMED region in February 2017. GTR met with Heckman in Cairo recently to speak to her about her focus areas and further expansion plans for 2019.   GTR: SEMED is now the largest region of operation for the EBRD. Why has it received such a big focus? Heckman: That’s correct. Last year SEMED was the largest; we did roughly €2.2bn of investments in what was then four countries we invested in: Egypt, Jordan, Morocco and Tunisia. Egypt was the biggest at €1.4bn. As a country, this investment from the EBRD was second only to Turkey last year, so very significant. This year it’s also looking like a very strong year, so we expect numbers to be in the same range. I think it’s because there has been a lot of economic reform taking place in the region. Particularly here in Egypt, for the last two and a half years you’ve seen a very strong reform programme, removal of subsidies in key areas, key investment acts being passed, bankruptcy and company laws, etc. When you have that type of reform, it enables us to invest more in a country because we believe the future of that country is strong. Another example is Tunisia, where in July we spearheaded a mission with the EU, the IFC and the African Development Bank to encourage Tunisians to continue on the reform path, and take the steps needed to ensure that the country is economically viable. One of the things I am proudest of this year has been that we were able to begin work in Lebanon and the West Bank. These are two areas where you really need trade facilitation lines, because of the perceived political risk in the region. It doesn’t just benefit the local banks; it really helps to open up the economy as a whole. It’s quite gratifying to see this.   GTR: Are there any specific programmes or projects you are particularly focused on at the moment? Heckman: We have a very strong programme in value chain development. Let me give you the example of Morocco – the country has really geared up for export and is now amongst one of the major centres globally for automotive components production as well as for aerospace components. The country put in the place the necessary infrastructure: the roads, the high-speed train, the Tangier-Med port and introduced proper incentives to attract multinationals to produce. Where we became active is in helping to finance local supply chain development. We’re working with the major multinational companies as well as the local companies who are investing, to help identify what type of supplies they can source locally. We then work with the local companies in the market to train them and bring them up the value chain. This is something we’re replicating throughout SEMED. We call it value chain financing, which is absolutely critical, because if a company can produce to the standard of global major companies like Ikea or Renault, then they are capable of producing under their own names in the local market. We also have a really great programme called advice for small business. It is funded by the EU throughout all of the SEMED countries, and we launched it in Lebanon in October. So far, we’ve advised more than 2,200 SMEs in the region. It includes advice on how to target export markets and tender for projects, as well as technical advice on how to gear your product for export markets. In that way we help small and medium-sized businesses with either local or international advisory services. This is absolutely critical. As part of this, we also have specific programmes geared towards women-owned SMEs. We work through the banks – it’s a combined programme – to provide financing to SMEs owned and operated by women. We help to train the banks, the credit departments, etc, on what the key factors for lending to women-owned businesses are, and then provide the technical advisory and mentoring to female entrepreneurs. We recently launched the programme in Morocco, in conjunction with the ministry of women and family.   GTR: What are the EBRD’s SEMED expansion plans? Heckman: Right now, our main plan is to expand within the countries where we are already operating, to do more in those countries. For example, in Egypt, we hope to open a third office this year. We’d like to do more in the regions of Egypt, namely outside of just Alexandria or Cairo, because those are the areas that need the most development. The same goes for Morocco: we opened our second office in Tangier, which covers the northern part of the country, and we hope to get approval to open later this year in the southern part of Morocco too, out of Agadir, where there’s a lot of agribusiness and a need for regional connectivity. When the time is right, we’ll also take into consideration other countries. Libya and Syria are both within our domain. I would personally love to be in Algeria – I worked there for four years with Citi, but we have to see after the elections what the political will is. Libya is another country that I could see the EBRD working in.   GTR: You mentioned earlier the EBRD’s expansion this year to Lebanon – what opportunities do you see in the country? Heckman: The Lebanese are extremely entrepreneurial, so naturally there are a lot of private sector opportunities. Initially, as we often do when we enter countries, we started with financial institutions, and we took an equity stake in Bank Audi. But then we’ve also signed trade facilitation lines and SME lending lines with other banks in the country. But the real opportunity is with private sector entrepreneurs and family groups in Lebanon.   GTR: Sub-Saharan Africa doesn’t fall under your domain, but with a growing focus on intra-African trade, does your work go beyond SEMED? Heckman: What we’ve noticed is that quite a lot of the companies we work with in North Africa, but also even in Lebanon and Jordan, are investing in Sub-Saharan Africa. Morocco is a key example of this. Attijariwafa Bank is present across Africa, and the corporates and companies have followed the Moroccan banking system, predominantly into the Ivory Coast, Senegal and Francophone Africa, because they see huge opportunities for growth. The EBRD has been involved in two events this year, working with our companies who are active in Sub-Sahara. One was the Africa Investment Forum in Johannesburg, and the other the Africa 2018 Forum in Sharm El-Sheikh. So we’re looking at how we can invest in companies which want to invest further in Sub-Sahara. The post EBRD’s growing focus on SEMED: “Economic reform enables us to invest more” appeared first on Global Trade Review (GTR).

essDocs to launch blockchain solution in early 2019

From Global Trade Review (GTR) | By Sanne Wass

Paperless trade platform provider essDocs will launch a series of blockchain-based trade solutions, having entered a strategic partnership with Swisscom Blockchain. Founded in 2015, essDocs already offers a range of non-blockchain solutions to digitise trade finance and logistics documents, including the bill of lading. Swisscom Blockchain, meanwhile, is a blockchain advisory that helps companies design, build and implement distributed ledger applications. It was established last year. In a statement, essDocs says the two companies will “leverage their respective resources and expertise to enable companies to digitise their trade and trade finance processes swiftly, efficiently and with minimal friction”. The parties have already started testing their first collaborative product, which will officially launch in Q1 2019. essDocs CEO Alexander Goulandris says the firms will offer “value-adding blockchain solutions” such as traceability, cross-platform connectivity and solution-data distribution. “Our joint solutions will first and foremost focus on transition technology, bridging data ‘gaps’, paper-based processes and technological silos with the end goal of secure, automated digital trade,” he says. Also commenting on the partnership, Daniel Haudenschild, CEO of Swisscom Blockchain, hints that blockchain technology will enable them to tackle the challenge of mass adoption that digitalisation efforts in the trade industry have historically faced. “Along the journey, both our companies will support a use-focused approach in order to unleash the true potential blockchain and digitalisation has to offer to the trade, trade finance and logistics community,” he adds. The partnership marks essDocs’ official foray into blockchain, a technology widely explored by other trade finance tech firms and banking consortia. Bolero, its much older competitor founded in 1998, has been working with blockchain firm R3 for more than a year to give its electronic bill of lading service a blockchain upgrade. This has evolved into Bolero taking part in a number of pilots of the Voltron platform, a blockchain project run by R3 and eight global banks to ease the exchange of trade finance documentation. In November, for example, Bolero’s electronic bills of lading solution was used in a Voltron-based trade transaction involving HSBC, ING, Reliance Industries and Tricon Energy. The integration enabled the digital transfer of title of goods on the blockchain. At the time, essDocs was mentioned as another electronic document provider that could be incorporated with the Voltron platform. Chris Sunderman, blockchain initiative lead for trade finance services at ING, told GTR: “When you look at the trade ecosystem, the world is large, and companies do not per se work with one provider of e-documents; there are also companies like essDocs and eTitle. So within project Voltron, the banks agreed to investigate and analyse the application of other solutions as well. We need to incorporate other solutions to make the lives of our clients as easy as possible.” He also confirmed that the consortium is currently in discussions with essDocs, which is interested in working with them. The moves by Bolero and essDocs to build blockchain solutions come as the competition in this space is heating up, with a range of other tech firms and consortia seeing trade documentation as an obvious home for the new technology. The nature of blockchain, being a decentralised technology, makes it ideal for the trade industry, as it allows multiple parties to exchange information in real time, while securely being able to track and transfer assets. One of the first firms to make headlines for its blockchain-based trade documentation solution is Israeli startup Wave. In 2016, it completed what became known as the world’s first live blockchain trade transaction with Barclays and is now working towards releasing a commercial bill of lading solution. This was followed by the foundation of Slovenia-based blockchain firm CargoX, which raised over US$7mn in an ICO in late January. Last month, the firm announced that its blockchain-based bill of lading platform is now commercially available, having spent the second half of 2018 conducting pilots with a number of logistics providers. Meanwhile, Maersk is working with IBM to build and expand TradeLens, a blockchain platform that enables users in the shipping ecosystem to interact efficiently, access real-time shipping data and digitalise and exchange trade documentation. Already, more than 92 organisations are participating in the platform’s early adopter programme. And more recently, some of the world’s top container lines and terminal operators formed a consortium, Global Shipping Business Network (GSBN), again with the same goal: to develop a new blockchain-based platform for the global trade ecosystem. The post essDocs to launch blockchain solution in early 2019 appeared first on Global Trade Review (GTR).

TDB rolls out SME programme for women-led businesses in six African countries

From Global Trade Review (GTR) | By Sanne Wass

The Eastern and Southern African Trade and Development Bank (TDB) is rolling out a credit programme in six African countries to support women-led export-oriented SMEs. Among the first to benefit are Ethiopian businesses, following an agreement between TDB and Ethiopia’s Enat Bank. Under a memorandum of understanding, the two have agreed to set up a credit enhancement facility and work together to build a pipeline of SMEs which qualify for export credit support. Focusing on women-owned and managed businesses, the parties will run the programme in partnership with the Ethiopian Women Exporters Association. The facility will make available loans, guarantees and capacity-building interventions, mainly within the financial services, agribusiness, mining, leather and tanning, and manufacturing sectors. TDB and Enat Bank will also enlist a local SME advisory partner to support participating firms on export readiness requirements. The agreement is part of a larger programme that TDB is rolling out to specialist financial institutions in its member countries. It launched its first facility in Zimbabwe in October and will be expanding it further in the coming months, starting with Burundi and Kenya, and then Zambia and Malawi. The bank has allocated US$3mn to pilot the programme over the next two years in these countries. According to TDB president Admassu Tadesse, Enat Bank was selected as a partner for this facility because of its “unique ethos”. The local bank is known as “the first women’s bank” in Ethiopia. It was initiated in 2013 by 11 Ethiopian women, with a 64% women ownership, and has a special focus on providing financial services to women. “This instrument is aimed at helping Enat Bank scale up its impact, share their risk and reach out to more SMEs, particularly women-led and women-owned SMEs. We also hope that Enat will use this instrument to reach more young entrepreneurs and those companies employing youth,” Tadesse says. According to the World Bank, Ethiopia lags behind the rest of Sub-Saharan African and other developing countries when it comes to lending to SMEs. In fact, it has reported that SME lending in the country comprises only 7% of banks’ lending portfolios. The post TDB rolls out SME programme for women-led businesses in six African countries appeared first on Global Trade Review (GTR).

Validus head of credit and political risk makes move

From Global Trade Review (GTR) | By Sanne Wass

Jared Kotler has joined The Hartford as its new head of credit and political risk insurance (CPRI). He moves from Validus Group, where he was head of political risk and credit, Americas, in New York. Prior to that, he held credit and political risk underwriting and analyst roles at Chubb and Zurich. In his new role, which is based in Washington DC, he will be in charge of the direction, strategy and results of The Hartford’s CPRI unit. The unit provides country and credit risk solutions for financial institutions, multinational corporations, exporters, private equity firms and regional development banks, as well as risk-sharing solutions for export credit agencies. The post Validus head of credit and political risk makes move appeared first on Global Trade Review (GTR).

Barclays opens major UK trade centre

From Global Trade Review (GTR) | By Sanne Wass

Barclays_logo_on-the-move Barclays has launched a new trade centre in Birmingham, which will be dedicated to helping UK businesses export more. Staffed by 30 export and trade product specialists, the centre will provide export support to more than 1,000 firms across the Midlands. Its goal is to “make it easier for UK businesses to find their way in overseas markets, by providing the right finance and all-important advice and guidance”, according to Jes Staley, Barclays’ group CEO. Supporting firms in all sectors, the centre will focus particularly on export activity into India, Pakistan, Bangladesh, across Europe, the Middle East, Africa, as well as Far Eastern markets such as China, South Korea, Thailand and Vietnam. The announcement follows the launch of the UK government’s new export strategy, which sets out its ambition to raise exports as a proportion of GDP from 30 to 35%. It aims to reach this goal through a range of initiatives, such as promoting more peer-to-peer learning and creating an online tool for UK businesses to easily connect to overseas buyers, markets and other exporters. Many of the projects will be business-led, with the government intending to work closely with private sector players to drive exports. In a statement, Barclays says the launch of its new trade centre is “a great example of the private sector support that the department of international trade (DIT) is promoting as part of its new export strategy”. Staley adds that Barclays “is determined to play its part” in helping firms to become “superstar exporters”. “New research we have commissioned on this important subject, published with the Policy Institute at King’s College London, shows that one important way to boost UK exports is to create more ‘superstar exporters’, or UK firms who export 10 or more products to 10 or more overseas markets. Helping these businesses to export more in turn helps smaller firms in their supply chain to grow, and to create jobs,” he says. The post Barclays opens major UK trade centre appeared first on Global Trade Review (GTR).

Markel expands Americas trade credit team

From Global Trade Review (GTR) | By Sanne Wass

Markel Markel Corporation has hired Jennifer Chang as underwriter and senior risk analyst in its trade credit and political risk operation in New York. Chang has nine years of experience in trade credit insurance, within both commercial and risk underwriting. She joins from Zurich in New York, where she spent four years as a senior underwriter, supporting the establishment of the firm’s excess of loss capabilities. Prior to that she held senior positions at AIG and QBE. Chang will report to Phil Amlot, Markel’s head of trade credit and political risk, Americas, and will work closely with underwriters Howard Lee and Christen Mizell. She will also support Arjan van de Wall, development director for the trade credit and political risk team globally. “Jennifer brings broad broker and client contacts to our operation and will play an important role in developing our US trade credit and political risk business,” says Amlot. Ewa Rose, managing director of Markel’s trade credit, political risk and surety operations, adds that the Americas region “remains rich in opportunities” for the firm’s trade credit and political risk business. “We look to capitalise on the cross-selling opportunities that exist within Markel’s broader portfolio. Jennifer’s broad underwriting experience will be a huge asset to our organisation,” Rose says. The post Markel expands Americas trade credit team appeared first on Global Trade Review (GTR).

Kenyan trade financiers “losing the battle” with Chinese banks

From Global Trade Review (GTR) | By Sanne Wass

Kenyan trade finance bankers express concern that they are “losing the battle” with Chinese banks, whose expanding business in the country is increasingly leaving local banks out of the equation or in advising roles only. The concern is raised as China continues to up its stake in the African continent. Speaking on Monday at the start of the three-day Forum on China-Africa Co-operation in Beijing, China’s President Xi Jinping pledged another US$60bn for African development over the next three years. This funding will go towards agricultural modernisation, infrastructure connectivity, green development and healthcare projects. Xi also said China would implement trade facilitation programmes and hold free trade negotiations with interested African countries and regions. Reacting to criticism that Beijing is tangling African governments in a debt trap, he said: “Only Chinese and African people have a say when judging if the co-operation is good or not between China and Africa. No one should malign it based on imagination or assumptions.” In Africa, meanwhile, the Chinese dominance is very real: while financial support is generally appreciated, it’s not always deemed as good for the continent. In Kenya, for example, critics have for long warned against a “Sino-invasion”, as business reporter Dominic Omondi called the problem in an op-ed in Kenya’s Standard newspaper in May. Under the headline “Poor strategy dug Kenya into Chinese trade hole”, he argued that China has “stretched Kenya’s hospitality”, “taking advantage of the country’s open-door policy to flood the market with all manner of goods”. The numbers speak for themselves: as of June 2017, China controlled no less than 66% of Kenya’s total Sh722.6bn (US$7.2bn) bilateral debt, according to the Kenya National Bureau of Statistics in its 2018 economic survey. At Sh478.6bn (US$4.75bn), this is more than a seven-fold increase from China’s Sh63bn (US$625mn) debt to Kenya in 2013. And while Kenya imported goods worth US$7.38bn from China in 2017, it only exported US$114.5mn-worth of goods to the Asian country, according to estimations by Coriolis Technologies. Kenyan trade finance bankers are also worried that they are not getting as big a slice of the Chinese pie as they would wish. This is despite the fact that most Kenyan banks now have Chinese relationship managers, or have even created full Chinese departments, as recently reported by GTR. Timothy Mulongo, trade finance business development manager at Co-operative Bank of Kenya, says Kenyan banks are sometimes cut out of deals altogether by local Chinese branches, a trend he says is “a major cause of concern”. “We see a lot of the Chinese banks setting up locally, so instead of marketing their products from offshore, they would set up a local office and build customer relationships from there,” he says. “What that means is that there are less and less opportunities for local banks to do business. It becomes more or less like local Chinese trade: Kenyan banks would not even have an opportunity to intermediate.” This experience is shared by other banks. George Kiluva, head of trade finance at Commercial Bank of Africa (CBA), points to “the dominance of the Chinese business in the region” as an issue often raised at the Trade Finance Association of Kenya, a local professional body for Kenya’s 44 financial institutions launched last year to discuss challenges and harmonise practices. One challenge, Kiluva explains, is that local public sector construction agencies in certain instances have started to accept performance guarantees on local projects directly from China, rather than locally. “That is our business being exported. The Chinese banks are taking away a lot of our banking business, because we expect to issue these guarantees locally. We’ve continuously looked at how to lobby against this,” he says.   Priced out of the guarantee market While Kenyan banks started to encounter the problem last year, Kiluva says it is now becoming “entrenched”. “Whenever there is a local project that Chinese firms are undertaking here in Kenya, we would get a counter-guarantee from a bank in China, and on the back of a that, we issue a guarantee,” explains Mulongo of Co-op Bank. “But Chinese counterparties are always looking at how to cut their costs. So we have seen that they send out a guarantee directly from a bank in China. It doesn’t make much sense, because you are accepting an instrument from a counterparty that you don’t know.” The trend means that guarantee business is increasingly run without involvement of the local banks, he adds. “They do not play their intermediation role in the industry. And when the local banks are utilised, it is for advising only, not for local issuance or confirmation.” The fact is that Kenyan authorities have gained a high level of comfort in Chinese contractors, after years of working together. “The Chinese say: ‘We’ve done so many projects in Kenya and nothing has gone wrong, you’ve not had the need to demand on the guarantees.’ So why bring in a local bank that will charge extra and make the cost high? You find local banks are losing the battle on that front,” says a trade finance banker who preferred not to be named. Kenyan banks are simply unable to compete with the price of the guarantees issued out of China. According to Janet Mulu, trade finance manager at Ecobank in Kenya, the average price for a performance guarantee by a Kenyan bank is about 2% per annum, whereas Chinese banks typically offer 0.8%-1%, and have even been known to go as low as 0.2%. It leaves banks in Kenya with the challenge to find other revenue streams that they can leverage from Chinese commercial activity, such as collection and payments. More banks are also looking at how they can grow their business through supply chain finance programmes and invoice discounting. In June, for example, CBA launched a new supply chain platform to finance more SMEs, built by Nairobi-based fintech firm Ennovative Capital (ECap). But China’s fast pace will undoubtedly leave some local banks behind. As Theo Osogo, director of business development at Sidian Bank, puts it: “Competition has come, and those who are surviving are the ones who are structuring things differently.” The post Kenyan trade financiers “losing the battle” with Chinese banks appeared first on Global Trade Review (GTR).

HSBC exploring Middle East for next trade finance blockchain trial

From Global Trade Review (GTR) | By Sanne Wass

HSBC is looking to carry out its next trade finance blockchain pilot in the Middle East, according to the bank’s regional head of trade. Speaking to GTR for its upcoming Fintech Issue, Sunil Veetil says the Middle East will be the next region of focus for HBSC when expanding its recently successful trial for a blockchain-based letter of credit solution. The bank made big headlines in May when it announced it had conducted its first live, commercial trade finance transaction on blockchain together with ING for agrifood trading giant Cargill. The deal was completed using the R3 Corda platform, with a cargo of soybeans exported from Argentina to Malaysia. Corda’s letter of credit module, which has been developed by 12 banks, enabled the transaction time to be reduced from a standard five to 10 days, to 24 hours. According to Veetil, the announcement created great interest among clients in the Middle East, some of which HSBC is now looking to involve in the next stage of the trial. He did not give any further information on which clients the bank is in discussions with, but says the Middle East is an “ideal place” for testing blockchain, given the region’s growing importance as a trade hub between the East and West. “If you look at the region, there is a huge reliance on trade, so there are huge benefits that our clients can derive from this technology,” he says. Another “uniqueness” of the Middle East, he explains, is that there’s considerable push for change from the regulators. “There is currently a large focus on blockchain, fintechs are opening up, banks are encouraging fintech and accelerators, and we have our own hubs where we work with locally groomed startups. Definitely I can see that interest is very high in the region, within the government and the regulators. And they are quite nimble, they move quickly,” he says. He adds that HSBC is currently in discussions with UAE regulators, which are keen to provide the necessary support for the bank’s blockchain pilot. The UAE has thrown its weight behind fintech and blockchain more so than any other government in the region. In April, it launched its Emirates Blockchain Strategy, which seeks to transform 50% of government transactions into the blockchain platform by 2021. In doing so it expects to save AED11bn in transactions and documents processed routinely, 398 million printed documents annually and 77 million work hours every year. Meanwhile, Dubai has its own blockchain strategy, run by its Smart City Office.   Ideal for trade finance technology HSBC has also had a great focus on the Middle East for piloting other trade and supply chain finance technologies. Last year, when HSBC and IBM introduced an AI solution to automate and digitise trade finance documentation, they selected the UAE as one the first countries (together with Hong Kong) to go live in. The bank also recently rolled out its trade transaction tracker, a smart-phone based application, which was first piloted in Qatar. And it has just launched a new supply chain finance platform in the region together with Kyriba, a financial software provider. HSBC isn’t alone in its quest: a growing number of global banks and software firms are starting to see the Middle East as a perfect location to test and roll out new trade technology. Standard Chartered, for one, announced last week that it had chosen the UAE to kick off an “industry-first client pilot” for blockchain-based smart guarantees in trade finance, together with Siemens Financial Services and blockchain firm TradeIX. TradeIX’s CFO Daniel Cotti specifically quoted the government’s “enormous drive for digitalisation and blockchain” as one important reason for choosing that location over others. This was followed by an announcement by Finastra, one of the world’s largest financial software companies, that it had joined Bahrain’s accelerator programme Bahrain Fintech Bay, with the goal to expand its open innovation platform FusionFabric.cloud to local fintech startups. Finastra went live with the platform earlier in June in order to accelerate innovation for its 9,000 bank clients by allowing them to easily connect to fintech applications within an open marketplace. “Now couldn’t be a better time to be part of this community as the Bahrain Fintech scene heats up,” says Wissam Khoury, Finastra’s managing director for the Middle East and Africa. While it’s still early days for fintech in the Middle East (in fact, the region had as of January 2017 only attracted 1% of the US$50bn raised globally by fintech startups since 2010, according to consulting firm Accenture), it seems that this is set to change. Fintech Hive, an accelerator which was launched last year in Dubai International Finance Centre (DIFC), kicked off its 2018 programme this week, after having received “overwhelming response” from applicants for what will be its second programme. It got more than 300 applications from around the world – three times more than in 2017. According to Raja Al Mazrouei, executive vice-president of FinTech Hive at DIFC, it is a “testament to the increasing demand for disruptive technologies in the region”. As for HSBC, it has not revealed the specific timeline for the roll-out of its blockchain solution for letters of credit. Vivek Ramachandran, the bank’s global head of innovation and growth for commercial banking, told GTR in May that we can expect to see another few live transactions on the platform, as the bank learns how it interacts with the systems of other banks and corporations. Then the primary focus will be on driving industry-wide adoption. “We’ve still got a few more steps to do before we get to widespread adoption,” he said. The post HSBC exploring Middle East for next trade finance blockchain trial appeared first on Global Trade Review (GTR).

Seasoned alternative financier becomes CEO of fintech firm

From Global Trade Review (GTR) | By Sanne Wass

Investly, a UK-based invoice finance fintech firm, has appointed Wayne Hughes as its new CEO. A seasoned working capital executive, Hughes brings over 25 years of experience working in the UK’s financial services industry, including senior roles with leading alternative financiers such as Demica and Bibby Financial Services. He joined Investly in May as consultant chief commercial officer. Now appointed the firm’s CEO, Hughes has been charged with “making Investly the leading receivables finance platform across the UK and rest of Europe”, the company writes in a statement. Investly launched its invoice finance platform for working capital and e-invoice providers last month. The platform, which allows businesses to sell their invoices, employs emerging technology to improve the speed and drive down the cost of financing, while expanding the reach of businesses that can be served sustainably. For example, the platform utilises open banking APIs to allow businesses to onboard seamlessly by connecting it to their bank accounts. The APIs also help the fintech firm to perform up-to-date monitoring for changes in credit risk to prevent fraud and overextension of limits. In a statement, Hughes says that while market and media commentary tend to focus on fintech’s disruption of incumbent players, he will rather seek to establish “mutually beneficial partnerships across the industry”. “I believe the true value exists in cooperative B2B relationships between fintech partners and existing market participants,” he says. And so instead of going after banks’ businesses directly, Investly is focusing on making its technology available for large origination partners which can then extend invoice discounting to their customers without having to build it in-house. Siim Maivel, founder and the previous CEO of Investly, now assumes the role of chief data officer. He says: “Working with the significantly larger pools of customers of our partners opens up further tools for data-driven credit decisioning, fraud prevention and automation. I will be carrying our long-held vision towards machine assisted credit decisioning engine in our next phase of growth as chief data officer. Credit intelligence will be key in becoming a market leader and sustaining healthy credit model.” The post Seasoned alternative financier becomes CEO of fintech firm appeared first on Global Trade Review (GTR).

Swift recruits Barclays executive to grow gpi in North America

From Global Trade Review (GTR) | By Sanne Wass

Swift has hired Dave Scola as its new head of North America, based in New York. He joins from Barclays, where he worked for almost seven years, most recently as global head of financial institutions. Prior to that, he spent seven years at Deutsche Bank, and previously worked at BNY Mellon. In his new position, which he will take up on October 1, Scola will be in charge of Swift’s innovation and growth strategy in the US and Canada. He will have a particular focus on driving growth in Swift’s global payments innovation (gpi) service and financial crime compliance portfolio. Swift’s gpi was launched last year to speed up settlement time and improve transparency for international payments. The service has so far been adopted by more than 200 financial institutions globally, but Swift recently announced it will move towards universal adoption of the gpi, meaning that all 10,000 banks on its global network will use the service by 2020. Commenting on the appointment, Javier Pérez-Tasso, Swift’s chief executive, Americas and UK, says: “With a proven track record of leadership in the Americas and Europe, Dave is ideally positioned to deliver innovation and growth in North America. We are delighted to welcome him on board as we accelerate our strategy in the region.” The post Swift recruits Barclays executive to grow gpi in North America appeared first on Global Trade Review (GTR).

Standard Chartered and Siemens pilot blockchain-based trade finance guarantees in UAE

From Global Trade Review (GTR) | By Sanne Wass

Standard Chartered and Siemens Financial Services, the financing arm of Siemens, are kicking off what they call “an industry-first client pilot” for blockchain-based smart guarantees in trade finance. They will do so in collaboration with blockchain firm TradeIX, a provider of a trade finance specific open-source blockchain platform, which allows financial institutions to develop their own trade finance applications with open APIs. Using TradeIX’s tools, Standard Chartered and Siemens started building the solution in March. It is among a number of proof of concepts that the bank has conducted on the open platform – and one which it has now decided to pilot with the purpose of commercialisation. Built on R3’s Corda framework, the solution will enable Siemens to digitise and automate its guarantee process – a traditionally paper-intensive business – for customers with large transaction volumes, from initiation of the bank guarantee to the claim handling. It utilises a decentralised ledger and auto-executing smart contracts to provides a streamlined communication tool between the guarantee issuer (in this case Siemens), the bank (Standard Chartered), and the beneficiary (Siemens’ customers). The pilot is expected to be fully completed later this year. “Unlike a letter of credit, which involves multiple parties, performance details and over 100 pages of documents, a commercial bank guarantee is a much simpler instrument to digitise,” Standard Chartered says in a statement. According to Michael Bueker, CFO at Siemens in the Middle East, having such a digital trade finance solution “is an important step” toward making the company’s trade finance operations “smoother, faster and more efficient”. “We are delighted to partner with Standard Chartered in leading such a game-changing transformation, which will help our customers go digital in their guarantee and claim processes and achieve higher efficiency,” he adds. The parties will pilot the solution in the UAE, which offers a good location for such an initiative, given the government’s “enormous drive for digitalisation and blockchain”, Daniel Cotti, CFO at TradeIX, tells GTR. He adds that most of the beneficiaries of the guarantees will be government entities. The UAE has thrown its weight behind blockchain more so than any other government in the region. In April, it launched its Emirates Blockchain Strategy, which seeks to transform 50% of government transactions into the blockchain platform by 2021. In doing so it expects to save AED11bn in transactions and documents processed routinely, 398 million printed documents annually and 77 million work hours annually. Meanwhile, Dubai has its own blockchain strategy, run by its Smart City Office. Commenting on the pilot, Motasim Iqbal, Standard Chartered’s head of transaction banking in the UAE, says: “This is an industry-defining solution which we believe will transform the way guarantees are issued and processed in the UAE. Siemens Financial Services has been a key partner for us to build and develop this pilot on the distributed ledger and we believe that this technology can further be harnessed by the Dubai Smart City initiative.” A range of projects are currently being carried out on TradeIX’s platform. The most prominent one goes under the name Marco Polo and is a platform for open account trade developed with R3 and 10 international banks, also including Standard Chartered. Pilots for this project are currently being prepared and are scheduled to begin in October, before being commercialised next year. The blockchain firm has also worked with Standard Chartered and global insurer AIG on a project to develop a blockchain-powered invoice finance programme for DHL. Now implemented by the logistics company, the solution helps its customers extend their payment period whilst maintaining the company’s receivables at current terms. The post Standard Chartered and Siemens pilot blockchain-based trade finance guarantees in UAE appeared first on Global Trade Review (GTR).

CargoX goes live with blockchain-based bill of lading

From Global Trade Review (GTR) | By Sanne Wass

Blockchain startup CargoX will roll its blockchain-based bill of lading solution into production next month, having carried out its first live pilot. The trial saw the shipment of garments from Shanghai in China to Koper in Slovenia, where it arrived on Sunday, using CargoX’s Smart B/L service. It involved Metro d.d (the importer), Hangzhou Doko Garments (the exporter) and was shipped by a large freight forwarder, whose name has not been disclosed. According to CargoX CEO and founder Stefan Kukman, other trials are currently underway, and the product will be made available to clients next month. The Slovenia-based blockchain firm raised over US$7mn in an ICO in January. The platform, which digitises the issuance and transfer of bills of lading, targets freight forwarders and NVOCCs (non-vessel operating common carriers), who will then be able to offer the solution to their customers. In the first live pilot, which the startup announced completion of today, the bill of lading was successfully processed in minutes, and at a cost of US$15, with the help of a public blockchain network. That’s a significant improvement from the days or weeks that a conventional, paper-based process usually takes, and which costs up to US$100. “This will give us the opportunity to lower the cost of importing goods significantly,” says Miloš Košir, logistics manager at Metro d.d., the pilot’s importer, which runs a network of 200 MANA clothing stores throughout Central and Eastern Europe. “We import hundreds of TEU [twenty-foot equivalent unit] from the Far East, and we are always trying hard to optimise our supply chain. If it raises the safety and reliability of the document transfer, that is an added value for us as well.” Zongyong Lin, CEO of Hangzhou Doko Garments, a manufacturer, and the exporter on the pilot, points to the option of overseeing the flow of the bill of lading, while always having access to an archive, as “advantages that we really think could bring a great benefit to us. We are looking into the opportunity and the effect it would have for our company as a whole”.   A tight race to digitise shipping CargoX is not alone in its aim to help firms involved in global trade digitise and streamline documentation using blockchain. Just earlier this month, Maersk and IBM announced they are live with the early adopter programme for their blockchain-powered global trade platform, called TradeLens, involving 92 participating organisations from across the globe. The platform connects all parties in the trade ecosystem and enables them to interact efficiently and access real-time shipping data. It also allows participants to digitalise and exchange trade documentation – anything from packing lists and shipping instructions to bills of lading and certificates of origin. The announcement followed a 12-month trial phase where more than 154 million shipping events were captured on the TradeLens platform, which will be made fully commercially available by the end of the year. Meanwhile, CargoX has dedicated its efforts to “solving one problem at a time”, says Kukman. In the first instance, the firm is focusing only on the bill of lading, but it plans to later expand its platform to the letter of credit. “Looking at the current situation, we made a proper decision and sticking to our game plan is paying out,” Kukman says. “By successfully completing the official test shipment we are concluding our development and testing phase of our CargoX Smart B/L solution, which will now be available to all logistics and shipping companies.” The firm says it is currently onboarding other large freight forwarders, NVOCCs and their customers. One client that has been named is Swiss freight forwarder Fracht AG. Kukman tells GTR the solution is now “stable from the development point of view”, but that “there might be some product tweaking as we gather feedback from customer trials”. The feedback has so far been positive, but rolling it out across all of the freight forwarder’s customers will take time, he says. “Forwarders of this magnitude are huge and globally dispersed entities, so it is not possible for them to roll out the solution in a very short time. They will evaluate how to integrate our solution into their processes, and we expect that to happen in the coming months. But the calculations of time and money saved speak for themselves – and this might help them improve their fiscal earnings really quickly and efficiently. And with less risk to their customers, too.” The post CargoX goes live with blockchain-based bill of lading appeared first on Global Trade Review (GTR).

Rising temperatures to threaten oil, agriculture and manufacturing exports

From Global Trade Review (GTR) | By Sanne Wass

Rising temperatures could “substantially undermine” export markets across emerging economies, new research from global risk analytics company Verisk Maplecroft finds. The firm’s newly-released 2018 Heat Stress Index assesses countries’ exposure to temperature and humidity conditions. It identifies four regional hotspots expected to bear the biggest economic brunt of rising temperatures over the next 30 years: West Africa, Central Africa, Middle East and North Africa (Mena) and Southeast Asia. In all, 48 countries are rated as being at ‘extreme risk’ from rising temperatures, with African countries accounting for almost half that number. Expected losses all come down to the fact that heat stress slows worker productivity by causing dehydration and fatigue. In extreme instances, Verisk Maplecroft notes, it can also cause death. The risk is therefore particularly high in the agriculture, mining, oil and gas and manufacturing sectors, as work is highly intense and often outdoors. West Africa is the most vulnerable region, given the importance of the extractives and agricultural sectors to the region’s export economy. The research finds that 10.8% of export values from West Africa are projected to be at risk from heat stress by 2045. This compares to 7.9% in Central Africa, 6.1% in Mena, 5.2% in Southeast Asia and 4.5% in South Asia. Using current values of exports, Verisk Maplecroft has translated this into an estimated loss of almost US$10bn per year for West Africa and US$78bn per year for Southeast Asia. Oil outputs from Nigeria and cocoa exports from Côte d’Ivoire and Ghana are “particularly vulnerable”, it says. In Central Africa, Angola and Gabon, where oil accounts for around 95% and 80% of their total exports respectively, are at high risk. The research also points to the manufacturing sector in Southeast Asia as being “under threat”, particularly in Vietnam and Thailand – key exporters of machinery and electrical components – which account for almost two thirds of the region’s total manufacturing export value. Meanwhile, strains on electricity infrastructure from rising demands for air conditioning to combat extreme temperatures will pose a major threat to reliable electricity supplies, particularly in countries that lack robust energy infrastructure. Again, Africa faces the greatest risks of disruption. With the continent’s urban population expected to expand by 235% by 2050, power capacity increases are “unlikely to keep pace with growing demand”, according to Verisk Maplecroft. The impact of rising temperatures could be dire – not just for the exposed economies, but also for global supply chains. “Taken together, the risk of disruption for companies operating in, or sourcing from, affected countries will substantially increase unless climate adaptation measures are implemented,” the company warns. According to Alice Newman, environment and climate change analyst at Verisk Maplecroft, these labour capacity losses could mean price rises for importers if product availability drops or production costs increase. “Supply chain disruption may also drive businesses to consider sourcing from lower risk locations, which would have a major knock-on effect on regional economies,” she says. Verisk Maplecroft’s estimates are calculated based on projected daily temperatures for the period 1980-2045 and data on the current values of exports. The research does not take into account future growth or diversification of export sectors, meaning it could serve as an important reminder of what is to come if exposed countries and companies turn a blind eye to the risk. “Forward-looking companies can mitigate heat stress risk through a range of measures, including sector diversification, changing work patterns, seasonal adjustment of output targets and climate control,” the firm says. But, it notes, such efforts will require “significant investment”, which many developing economies will struggle to mobilise. While this summer has seen Europe gripped by a heatwave, it remains the region most insulated from the economic impact of heat stress. The 10 lowest risk countries for heat stress are predominantly located in Europe, including the UK and Ireland and the Scandinavian countries. The post Rising temperatures to threaten oil, agriculture and manufacturing exports appeared first on Global Trade Review (GTR).

Standard Chartered trade finance banker joins AIG

From Global Trade Review (GTR) | By Sanne Wass

Olga Berlinskaya has left Standard Chartered to join AIG’s supply chain and trade finance team. At Standard Chartered she was an associate director within the capital structuring and distribution group. There she worked with the distribution of financial institution and corporate trade assets into the secondary market, and risk participation in supply chain and receivables finance programmes, covering a European and Sub-Saharan African portfolio of financial institutions and alternative investors. She previously worked at Bank of America Merrill Lynch, HSBC and Olam International. At AIG, Berlinskaya has taken on the role of senior business development and relationship manager. Heading up AIG’s supply chain and trade finance team is Marilyn Blattner-Hoyle, who was promoted to the role last year after Scott Morris moved to Sompo Canopius. With her move, Berlinskaya joins a growing number of trade finance bankers who have left banks and taken the leap into insurance. A relatively recent example is Chris Hall, who moved from Lloyds Banking Group to become a senior underwriter at Liberty Specialty Markets earlier in the year. In 2015, Silja Calac took on an underwriting role in Swiss Re’s credit and surety team, and spoke to GTR recently about changing track almost two decades into her banking career. The post Standard Chartered trade finance banker joins AIG appeared first on Global Trade Review (GTR).

Maersk and IBM go live with global blockchain trade platform TradeLens

From Global Trade Review (GTR) | By Sanne Wass

Maersk and IBM are now live with the early adopter programme for their blockchain-powered global trade platform, called TradeLens, involving 92 participating organisations from across the globe. The announcement follows a 12-month trial phase where more than 154 million shipping events were captured on the blockchain. TradeLens will be made fully commercially available by the end of the year. It all falls under a revised partnership model between IBM and Maersk after industry players had expressed worry over “too much Maersk control”. TradeLens, jointly developed by Maersk and IBM, is a platform aimed at promoting more efficient and secure global trade. It connects all parties in the trade ecosystem and enables them to interact efficiently and access real-time shipping data. The platform will also enable participants to digitalise and exchange trade documentation – anything from packing lists and shipping instructions to bills of lading and certificates of origin – all backed by a secure, immutable audit trail. Its trade document module, called ClearWay, will allow for the automation of various businesses processes, such as import and export clearance, with smart contracts ensuring that all required approvals are in place. The platform also allows for the integration with internet of thing (IoT) and sensor data to measure events like temperature control and container weight. Maersk and IBM believe the blockchain-based system will significantly improve efficiency in shipping, an industry still largely dominated by manual, time-consuming, paper-based processes. During a trial, the platform helped reduce the transit time for shipments to the US by up to 40%, saving thousands of dollars in cost. Among the 92 organisations already signed up are port and terminal operators, ocean shipping lines, customs authorities, freight forwarders and logistics companies. While today’s announcement marks the formal launch of the early adopter programme, about half of the participants have already been onboarded and are now using the platform. In fact, over the last 12 months, during which users have been trialling the beta version, more than 154 million shipping events have been captured on the blockchain-based platform. This includes data such as arrival times of vessels and container “gate-in”, as well as the exchange of documents. According to IBM, this data is growing at a rate of close to 1 million events per day. No banks are a part of the project at this stage, but they are “on our roadmap”, says Marvin Erdly, global trade digitisation leader at IBM Blockchain. Speaking to GTR, he says the project will likely starting piloting with financial institutions next year. “We are currently having discussions and workshops with a lot of financial institutions, both for trade finance and trade insurance, and we will continue to do that and uncover what those capability requirements are and likely have something out in 2019. It’s not something we are going to be doing by the general availability release, but it’s absolutely a critical part of our plans,” he says. The idea is that banks providing trade finance products will be afforded increased visibility of key events affecting their financing, as well as the digital documentation supporting the transactions. It is hoped that this will enable them to free up more capital to lend elsewhere.   No joint venture Erdly emphasises that TradeLens is “definitely not a solution for Maersk”, but rather “an industry platform”. That’s why IBM and Maersk decided to ditch their original plan to form a joint venture to commercialise the platform, as announced in January. Maersk would have owned 51% of the company. But the announcement was followed by criticism, in particular from Maersk’s biggest rivals, who rejected the idea of joining a project that was not driven by the industry as a whole. “Some were worried about too much Maersk control,” Erdly says. “The idea is that you need to have a neutral industry platform. This is not a platform for Maersk, it is an industry platform that needs to be adopted by the industry. We announced we were going to form a joint venture, but we have since received feedback from many in the ecosystem. We did get some pushback, especially from other ocean carriers, who said if this joint venture cannot be more broadly distributed in the industry, it’s not a model they would find the best. We took that very seriously.” Instead, the parties decided to extend their existing collaboration model so that other participants can join as members of the platform, through agreements with IBM or Maersk. “It’s really a better way to drive widespread adoption,” Erdly says, adding that while AP Moller Maersk and IBM will continue to invest in the development of the platform, Maersk Line will be a participant just like any other in the network, on the same terms and conditions that others would sign up to. So far, IBM and Maersk have named only two other ocean carriers as current participants in the solution: Pacific International Lines (PIL) and Hamburg Süd. But, according to Erdly, the parties are in “active discussions” with rival shipping lines and are “very optimistic” that others will join “very quickly”. “The network is as important as the software product itself,” he explains. “The platform becomes more valuable as we add network participants. The most critical point for us is that we are able to bring on other ocean carriers, because that’s where we really get to expand the network.” To date the TradeLens network includes more than 20 port and terminal operators, including PSA Singapore and APM Terminals, a large number of beneficial cargo owners (BCOs), freight forwarders, transportation and logistics companies, as well as customs authorities in the Netherlands, Saudi Arabia, Singapore, Australia and Peru. After the commercial release, which is scheduled to take place by the end of the year, participants will be able to access the core platform through a subscription-based model. TradeLens will also host an “applications marketplace”, where – through APIs – participants can develop and offer value-added services and apps themselves. The post Maersk and IBM go live with global blockchain trade platform TradeLens appeared first on Global Trade Review (GTR).

Swift opens up payments tracking to corporates: “The beginning of a long journey”

From Global Trade Review (GTR) | By Sanne Wass

Corporates will soon be able to track their payments in real time as part of Swift’s global payments innovation (gpi) initiative – a function of the system that was previously only available to them through their banks. Over the coming months, Swift, together with 10 multinational corporates and 12 leading banks, will pilot what it calls an “enhanced multi-bank standard” for tracking payments, aimed specifically at bringing more transparency to multi-banked corporates. Swift’s payments tracker, which enables users to trace cross-border payments in real time, was rolled out in May last year. It came in response to a common complaint from Swift users about the lack of visibility on their payments status. Until now the tracker has only been available to banks, meaning that their clients have been dependent on them to monitor the status of their payments. “The unfortunate thing is that if you work with several banks you end up with several trackers,” Martin Schlageter, head of treasury operations at Roche, tells GTR. “For the initial setup within gpi, banks wanted individual trackers because they can build services around them. It means we would basically have a tracker for each and every bank that we are working with. This is highly questionable.” Roche, a Swiss multinational healthcare company, is among the firms taking part in the pilot. The aim is to start the live testing with two banks in September/October this year. The design for the system has been developed through co-creation workshops with pilot participants, which also include Airbus, Bank of America Merrill Lynch, BBVA, BNP Paribas, Booking.com, Borealis, Citi, Deutsche Bank, General Electric, IATA, Intesa Sanpaolo, JP Morgan, LVMH Moët Hennessy Louis Vuitton, Microsoft, National Australia Bank, Ping An Group, RTL Group, Sumitomo Mitsui Banking Corporation, Société Générale, Standard Chartered Bank and UniCredit. The new capability essentially means that corporates will be able to bypass their banks’ trackers and instead integrate gpi flows in their ERP and treasury management systems. It’s a function that will be particularly useful for companies that want to initiate and track gpi payments to and from multiple banks. When initiating a payment instruction with the gpi tracker in its current iteration, a bank includes a unique end-to-end transaction reference (UETR), which enables it to trace the payment. In the upcoming pilot, a UETR will be created for the corporate client, allowing the corporate to follow the payment in its own system, independently of its banks. Schlageter explains the typical payment process without a UETR: “If you send a message through the old process, you get an acknowledgement that the message is on its way, but then it’s a black box. When another bank or a supplier then has a question regarding this payment, you start sending emails to your bank, they contact the next bank in the chain and so on, and it can take weeks before you get a copy of the Swift message to realise that fees were deducted, or a payment got stuck or whatever. It’s cumbersome and not transparent at all. It really eats up resources.” “Corporates want to track payments in real time and get confirmation of credit to the beneficiary’s account,” says Swift’s global head of corporates Marc Delbaere. “This new multi-bank capability will enable that experience in a consistent fashion, across multiple banks and multiple corporates. Having this information instantly in the corporate treasury space is what corporate customers are asking for.” But the pilot is just “the beginning of a long journey”, says Schlageter at Roche, noting that it will take time to implement, and there will still be shortfalls: not all banks are live with gpi. Currently, of Swift’s network of 11,000 financial institutions, 180 banks have signed up. However, he is hopeful that the new standard will eventually make cross-border payments easier and more transparent for a company like Roche, especially now that Swift is making it mandatory to include a UETR in all payment instructions across the network from November. Swift also recently announced it is moving towards universal adoption of the gpi, which will see all banks on its global network use the service by 2020. “We will achieve full transparency of all our flows, so this is quite ideal,” Schlageter says. “Once we are live with this, it will change the nature of how we do cross-border payments and how much resources we have to put into supporting these.” He adds that the initiative is also of strategic importance to Roche. “It’s important that we can still rely on Swift as our central comprehensive payment channel. That’s why we have been pushing Swift to close this last hole, where they are really losing ground, because they were not living up to corporates’ expectations.” The post Swift opens up payments tracking to corporates: “The beginning of a long journey” appeared first on Global Trade Review (GTR).

New deal to bolster green investment market in Palestine

From Global Trade Review (GTR) | By Sanne Wass

Bank of Palestine has secured a €12.5mn credit line from the French development agency AFD for the financing of green and renewable energy projects in the West Bank and Gaza. The facility is aimed at developing a market for green investments in Palestine by giving Palestinian enterprises, in particular SMEs, easier access to green finance. Bank of Palestine will on-lend the money to projects related to environmental efforts and renewable energy. It will also target retail, industrial, tertiary and agricultural sectors in order to replace high energy consumption equipment. This includes supporting hotels, offices, hospitals and supermarkets in saving energy and reducing water consumption. In the agricultural sector, it will promote energy efficiency in irrigation and biogas technology. A focus on green and renewable energy is essential to secure future energy sources in the Palestinian territories, which today rely heavily on Israel for their electricity imports, and energy costs more than anywhere else in the Middle East. Researchers have found Palestine’s main renewable energy sources to be solar energy, wind energy and biomass, which could significantly reduce the energy dependence on neighbouring countries. The green credit line was agreed under AFD’s green finance programme Sunref, a scheme that provides local banks with long-term loans on favourable terms. It also offers technical support, assisting banks in project financing and helping companies implement green strategies. Bank of Palestine has previously partnered with AFD under the Ariz loan guarantee programme, an instrument by which AFD provides up to 50% credit risk cover on corporate loans. Starting in 2014, the programme has so far financed 255 projects worth a value of between US$20,000 and US$300,000. Bank of Palestine is the West Bank’s largest financial institution and lender to SMEs, a sector that represents 90% of the Palestinian economy. In the last 10 years its assets have grown from US$500mn to almost US$5bn, according to the bank. The post New deal to bolster green investment market in Palestine appeared first on Global Trade Review (GTR).

Barclays to offer digital invoice finance after taking “significant” stake in fintech firm

From Global Trade Review (GTR) | By Sanne Wass

Barclays is to expand its invoice finance offering for SME clients, having partnered with MarketInvoice, a fintech firm and Europe’s largest online invoice financing platform. In doing so, Barclays has committed to acquiring a “significant minority stake” in the firm, the bank says in a statement. The bank also plans to fund invoices via the platform, growing its asset base in the small business segment. The aim, Barclays adds, is to give SME clients “seamless access to innovative forms of finance”. As a result of the partnership, customers will get access to MarketInvoice’s single invoice finance product as well as broader digital invoice finance facilities. MarketInvoice’s platform allows SMEs to upload their invoices and sell them to investors, thus unlocking cash during the invoice’s payment period, which can often be up to 120 days. Since it was founded in 2011, MarketInvoice has funded more than 90,000 invoices worth over £2.7bn. The new product will be introduced to Barclays customers “over the coming months” in East Midlands, West Midlands, Herts and North West London, with a full roll-out across the UK set to commence in 2019. MarketInvoice is among a sea of fintech firms seeking to tap into a booming invoice financing market. As reported by GTR in its recent fintech feature, these firms differentiate themselves through technology, utilising emerging tech to shore up security and speed up transaction times. Most recently, MatchPlace, a platform that has been offering foreign exchange and payment services for SMEs since 2016, launched a peer-to-peer invoice financing service in the UK. Seeing a “huge potential” for invoice finance across Europe, the firm expects to soon expand its service to Portugal, France and Spain, and aims to build a book of £30mn within the next three years. There seems to be plenty of space for growth within this market, as more companies (SMEs in particular) move away from traditional banking products to more innovative ways of optimising their working capital. MarketInvoice recently announced that in one year it almost doubled the average amount advanced to UK businesses – from £606,000 in 2016 to £1.14mn in 2017. The partnership with MarketInvoice is undoubtedly an effort by Barclays to capitalise on this trend and stop the flight of SME customers toward alternative financiers. “Invoice financing gives small businesses the power to obtain funding in a fast and innovative way. It is a product that has come of age in the digital era, it’s efficient, effective and controllable for small businesses,” says Ian Rand, CEO of Barclays Business Bank, commenting on the new partnership. Barclays is the first UK high street bank that MarketInvoice has partnered with. Anil Stocker, MarketInvoice’s CEO, says: “It’s exciting to be combining the knowledge and footprint of a 325-year old British banking institution with MarketInvoice’s tech-led online finance solutions. Bringing this together in a strategic partnership can only mean good news for UK businesses, with the segment we’re targeting responsible for upwards of 60% of UK employment.” The post Barclays to offer digital invoice finance after taking “significant” stake in fintech firm appeared first on Global Trade Review (GTR).

Trump’s Iran sanctions deadline: What businesses need to know

From Global Trade Review (GTR) | By Sanne Wass

Firms doing business in Iran “risk severe consequences” as Donald Trump’s first batch of secondary sanctions against the Middle Eastern country come into effect today. August 6 is the first of two deadlines that the US president gave companies to “wind down” activities in Iran when in May he announced he was pulling the US out of the Iranian nuclear deal – officially known as the Joint Co-operative Plan of Action (JCPOA). Calling the JCPOA “a horrible, one-sided deal that should have never, ever been made”, Trump said the US would be instituting “the highest level” of economic sanctions against Iran. The JCPOA was agreed between Iran and China, France, Russia, the UK, US and EU in 2015. While the US maintained its tough stance on US persons dealing with Iran, the JCPOA meant it agreed to lift its so-called secondary sanctions – those that apply to non-US persons and entities engaged in Iranian transactions. Those are the sanctions now being reimposed. However, with the EU expected to enforce a so-called ‘blocking regulation’ – a statute that makes it illegal for any EU company or person to comply with those US sanctions – EU firms will be caught “between a rock and a hard place” when it comes to doing business in Iran and complying with the US requirements. So says Leigh Hansson, partner at law firm Reed Smith, where she heads up the international trade and national security team. In an interview with GTR, she explains what changes will come into effect and how they will impact business.   GTR: August 6 will see the first batch of US secondary sanctions reimposed on Iran. Which sanctions are being reenforced and which type of businesses should be especially aware of these changes? Hansson: On August 6, the US government will re-impose secondary sanctions on the following:
  • The purchase or acquisition of US dollar banknotes by the government of Iran;
  • Iran’s trade in gold or precious metals;
  • The direct or indirect sale, supply or transfer to or from Iran of graphite, raw or semi-finished metals such as aluminium and steel, coal and software for integrating industrial processes;
  • Significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial;
  • The purchase, subscription to or facilitation of the issuance of Iranian sovereign debt; and
  • Iran’s automotive sector.
These sanctions also apply to associated services, and therefore all businesses which engage in dealings related to these industries should carefully review their transactions that directly or indirectly relate to these sectors to ensure they are not inadvertently violating these newly imposed sanctions.   GTR: Trump’s second deadline is November 5. What sanctions will come into force then? Hansson: On November 5, the US government will reimpose secondary sanctions on the following:
  • Iran’s port operators and shipping and shipbuilding sectors;
  • Petroleum-related transactions, including the purchase of petroleum, petroleum products or petrochemical products from Iran;
  • Transactions by foreign financial institutions with the Central Bank of Iran and other Iranian financial institutions;
  • The provisions of underwriting services, insurance or reinsurance; and
  • Iran’s energy sector.
Like those that will be reimposed in August, these sanctions also apply to associated services, and therefore all business which engage in dealings related to these industries, such as shipping and those involved in the oil and gas industry, should make sure they are not engaged in activities that may violate sanctions. On November 5, the US government will also re-designate many of the persons and entities who were removed from the List of Specially Designated Nationals (SDN) pursuant to the Joint Comprehensive Plan of Action (JCPOA) in January 2016. Following November 5, engaging in transactions with these persons and entities can subject non-US persons to sanctions.   GTR: The EU is anticipated to impose a so-called ‘blocking regulation’. What would this mean for EU firms doing business or looking to do business in Iran? Hansson: The EU blocking regulation has been amended to include the US sanctions that are being reimposed on August 6 and November 5 and is expected to come into effect any day now. Under that regulation, EU persons are prohibited from complying with any requirement or prohibition that is based on the reimposed sanctions. EU firms are therefore between a rock and a hard place when it comes to doing business and complying with the US requirements. It is worth noting that the EU blocking regulation has been in place since the early 1990s and there is little, if not any, record of enforcement. In contrast, there is a long history of the US government enforcing its sanctions programmes against non-US entities. However, many EU countries have stressed their commitment to the JCPOA, so it may be that this could be a new era of enforcement by the EU.   GTR: In what way have firms in both the US and Europe reacted to the announcement of these new sanctions? Are they prepared for the deadline? Hansson: President Trump made his announcement the afternoon of May 8, and by 9pm we had received countless calls and emails from both US and EU companies inquiring about what they needed to do to remain in compliance with US sanctions. Those calls and emails have not let up since then. Within weeks of this announcement, a number of large companies announced they would exit Iran. Among those companies are Total, the French oil company, Danish shipping company Maersk, and Peugeot. Since the US announced it would not grant sanctions waivers for European companies seeking to remain in Iran, it seems the number of companies announcing that they are ceasing Iranian business has increased. In sum, most companies are prepared or close to being prepared for the deadlines.   GTR: What consequences could firms face if they do not comply with these changes? Hansson: The US takes compliance with its sanction programmes, especially its Iran programme, very seriously. If persons and companies fail to comply with these sanctions, the US has the authority to put that person or entity on the SDN list. US persons are prohibited from engaging in all transactions and services with SDNs and even non-US persons run the risk of being sanctioned if they engage in significant transactions with certain SDNs.   GTR: How do you expect the new US stance to impact Iranian trade going forward? Hansson: As I mentioned, the US takes its Iran sanctions programme very seriously and hostilities between the two countries seem to be escalating. I do not expect the sanctions to be reduced anytime soon and I think we will see significant enforcement actions by the Office of Foreign Assets Control (OFAC) against non-US companies. Consequently, I expect to see most companies polish up their compliance programmes, which will then cause companies to withdraw from transactions even remotely related to Iran. The post Trump’s Iran sanctions deadline: What businesses need to know appeared first on Global Trade Review (GTR).
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