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From Global Trade Review (GTR) | By Finbarr Bermingham
Economists at National Australia Bank (NAB) have downplayed the impact of trade tariffs between the US and China, saying instead that the key battleground will be technology and intellectual property (IP).
Tariff barriers may “shave a few percentage points off global GDP” in the very worst case scenario, but are relatively immaterial in the grand scheme of things, Christy Tan, head of markets for Asia at NAB, told a press conference in Hong Kong yesterday.
“The trade deficit and US$200bn [to be cut off the US trade deficit] by 2020 is just a number. At the end of the day, if China is not buying from the US, it’s buying from Brazil, or South Korea, for instance. If the US is not buying from China, it’s not going to just manufacture locally, it will shift its demand to India, Sri Lanka, etc. The key issue is technology and IP.”
China is looking to increase its role as an important player in tech industries such as electric vehicles and artificial intelligence (AI).
President Xi Jinping has clearly laid out plans for China to become a leader in innovation, spearheaded by the “Made In China 2025” initiative to upgrade the country’s industry. It’s been described by the Council on Foreign Relations as “the real existential threat to US technological leadership”, but according to Tan, it is “not up for negotiation”.
Meanwhile, the US has long harboured concerns over China’s alleged IP theft, as well as its heavy government support for such industries.
Dinny McMahon, a fellow at the MarcoPolo programme of the Paulson Institute and author of the recent book China’s Great Wall Of Debt, tells GTR that China will replicate the heavy subsidies it applied to traditional industries in the technology space over the coming years.
“China’s vision of how it becomes a rich nation, how it builds new drivers of growth, is a big bet on new industries: robotics, electric vehicles, semiconductors. It wants a forced march to become a global leader in those industries, and that requires the same techniques it applied to heavy industries in the past,” he says.
These opposing stances appear to place the superpowers on a path for further collisions.
The US has already hit Chinese smartphone maker ZTE with paralysing sanctions, barring it from importing from US companies. As a result, China’s second-largest telecoms company has this week been forced to halt major operations, after being banned from purchasing the Google Android software and Qualcomm chips on which it depends.
ZTE was penalised after breaking the terms of previous sanctions laid on after it was found to be shipping goods to Iran and North Korea, then subsequently lying about it.
Huawei, China’s largest smartphone company, appears to be next in the US’ crosshairs. AT&T and Verizon have already dropped plans to sell Huawei phones, amid allegations of stolen IP, while it is also alleged to be under investigation for flouting US sanctions on Iran.
The US government has also blocked the sale of a number of US companies to Chinese buyers, including the proposed takeover of Moneygram by Alibaba-owned Ant Financial.
If further sanctions are handed down, Tan expects an immediate retaliation.
“China responded immediately [to ZTE sanctions], by hiking the tariffs on sorghum by 178.6%. China is making its presence felt, sending the message clearly that if you hit tech and IP, there will be retaliation where it hurts quite badly, the US agri sector. Steel and aluminium are small issues in the grand scheme of things. Tech and IP is something that is going to be long drawn,” she says.
As it stands, tit for tat tariffs have seen the US government place levies on products ranging from washers and solar panels to aluminium and steel. In addition to the whopping levy on sorghum, a cereal used in livestock feed, China has retaliated with tariffs on products such as fruits, nuts and frozen pig parts.
In high-level trade negotiations which are set to resume next week, the US is demanding that China cut its trade surplus with the US by more than US$200bn – the logic of which was questioned by NAB analysts at the briefing.
“It’s hard to frame a trade negotiation in that way, trying to put a numerical value on reducing your bilateral trade deficit. They are pretty meaningless things, they’re a consequence of savings and investment decisions by thousands of people. So the idea that you can make it some numerical number by lowering it by US$200bn is not an economic reality. No economist would frame it like that,” said Peter Jolly, global head of research.
The post Forget tariffs, tech will be the key battleground in trade war appeared first on Global Trade Review (GTR).
By Sanne Wass
Evergreen Line has partnered with Bolero International to offer paperless bill of lading and dispatch documentation via its ShipmentLink portal.
The new partnership makes Evergreen Line the first container carrier to integrate with Bolero’s e-bill of lading (eBL) solution.
The two new services will “enhance connectivity for exporters and importers with banks, insurers, regulators, customs and port authorities” and “lower shippers’ costs while making data transfer more accurate, efficient, reliable and secure”, according to the two companies.
The e-bill of lading (eBL) application allows carriers to create, send and manage bills of lading digitally, which will lead to a more rapid issuance and transmission. This is particularly important for short-sea shipments, where a paper-based bill of lading sometimes arrives later than the vessel, making it difficult for importers to pick up cargo on a timely basis.
Going paperless also allows reviews and amendments to be carried out online, and speeds up cash flow by avoiding delays that often come with paper-based documents. With eBL, carriers will be able to release goods far quicker, thus speeding the payment process to shippers.
In addition to the eBL service, the new electronic dispatch function allows the exchange of a wide range of shipping documentation, including packing lists, commercial invoices, certificates of origin and other customs-related credentials, licences and inspection reports.
Putting everything online, the shipping firm seeks to prevent documents being lost in transit or fraudulently copied, and it enables the transmission to be done in an encrypted form when necessary.
Ian Kerr, Bolero’s CEO, says the partnership will “help transform” the shipping industry.
“Bolero’s eBL platform has already been proven in bulk cargo trades and initial container-based transactions by corporates such as Cargill, BHP Billiton and Reliance Industries, but now with Evergreen we are taking a very significant next step in the digitisation of world trade by putting our technology at the disposal of a wider community of container shippers and NVOCCs,” he says.
While companies worldwide have long been looking at ways to automate their business, shipping continues to be an industry largely dominated by manual, time-consuming, paper-based processes. In response to the urgent need for digitisation, platforms like Bolero and EssDocs have emerged to help electronify trade documents or remove paper from the process altogether.
Other shipping companies are taking a different approach, utilising new technologies to build their own platforms from scratch.
Maersk Line, for one, announced a joint venture with IBM in January, which will release a blockchain-powered digital platform for use by the entire global shipping ecosystem. It will utilise distributed ledger technology to give large networks of disparate trading partners – including manufacturers, shipping lines, freight forwarders, port and terminal operators, shippers and customs authorities – a single shared, immutable, real-time view of a transaction.
The joint venture is soon due to release two capabilities, one of which will go under the name “paperless trade” and will digitise and automate paperwork filings through smart contracts. The platform will also employ other cloud-based technologies such as artificial intelligence (AI), the internet of things (IoT) and analytics to help companies move and track goods digitally.
Meanwhile, Bolero itself is also looking at how to redesign its eBL service using blockchain technology, following the signing of a memorandum of understanding with fintech consortium R3 in October.
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By Finbarr Bermingham
Pacific International Lines (PIL), PSA International and IBM Singapore have successfully tested a blockchain platform on a supply chain network between Singapore and China.
The trio tracked cargo movement from Chongqing to Singapore using IBM technology. The trial showed that blockchain allows for multimodal logistics capacity booking that complies with regulations.
It also confirms its suitability for track and trace in real time and permissioned access control for ecosystem participants.
The project built on a memorandum signed in August 2017, through which the organisations pledged to collaborated on supply chain innovations on the blockchain. In a release, they say that testing revealed “there is now sufficient evidence to show that the concept can be taken to the next stage”.
This will involve engaging more participants from the supply chain and logistics world, however none of the parties responded to GTR‘s questions as to what that might involve.
The work ties in with Singapore’s efforts, along with authorities in Hong Kong, to launch the first blockchain trading corridor. The Global Trade Connectivity Network (GTCN) is backed by multiple banks and trade service providers, and is scheduled to launch at the start of 2019.
Roger Tan, regional CEO for Northeast Asia at PSA (formerly Port Authority of Singapore, before privatisation), says that the work along the trade route between China and Singapore could help boost Singaporean involvement in the Belt and Road Initiative.
“PSA’s collaboration alongside our partners and relevant stakeholders in this blockchain trial demonstrates our efforts to enhance physical and digital connectivity, as well as to improve efficiencies along the global supply chain,” he says.
Teo Siong Seng, PIL managing director, adds: “We are highly-committed to this idea because we believe the wider application of blockchain across the global logistics and shipping businesses will lead to much greater operating efficiencies, security and transparency. It is the future for our industry.”
The post Singaporean entities complete blockchain for supply chain trial appeared first on Global Trade Review (GTR).
By Finbarr Bermingham
The long-anticipated trade war between the US and China looks to be underway, with the Trump administration readying global tariffs on metals imports that would disproportionately target Chinese output.
Tariffs of 24% on steel imports and 7.7% on aluminium have been mooted and are under consideration after US investigations found that the imports of those metals are a threat to US national security.
In response, China said it had found evidence of dumping of styrene imports from the US, a chemical which is essential in the manufacturing of many plastics. The Chinese government has called for tariffs of between 5 and 10.7% on styrene imports.
Experts are warning that this could escalate very quickly and that there are infinite potential routes a trade war could take, including tit for tat tariffs, and countervailing duties relating to perceived government subsidies.
The US is also coming towards the end of an investigation into Chinese violations of the intellectual property of US corporations. The probe was launched last year after the invoking of section 301 of the Trade Act of 1974.
“The area I think is most worrying to most people is section 301,” Alexander Capri, senior fellow on trade and supply chains at the National University of Singapore, tells GTR.
The probe could uncover IP theft or infringement through the mandatory joint ventures that were a big part of foreign direct investment in China over recent decades, or through outright corporate espionage. Either way, to recover the perceived damages, the US reserves the right to slap tariffs on Chinese goods.
“It’s anybody’s guess, whether that becomes a flat tariff against all Chinese imports, or if they single out product groups. Will it happen? Nobody can predict anything that will happen with this administration, it’s totally mercurial. If it does happen, nobody would expect the Chinese to sit on their hands. They’d retaliate against probably US companies based in China. Either imposing taxes or whatever,” Capri says.
All of this could be bad news for US companies already in China, or those looking to enter the market. The escalation comes at a time when many fintech companies are looking to “crack China”, and the evidence suggests that these sorts of companies could get caught in the crosshairs.
Last month, for example, the US government blocked the US$1.2bn sale of MoneyGram to Alibaba’s Ant Financial platform.
“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago. Despite our best efforts to work co-operatively with the US government, it has now become clear that the Committee on Foreign Investment in the United States (CFIUS) will not approve this merger,” said Alex Holmes, CEO of MoneyGram, a money transfer and payments company.
Chinese telecoms giant Huawei also fell afoul of US regulators in January, when it was forced to scrap plans to offer customers Huawei handsets after members of Congress lobbied against the plan.
Eyeing developments carefully, no doubt, will be business leaders at Ripple, the blockchain-powered payments company, which this month partnered with LianLian, a Hong Kong firm, to offer cross-border payments into China.
The Mainland market is high on the Ripple agenda, with CEO Brad Garlinghouse telling GTR last year: “When I think about Ripple in China, we will almost certainly identify a partner and enter in conjunction.”
Hyperledger is another high profile fintech organisation attempting to make headway in China. In a recent interview with GTR, executive director Brian Behlendorf talked about the challenges of entering the market and appearing as an international firm.
“[We wish to be viewed] as a global organisation. If you look at our member organisations, we’ve got two of the 20 premier members based in Mainland China, Baidu and Wanda. I like to celebrate that,” Behlendorf said.
Should the US continue to block the expansion of China-based tech companies into its market, then it could realistically expect the same rules to be applied to US businesses in China.
“The Chinese have a certain advantage when it comes to their retaliatory measures in that they can weaponise democracy. They can specifically target firms from specific states and, depending on how much sway those companies have with their political representatives, that can influence politics in the US. Mexicans do that around Nafta by blocking some agricultural imports from certain states in the US,” Capri says.
He adds: “Here’s the bottom line, I think an escalation into a tit for tat is going to leave a lot of bloody noses anywhere. It’s not something anyone wants to see, and nobody can predict how far it will go.”
The post Could fintech be caught in crosshairs of US-China trade war? appeared first on Global Trade Review (GTR).
An increase in the accumulation of large datasets on agribusiness in Africa is proving crucial to the financing of a sector often overlooked by banks.
“We’re seeing the impact of the availability of data having a much more positive impact on access to financing,” says Antois van der Westhuizen, managing director of John Deere Financial, Sub-Sahara Africa.
He tells GTR that, over the last 12 to 18 months, data on Africa’s agribusiness sector has increased, which is bringing about a change in financiers’ opinions on financing smaller-scale farming enterprises.
The influx of data has been driven by companies such as John Deere, which collects and processes massive amounts of information on factors such as soil type, seed variety and weather by connecting its own pieces of equipment to one another as well as to owners and operators. In addition to working with commercial farmers engaged in precision farming, the company has also started gathering the same information from small-scale operators to calculate how they can achieve profitability, and, ultimately, bankability.
As the agri sector evolves, it continues to attract much attention from technology entrepreneurs keen on developing new big data platforms and solutions. Aerobotics, a South African-based startup specialising in aerial data analytics, is one such company.
“At the moment it’s very much a data collection play,” the company’s co-founder and CTO, Benji Meltzer, tells GTR.
Aerobotics’ current product is an “early warning” system which helps farmers discover problems early on, and provides them with an overall assessment of their crop. The company has developed a platform that identifies the data using drone and satellite imagery and then diagnoses it. The longer-term plan is to become more predictive and diagnostic; to be able to capture the data and use it for longer-term projects, says Meltzer.
Aerobotics’ focus until now has been on large-scale commercial farmers, given the logistical challenges such as access to technology and the internet that exist in more rural locations. It has been involved in some pilot projects with insurance companies but is now working actively with Nedbank on finalising an agri data-gathering partnership.
Banks favour a partnered approach
Despite the increase in information and recent advances in big data analytical and computational capability, commercial banks are reticent to go it alone when engaging with small-scale farmers on a bilateral basis. Partnerships with the likes of commodity trading companies and agricultural co-operatives, which can act as the obligor and facilitator, remain key.
This thinking is linked to strict compliance and regulatory requirements, says Zhann Meyer, head of agricultural commodities in Nedbank’s global commodity finance team.
“Engaging in input financing programmes with thousands of small-scale farmers operating on one hectare of communal land each makes effective management of production and delivery risk a cumbersome and expensive exercise. We definitely think that big data is a helpful tool, but we have to engage with a partner to make this work on a collective basis,” he says.
“Most of our finance products are based on derivatives of classic pre-export finance models where you would typically pay for roll out of inputs and then expect the crop to come back as repayment for these loans. For us to practically implement these structures in our footprint countries, we would require a partnership based on both a reliable aggregator acting as our obligor, as well as accurate datasets to make informed decisions about crop germination and yield estimates.”
He agrees that banks are becoming more comfortable with weather derivatives and index-based insurance products, which he says are becoming more predictable and accurate – purely because of the length of the period of data gathering and advancements in technology.
Banks aside, other, more specialised financiers such as leasing companies and hedge funds are showing increased interest in investing in the sector.
“They take big data a lot more seriously in terms of analysing affordability than what we see from the regional banks,” says van der Westhuizen at John Deere Financial.
What’s more, financiers of all kinds across the continent are coming round to the idea of using data when making business lending decisions.
“In Kenya and Tanzania, 72% of the population makes use of mobile banking, and only 8 to 12% use formalised banking systems. If you want to apply for a loan, you have to give bank statements, so the majority of clients won’t be able to do that,” he explains.
But, he says, this is changing as more banks and leasing companies are now prepared to use clients’ mobile money statements along with production data, provided by the likes of John Deere, to verify if they will be able to repay their loans.
“We’ve seen more and more loans being made available for those clients to start purchasing inputs as well as mechanised equipment,” he adds.
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Singapore bank OCBC is trialling the use of deep learning satellite technology in a bid to reduce risks in the financing of crude oil.
The bank has engaged specialist data analytics firm ImageSat International (ISI) to estimate crude oil levels in tanks stored in undisclosed locations in Asia, using optical images collected via satellite. Data taken from the images, collected over a period of time, help build an algorithm which gives OCBC a 90% accurate gauge of the oil it has financed.
Since the information is linked directly to the commodity rather than the terminal at which it is stored, it eradicates the potential for fraud and inaccuracy in the reporting of the bank’s collateral position, the bank says.
GTR can reveal that OCBC has successfully completed a proof of concept with ISI and is looking to trial the technology further in other commodity verticals, where the bank provides storage and project financing against an underlying collateral position.
Phase two of the pilot, which will commence shortly, will add additional infra-red satellite imagery to boost the accuracy of readings to 95% since infra-red satellites can penetrate cloud cover and therefore sidestep potential adverse weather conditions.
“The first phase focused on oil inventory in Asia, looking to see if we could get an accurate independent estimation of oil in tanks that the bank is financing. That took some time, we had to identify where the bank would want to do this, and decided on a location in Asia. We worked with ISI over the course of months and came up with an accuracy level of 90% on the oil inventory we financed. We closed that off in January 2018. After this phase, we’re going to look at the second and third phase, focusing on metals and agricultural products,” Barend van IJsselstein, head of energy commodities at OCBC, tells GTR.
OCBC claims to be the first bank to apply this technology to the commodity finance sector. However, it has also been deployed to analyse oil inventory stocks by organisations including hedge funds. For instance, funds are using it in Cushing, Oklahoma – a major oil trading hub – to help predict the price of crude.
This technology combines advancements in satellite and smart technologies. Using shoe-box satellites, which come at a fraction of the cost of traditional, more cumbersome satellites, ISI takes pictures of the co-ordinates provided by OCBC, from space.
The company then uses its deep learning software to analyse the images. The algorithm scans the oil inventory for storage tank depletion, looking at the sinking level of the lid and the shadow cast by the sun on the inside of the tank. Detecting these patterns allows analysts to estimate how much oil is in the tank.
Furthermore, using bandwidth purchased from infra-red radar satellites, then analysing those images, the company can gauge the contrast in the temperature between the oil stored inside the tank, the tank itself and the gas-filled spaces in the tank to predict the volume of oil stored in the tank.
“We are providing the ability to monitor areas or locations from space,” Liron Vine, head of marketing at ISI, tells GTR. “We then apply our comparison analytics in which we identify the changes spotted in the area since the last picture that we sampled and over several periods of time. This enables us to assess the status of the pictured area. For example: if it’s a site – is it active or not, or are construction works progressing and what phase they are in? Another example: we can provide precise volumetric measurements of crude oil tanks with floating lids. By measuring the lid height – that is changing according to the oil volume – we can calculate exactly how much oil is in every tank.”
One of the main purposes of this sort of technology is to reduce the risk of fraud, which continues to plague certain commodity markets in Asia. High-profile cases in recent years include the Qingdao metals fraud, which exposed many banks to fraudulent warehouse receipts, obtained multiple times against metals stocks which may not have existed.
Last year, ANZ was exposed to a warehouse receipts fraud in the nickel sector, worth more than US$300mn. The bank was left with ownership of 83 fraudulent warehouse receipts which pertain to cargoes of nickel stored at Access World warehouses in Singapore and South Korea.
These instances, combined with the multitude of fraud cases that go unreported every day, have left banks looking to fintech for answers. One of the most frequently-cited pluses of blockchain technology is that it can help eradicate double financing, since data entered onto the blockchain cannot be altered. Other tools such as LMEshield are geared towards stopping warehouse receipt fraud.
Satellite technology that is able to track and monitor commodity stocks offers some assurances to banks that these cargoes do, indeed, exist and that they are what they claim to be.
“To my knowledge there hasn’t been a fraud case in oil in Asia for quite a long time. However, fraud in general in commodity finance remains a big risk factor, especially as the dollar amounts in oil and energy are quite large,2 van IJsselstein says. “Anything a bank can do to reduce risk in financing is something that’s very useful. We see this as one of those additional tools. As we go along the process we are discovering extra benefits, such as reducing travel costs and CO2 footprint. These are side benefits, but the main benefit is that we can enhance our risk management and mitigation process.”
ISI says the technology is “highly scalable” and can be used across commodities, tracking ship traffic and following the stocks through the entire supply chain.
“We can quantify everything that is visible from containers, cars in parking lots and finished goods in factories and through that, create customised indexes,” Vine explains.
The post Exclusive: OCBC to use deep learning satellite technology in oil financing appeared first on Global Trade Review (GTR).
US blockchain company Skuchain has partnered with Japanese tech giant NTT Data to build a blockchain platform for supply chain and logistics management.
The solution, which combines blockchain technology with internet of things (IoT) innovations such as radio-frequency identification (RFID), has already been trialled in Japan’s manufacturing sector, where it has been successfully used to improve supply chain efficiency.
The solution is being jointly marketed by Skuchain and NTT Data in Japan and further afield.
Skuchain and NTT Data are also working with companies in Japan to use the supply chain platform to offer inventory financing offered through the blockchain platform – a key part of Skuchain’s offering in other industry sectors such as food and agribusiness.
Skuchain is also in the process of implementing a supplier financing programme based on its blockchain technology with one of Japan’s premier automotive manufacturers, with the California tech company set to make big strides in the Asian supply chain space this year.
At the crux of the product is blockchain-enabled track and trace technology, which helps manufacturers with complex supply chains ensure that products are traceable at every node. By harnessing IoT, such as RFID, it means factory workers don’t have to go through the arduous process of scanning each pallet of goods to ensure it is there, since RFID tech allows for goods to be scanned on a collective basis, using mobile phones.
The blockchain element comes with Skuchain’s Popcodes app, which allows for tracking and tracing goods at every point of the supply chain. Enabling all of this technology together reduces stock wastage, increases efficiency and allows companies to have greater control over their supply chains.
Rebecca Liao, Skuchain’s vice-president for business development and strategy, says that the work done on the physical side of the supply chain is more advanced than that of the financial side. But as large companies making big investments in blockchain technology, banks may have to follow in their footsteps, or be left behind.
“Banks were early to the story, because blockchain started as fintech. But they move slowly: there’s a lot involved with bank technology that is outside their control, including interoperability, standards and regulations. That is a much slower process, but on the supply chain side, our idea has always been to go after large anchor buyers because they have whole supply chains with lots of needs. We’re very excited to have Japan on board, their supply chains need no introduction,” she tells GTR.
The post Skuchain uses blockchain and IoT for new supply chain platform appeared first on Global Trade Review (GTR).
A joint venture between Maersk and IBM is to release a blockchain-powered digital platform for use by the entire global shipping ecosystem.
The two firms have announced they will establish a company that will commercialise and scale a platform jointly developed on open standards, which aims to address the urgent need to provide more efficiency, transparency and simplicity in the movement of goods across borders.
Based on blockchain technology, it empowers large networks of disparate trading partners – including manufacturers, shipping lines, freight forwarders, port and terminal operators, shippers and customs authorities – to collaborate through one platform. It will establish a single shared, immutable, real-time view of a transaction without compromising details, privacy or confidentiality.
Banks providing digital trade finance products will similarly get increased visibility of key events affecting their financing, as well as the digital documentation supporting the transactions. The hope is that this will free up more capital for banks to lend elsewhere.
The platform will employ other cloud-based technologies such as artificial intelligence (AI), the internet of things (IoT) and analytics to help companies move and track goods digitally.
The announcement of the joint venture is the next step in a collaboration that started in June 2016, which has since involved pilots with various parties, including DuPont, Dow Chemical, Tetra Pak, Port Houston, Rotterdam Port Community System Portbase, the Customs Administration of the Netherlands, US Customs and Border Protection.
The new company, which has not yet been named, will now enable IBM and Maersk to commercialise and scale the solution to a broader group of global corporations. According to a statement by the two firms, many companies have already expressed interest and are exploring ways to use the new platform. These include General Motors, Procter and Gamble and freight forwarder and logistic company Agility Logistics. Customs and government authorities such as Singapore Customs, Peruvian Customs and the global terminal operators APM Terminals and PSA International are also considering the platform.
An IBM spokesperson tells GTR that two core capabilities are expected to be fully released within a few months.
The first is a shipping information pipeline which will provide full supply chain visibility, enabling all actors involved to securely exchange information about shipments in real time. The second capability, “paperless trade”, will digitise and automate paperwork filings by enabling end-users to securely submit, validate and approve documents. Smart contracts will ensure that all required approvals are in place, which will speed up approvals and reduce mistakes.
According to Bridget van Kralingen, senior vice-president, IBM Industry Platforms, the joint venture will speed up blockchain adoption for “millions of organisations”.
To address specific needs of the industry, Maersk and IBM are also establishing an advisory board of industry experts, which will provide guidance and feedback on the platform, services and open standards. Michael White, former president of Maersk Line in North America, has been appointed as CEO of the new company.
Maersk chief commercial officer, Vincent Clerc, will be the chairman of the board. He says the joint venture marks “a milestone” in the conglomerate’s efforts to drive the digitisation of global trade.
“The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit. By joining our knowledge of trade with IBM’s capabilities in blockchain and enterprise technology, we are confident this new company can make a real difference in shaping the future of global trade,” Clerc says.
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The we.trade blockchain consortium has added another founding partner, extending its geographical coverage into the Nordics market.
Nordea joins Santander, Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit as a we.trade shareholder, becoming the first bank in the Nordic region to deliver a customer-facing trade solution based on distributed ledger technology (DLT) – also referred to as blockchain.
We.trade is a digital platform for managing, tracking and protecting trade transactions between SMEs. It is currently being developed by the founding banks together with IBM, which was selected as the project’s IT vendor earlier this year. Originally known as the Digital Trade Chain, the group later rebranded as we.trade.
The platform will be powered by Hyperledger Fabric 1.0 and harnesses both DLT and smart contracts. It links the parties involved in trade (the buyer, buyer’s bank, seller, seller’s bank and transporter) and registers the entire trade process, from order to payment, displaying it in an at-a-glance, user-friendly interface, and guaranteeing automatic payment when all contractual agreements have been met. The platform is fully automated and available 24/7, making the order-to-payments process quicker than the traditional exchange of documents.
Speaking at a panel at Sibos back in October, the eight shareholders said that the consortium had no plans to grow its shareholders for the time being. Instead, the message was that the group was looking to have as many banks as possible – and as quickly as possible – onboarded to the platform on a licence-type basis.
It seems that by welcoming the Nordic bank as a shareholder, the consortium has changed its mind. But Anne-Claire Gorge, global head of product management, trade services, at Société Générale, tells GTR that Nordea’s “strong interest” in the project dates back several months.
“From the beginning Nordea was willing to be a shareholder,” she says. “It took some time to settle the deal. When we met in October in Toronto it was very well advanced but still confidential. Obviously this was a very good opportunity for the consortium to add the Nordic countries in the scope of the solution.”
At Sibos, the shareholders also announced their intention to establish a not-for-profit joint venture company (JVCo) by the end of the year, in Ireland, to manage and distribute the platform. The JVCo will be co-owned by the now nine founding member banks.
Although backed by the founding banks, the we.trade consortium is an open bank platform available for other “member” banks to join in order to create standardisation, collaboration and consensus across banks to support trade.
“We are currently talking to several banks and offer them to join as member banks. They will have their own node on the blockchain and will be able to give their clients access to we.trade. We’ll create a user group to enable them to contribute to the solution’s roadmap,” says Gorge.
She reiterates her own message from Sibos: “It’s faster and easier to onboard as a member bank. We can’t exclude the possibility to add new shareholders, but we want to stay swift and agile which is not easy with too many shareholders.”
The commercialisation of the platform is anticipated in Q2 2018, while it is expected that test customers of the founding banks will use the platform sooner than that.
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“Banks that are excited by blockchain either don’t have a clue or are happy to be disintermediated.”
Those were the words of Bart Ras, research fellow at Windesheim University of Applied Sciences and managing director of Greensill Capital, speaking at the Supply Chain Finance Community Forum in Amsterdam last week.
His point, he later expounded, is that even though blockchain technology “is great”, its success will result in a lot of losers – chief among them will be banks.
Speaking to GTR on the sidelines of the event, Ras said that banks tend to focus on one optimisation element within the trade chain. While this is a “big advantage” for banks for now, many of them are missing the opportunity to zoom out and take a view of the entire value chain. As a result, they are blind to the reality that many steps before and after this action are still being carried out through old-fashioned processes.
He used the postal system as a metaphor to explain the apparent futility of what banks are doing to digitise their trade processes.
“For example, Royal Mail could say: ‘If you write me a letter, I will type it into an email, then send it electronically to the other side of the world, and then print it off, and deliver it. And by doing so I’ll save seven days, because there’s no shipping involved.’ But, what will happen, of course, is that people will try to write – and send – the email themselves. And then I don’t need my postman anymore; I don’t need my bank.”
This is not to say that banks will disappear entirely, he explained, but rather that they will, in future, function only as pure balance sheets.
“Banks are many different things, but quite a few of [their services] can be better performed by a distributed ledger technology/blockchain solution,” Ras said.
The bigger issue for banks comes with the impact of Basel III on borrowing costs, and whether they will continue to be considered as the best source from which to borrow money.
“They’re being hunted from both sides,” said Ras, referring to the situation for banks as a “perfect storm”.
The good news, he said, is that banks are deeply integrated into governments, meaning that they will be protected by regulatory changes for a long time and “therefore won’t go overnight”.
He ended by calling on industry players to be honest about blockchain’s downside and the potential harm that it could bring to institutions in the trade ecosystem.
This also goes for industries outside of the world of trade. Smart contracts could, for example, be used to find people who violate traffic rules, putting ticket-issuing traffic officers out of work. Likewise, the role of a notary in the property-selling process could arguably be done on the blockchain.
“It’s a cool technology, but not everybody will be happy with it,” Ras said.
The debate over bank disintermediation has stepped up a notch in the past couple of years in light of the strides made in blockchain and its possible use in trade.
“The sector is ripe for disruption because it’s so antiquated. It’s a paper-laden process, there’s still message formatting created in the 70s such as Swift and EDI [electronic data interchange]. It’s pre-internet and it’s not current,” Mark Pryor, CEO of US commodity trading software company The Seam told GTR earlier in the year.
Some blockchain companies involved in trade are already offering downstream financing solutions. Skuchain, for one, offers supply chain financing as an incentive for more suppliers to sign up to use its blockchain solution.
“We have our own special purpose vehicle, a wholly-owned subsidiary of Skuchain. We buy the goods from the supplier, we take title to the inventory. They get immediate working capital relief, at a rate that’s better than the terms the buyer had to offer or that any bank would offer,” says vice-president for business development and strategy at Skuchain Rebecca Liao.
By Jacqueline Woo
29 November 2017 – French container shipping giant CMA CGM continues to put down roots in Singapore, where it is establishing a hub for its digital activity in Asia.
A recent step has been to name a new chief digital officer for Asia based here. The role involves seeking opportunities in relation to transport and logistics start-ups that can complement CMA CGM services.
The appointment comes amid efforts by the firm to further develop its digital and e-commerce business, such as offering end-to-end solutions, said chairman and chief executive Rodolphe Saade.
“The world is changing and we are becoming more digital… and this will play an important role in the company’s operations,” he noted. “We believe that Singapore is ahead of the curve in terms of the digital business. We could have had someone from China or Hong Kong, but we decided that the place to be in Asia to develop our digital activity is Singapore.”
Mr Saade said CMA CGM, the world’s third-largest carrier, has been trying to boost its presence in Asia by consolidating operations here since completing its $3.38 billion acquisition of Neptune Orient Lines.
The group has relocated its regional base from Hong Kong to Singapore and has set up a container terminal joint venture with port operator PSA.
It expanded capacity at the terminal earlier this year to four million TEUs (twenty-foot equivalent units) – double the initial annual capacity when the facility started operations in July last year.
In April, it set up CMA CGM Academy in partnership with IE Business School, Singapore Management University and Sciences Po to develop its staff in the region. CMA CGM has around 8,000 employees in Asia, including about 1,000 here, out of a global headcount of more than 29,000.
The firm posted stellar third-quarter results this week, with net income of US$323 million (S$434 million), compared with a US$268 million loss in the same period a year earlier. It carried a record high of nearly five million containers, thanks largely to strong growth through the Ocean Alliance pact.
The global container shipping industry is slowly emerging from a protracted slump, although the capacity glut has remained strikingly unresolved.
Mr Saade said he expects the growth of the Ocean Alliance – comprising some of the world’s biggest container operators, including China Cosco Shipping – to translate into higher activity in Singapore.
CMA CGM has 27 services calling at the Port of Singapore each week. “Singapore has become a very strong base in Asia for us now, and we hope that this will continue in the years to come,” said Mr Saade.
This article first appeared in The Straits Times.
Ovamba, a fintech firm that uses blockchain and other new technologies to connect investors with African SMEs, has facilitated a €30mn deal for the purchase and export of cocoa for Cameroonian commodity marketing company Producam.
The transaction marks Ovamba’s first foray into commodities export: the firm has previously only been involved in domestic trade. It also marks the borrower’s first use of non-bank financing to fund its exports.
Ovamba is both a direct impact investor and syndicates larger funds that meet its “purpose-driven profit” philosophy. It combines off-balance sheet asset-backed lending with e-commerce, logistics and flexible warehousing to provide SMEs in Africa’s trade and commodities sectors with capital.
In this transaction, Ovamba brought together African Merchant Capital, Courtyard Capital and an unnamed Japanese marketplace lending platform to fund 10,000 tonnes of cocoa aggregation and export for Producam. The transaction is secured by the inventory with a one-year tenor.
A spokesperson from Ovamba explains the process to GTR:
“Ovamba uses advanced data analytics at a product, company, sponsor and sovereign level to identify potential businesses where our capital and expertise can bring the companies to the next level. We operate a blockchain-based, local tribal and ethnic language mobile and web platform that brings together the collateral manager, farmer, trader and investors and directly invests via this seamless data and transaction system.”
Ovamba provides the capital on the trader’s behalf to buy the product either at farm or warehouse delivery, with Ovamba itself investing in the more difficult tranche – that which covers the farm to warehouse.
Ovamba also provides quality control, reviews and confirms the work of the collateral manager, and then funds the delivery to the offtaker, sharing the profits and fees with the trader.
“Judging by the current demand, this is only the beginning of a significant pipeline of opportunities for Ovamba to fund,” reads a release issued by the US-founded fintech company.
Founded by Emmanuel Neossi in 2012, Producam has farms and operations in Kekem, Cameroon’s western region.
Neossi reportedly approached Ovamba before the start of the 2017 cocoa season with a request for support of capital to buy cocoa from its current and new cocoa suppliers to meet the increasing demands of its buyers, who are major cocoa product manufacturers throughout Europe. Ovamba then reached out to its pool of international investors and secured the capital required “faster than any bank that Neossi had ever used in the past”, it says.
Ovamba’s co-founder and CEO, Marvin Cole, comments on the deal: “Ovamba’s vision for cash crops commodity marketing is to make it possible for farmers to get good prices for their produce and to determine the size of their profit margin. Ovamba plans to fund the transformational growth and manufacturing potential of as many commodity marketing companies as we possibly can.”
The fintech company apparently has strong commitments in place to fund other coffee and cocoa suppliers in the Central and West Africa regions.
“We are really excited to have expanded our funding expertise into commodities exports. Many sectors are affected by the downturn in the oil industry. Helping Africa’s best performing sectors is good for the economy and is a smart portfolio differentiator for our investors,” says Viola Llewellyn, co-founder and president of Ovamba.
The post Fintech firm Ovamba moves into African commodities exports appeared first on Global Trade Review (GTR).
The Sepa (single euro payments area) Instant Credit Transfer (SCT Inst) scheme is now in operation and offering instant payment solutions across eight European countries via some 600 payment service providers (PSP).
SCT Inst, introduced by the European Payments Council (EPC), was launched this week in response to concerns that the emergence of various domestic real-time payment solutions would result in a fragmented market across Europe.
The new platform allows the electronic transfer of up to €15,000, across Europe, in less than ten seconds. Transactions can take place at any time and on any day of the year, including weekends and holidays. Transactions covered by the scheme must be denominated in euros.
Currently, Sepa credit transfers are processed in batches whereby a corporate will send payments to its bank at various times during the day, and all transactions will be submitted and cleared at the end of the day.
Countries currently participating in the scheme are Austria, Estonia, Germany, Italy, Latvia, Lithuania, the Netherlands and Spain. Businesses, corporations and administrations from these countries can now make and receive instant euro credit transfers within their national borders as well as cross-borders, with the funds being available immediately.
The geographical scope of SCT Inst is expected to progressively span over 34 European countries. More European countries are expected to join the scheme in 2018 and 2019. Among them are PSPs from Belgium, Finland, Germany, Malta, the Netherlands, Portugal and Sweden.
The scheme is also expected to evolve to reflect market needs, such as regular review of the maximum amount per transaction, to make it more attractive to larger organisations.
Chair of EPC, Javier Santamaría, says: “With its numerous advantages, the SCT Inst scheme fully anchors European payments in the anywhere, anytime digital world. SCT Inst is the only regional initiative of this kind in the world. The European payment community can be proud of the work achieved to make instant euro credit transfers a reality today.”
Italy’s UniCredit, one of the banks that has been involved during the development and testing stages, says it conducted its first instant payment from Germany to Italy on the platform this week. The transaction was completed in 2.5 seconds.
Global co-head of corporate and investment banking at UniCredit, Gianfranco Bisagni, says: “We are excited about the benefits this new service will bring to our clients – promoting speed and transparency through 24-hour, 365-days-a-year coverage and real-time notifications of successful payments.”
Two successful blockchain pilots have been completed in Australia’s grain industry, which show that the technology can eliminate counterparty risk and track the provenance of agri produce.
The work was completed by CBH Group, Australia’s largest co-operative and a grain exporter, and AgriDigital, an Australian company which develops blockchain-based solutions for the grain industry and which has developed a cloud-based commodity management system.
The first pilot successfully created tokenised digital title for a commodity in exchange for digital dollar payment. This eliminates the burden of counterparty risk and payment security that traditionally faces farmers.
Via AgriDigital’s platform, digital title to a delivery of oats was generated and held in the farmer’s digital wallet. Seven days later, settlement between the farmer and buyer occurred in an atomic transaction. For the period up until payment, the farmer had clear ownership of the digital title token that represented the physical grain delivery and therefore the security over the asset.
The pilot was then extended to track the provenance of organic oats from the farm through the supply chain, including through the processing and packaging of those oats to ensure that their organic status was maintained through to the retailer.
AgriDigital founder Emma Weston tells GTR that the company will launch a third pilot phase next month and continue development through 2018, with plans to launch a commercial solution on blockchain in 2019. Its cloud-based commodity management platform was launched in August and has been adopted by grain growers, buyers and bulk handlers in Australia and overseas.
Commodity supply chains, with the inherent risk of duplication of stocks and financing, counterfeiting, corruption and unfair trade is viewed as one of the areas for blockchain to take early root. It can also bring efficiency to an industry which often works in archaic fashion.
“Using consensus mechanisms such as Raft, with 50 millisecond block times, means payments can be processed in real-time, a significant improvement to the delay experienced with traditional banking transfers,” Weston says.
She adds: “Blockchain has enormous potential for all participants along the agri supply chain. Creating digital title and matching it to payment in an atomic transaction is significant for farmers and indeed all sellers – they retain ownership over their asset up until the moment they receive payment from the buyer, which eliminates counterparty risk. Additionally, the data collected and stored along the blockchain gives clear visibility over commodity ownership, thereby improving security over the asset.”
A number of other companies have been actively working in this space, with similar ambitions. The Seam, a US commodities trading and agribusiness software provider, this year launched a blockchain consortium for the global cotton industry. Working with IBM, it intends to build a blockchain-based trading ecosystem on Hyperledger Fabric.
Another US company, Skuchain, is working with avocado farmers to ensure the provenance of their organic crop, using blockchain.
The post Australian grain exporter completes successful blockchain pilots appeared first on Global Trade Review (GTR).
By Nguyen Thi Bich Ngoc
3 Nov 2017 – AddVentures, the corporate venture arm of Thailand’s Siam Cement Group (SCG), has led a Series A investment into logistics startup GIZTIX. GIZTIX is backed by 500 TukTuks and KK Fund who invested in the startup’s funding round last year.
The series A round saw participation from other VC firms, the startup said, declining to divulge more. GIZTIX will make an official announcement on November 21 to reveal further details including its growth strategy following the fundraise. The investment marks the first direct funding into a startup by SCG, which established its investment arm just this year and since then has become a limited partner in vehicles operated by Vertex Ventures and Wavemaker Partners.
GIZTIX said proceeds from the Series A round will help it expand in Thailand and other Southeast Asian countries, facilitating the growth target of 10x in the next 24 months. The company claims a 30 per cent month-on-month growth over the past 15 months. Founded in 2015, the Bangkok-based logistics marketplace offers online bidding, booking and payment services, aiming to automate logistics processes.
AddVentures’ first investment is an undisclosed amount funnelled into Wavemaker Partners’ second Southeast Asia-focused fund, which targets seed to series A deals primarily in B2B startups. Wavemaker is the SEA and Southern California representative of the Draper Venture Network. AddVentures’ latest fund-of-funds transaction is an investment in Vertex Ventures SEA Fund III. The SCG’s venture arm said in an earlier announcement that it had a laser focus on smart manufacturing, robotics, automation, energy efficiency tech, logistics, predictive analytics, and e-commerce enablement.
The fund eyes businesses worldwide including Thailand, Southeast Asia, Silicon Valley, Israel and Shenzhen (China).
This article first appeared on Deal Street Asia.
Founding member banks of the Digital Trade Chain (DTC) consortium, now re-branded as we.trade, are taking the final steps to bringing their blockchain trade finance platform for European SMEs into production and are enticing the wider banking community to join the project.
The consortium, which includes Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit, briefed the market on their progress and future plans at the Sibos conference in Toronto last week. Chief amongst the platform’s latest developments were: the addition of Santander as a founding member, bringing the total number to eight; a name change – the platform now goes under the name we.trade, which the consortium feels is a “stronger brand name”; and the intention to establish a not-for-profit joint venture company (JVCo) by the end of the year, in Ireland, to manage and distribute the platform. The JVCo will be co-owned by the eight founding member banks.
For the first time, during a panel discussion at the conference, the eight banks also outlined a roadmap for full deployment of the platform and the onboarding of additional banks, a list of comprehensive benefits for both banks and their clients, and options for add-ons further down the line.
The finer details
We.trade is a digital platform for managing, tracking and protecting trade transactions between SMEs. It harnesses both distributed ledger technology (DLT) and smart contracts: it links the parties involved in trade (the buyer, buyer’s bank, seller, seller’s bank and transporter) and registers the entire trade process, from order to payment, displaying it in an at-a-glance, user-friendly interface, and guaranteeing automatic payment when all contractual agreements have been met. The platform is fully automated and available 24/7, making the order-to-payments process quicker than the traditional exchange of documents.
In order to use the platform, companies have to be clients of the banks involved. This is not only a technical requirement – the banks need to perform the appropriate know your customer (KYC) procedures on all the companies that transact on the platform. However, companies themselves are not onboarded onto the platform.
IBM was selected by the consortium as the project’s IT vendor earlier this year, and is currently in the process of developing the platform, which will be powered by Hyperledger Fabric 1.0.
“We’re now well down the track as far as the delivery of the platform software is concerned,” Keith Bear, vice-president of financial markets at IBM, told GTR at Sibos.
The platform is being built with API (application programming interface) layers, which will allow each of the participating banks to be onboarded either through ‘software as a service’ (SaaS) (cloud) or on-premises (computer or server-based) software, depending on the bank’s capabilities.
“The immediate focus is around SME-to-SME trade, providing interfaces to track and trace, so that the positioning of goods, payments, invoice financing – all elements of the lifecycle in that part of the transaction, are captured on the blockchain,” explained Bear. “But, we’re not, for example, on the platform itself bringing shipping agencies onto the blockchain – it’s done through APIs. That’s one of the reasons why the time to market is as early as it is.”
Efforts to scale up
The founding member banks are now in the process of marketing the solution to their peers in order to build scale.
“It’s not a private club of eight banks, but a solution that we also want to make available to other banks,” Roberto Mancone, global head of disruptive technologies and solutions at Deutsche Bank, told the audience at Sibos. “The concept is not to grab market share from the others, but to try and create consensus among the banks. We’re ready to go live soon, which is why we’re presenting this opportunity to you today.”
Mancone outlined the consortium’s plans for the roll out of we.trade: a joint venture company will be established by the end of November; release 1.0 of the platform will go live with test clients in February 2018; and, at the start of Q2, it will have full deployment to the market, and will also begin onboarding new banks. Project governance has already been agreed and set up: a legal entity has been appointed and shareholder structure has been settled.
Expansion of the platform is targeted for the whole of Europe, and beyond.
“This is just the start,” said Vinay Mendonca, global head of product and propositions, global trade and receivables finance at HSBC, speaking on stage at Sibos, adding that he expects adoption of the platform to grow to the bank’s entire global footprint.
Mendonca noted that the platform has been of particular interest to HSBC because it is focused on the open account space, where the market is currently seeing faster growth compared to more traditional trade finance instruments. The fact that the platform may help banks to generate new revenue streams in this space was highlighted as a distinct incentive for banks to join the project.
The Sibos panel was also keen to expound to the audience that – perhaps unlike its rivals in the trade finance industry – much work has already gone into developing the platform, and that it has far surpassed the “design thinking” phase. Mancone noted that the 150 people involved in the development work have racked up more than 500 conference calls and 120 meetings thus far.
“This is not a platform where we ask banks to join to build it, this platform will be built and delivered, so that even those banks that don’t have the capacity, or the knowledge, or the full ability to develop something will be able to join,” he explained.
The platform’s timescale has been hailed as one of its key differentiators: “Other initiatives out there are targeted at the end of next year in terms of being in production, so the fact that this is going to be in production in the early part of next year is a reflection on the fact that it will be a significant achievement,” IBM’s Bear told GTR.
The consortium has implemented a “first-in, first-served” principle for onboarding, and banks that are not able to join today can lock in an “onboarding slot” for a future date.
For the companies, in addition to real-time tracking and tracing of where their shipment is and conditional settlement through the banking system, a chief benefit is the ability to identify any known counterparts in their supply chains. “Later on, clients may start to rate each other, based on reliability, timely delivery and timely payment,” Mancone said.
In time, other non-financial banking services will be added to the platform – which will be key for its development.
“If we integrate the physical supply chain into the platform, then we can do pre-shipment finance, and, sure, there is a performance risk, but if the deal is done, at the end, the payment will come through the platform, so [banks] will get paid,” explained Anne-Claire Gorge, global head of product management, trade services, at Société Générale, speaking on the Sibos panel.
The topic of fees dominated the conversation during the audience Q&A, with many seeking further clarity on the platform’s pricing. They were told that – as is the case today – banks on the platform will be welcome to price their services in a way that they feel is appropriate.
Banks will pay SaaS fees – to onboard, maintain the platform and help build out the roadmap. The panellists agreed that the valued added to banks – regardless of size – will be “totally proportionate to the costs”, but they did not clarify if a standard fee will apply to banks of all sizes.
Questions also arose on the commercial structure of the platform itself, and the differentiation between the founding member “shareholder” banks and those that subsequently sign up to the platform.
Although the consortium said that it hasn’t ruled out further capital rounds and additional shareholders further down the line, its plan is not to grow the founding member banks for the time being. The intention now is to have as many banks as possible – and as quickly as possible – onboarded to the platform on a licence-type basis.
Nevertheless, the founding members stressed that there will be no difference in user experience for any of the banks’ clients and that all banks involved in the platform – consortium member or not – will be involved in its future development.
“It’s much easier to join as a member bank, to buy the licence, than to become a shareholder, so it will be faster too,” said Société Générale’s Gorge.
The consortium credits its nimbleness thus far to date with the fact that it has remained a relatively small group.
The post Banks unveil roadmap for we.trade blockchain platform appeared first on Global Trade Review (GTR).
By Lara Edwards
August 15, 2017 – An invoice lands on your desk. Let’s say it’s for some printer cartridges. It’s a bit strange because it isn’t from the local printer company you usually work with, but you don’t really give it a thought. Perhaps the cartridges needed to be sourced elsewhere for some reason this time. You’re busy, it isn’t worth worrying about and you pass it for payment.
Stop! While it might be an innocent invoice, it also might not be. Are you sure those printer cartridges were actually ordered and actually arrived in your office?
Invoice fraud is on the rise and rapidly so. Some estimates suggest UK small and medium-sized businesses (SMBs) lose more than £9bn to invoice fraud every year – that’s equivalent to £1,658 per SMB.
And if you think you wouldn’t be fooled by the printer cartridge scam scenario, could you be sure about any of the following?
You receive an email or a phone call purporting to be from someone wanting to feature your company’s details in a directory. The directory might be a familiar name; it might not. Either way, they’ve got a compelling offer: the directory will be going to huge numbers of people or to your perfect target market. Taking the space seems a ‘no-brainer’ so you do. The hefty invoice arrives and you duly pay it. But the directory – or your listing in it – simply never appears. You’ve been had.
You might be wary of someone selling directory space, but what about something that seems to come from a more official source?
Fraudulent Patent Office invoices do the rounds – in fact, they’re so notorious, the government has even published an official warning. The invoices look nearly identical to the real ones. The only trouble is that the bank account details are different.
Or what about an official-looking renewal reminder letter or invoice from a company offering its services to help you protect your intellectual property (IP)? Again, it’s something the government has warned businesses about, so common is the fraud.
As you will have realised by now, invoice fraud is more common than you think. While you may have spotted one of the cruder attempts in the past, could you be so certain with something more sophisticated?
Here are our top tips for minimising the chances of you being taken in by an invoice fraudster:
Train your staff. It’s all too easy to think that picking up problems is someone else’s job, but when it comes to invoice fraud, it’s something everyone needs to think about. Brief your receptionist to be on the alert. Have reminders on staff noticeboards or in your update bulletins.
Check your invoices. Compile a list of companies your business regularly purchases from and raise a red flag whenever you get anything from anywhere else or whenever bank details differ. Cut out manual steps that are prone to human error. This is something that technology can help you with. Make sure employees are being vigilant when they pass an invoice for payment – did they definitely see the directory listing? Did the printer cartridges definitely arrive?
Report the crime. If you spot a scam, alert the necessary authorities. In the UK, you should report invoice fraud to Action Fraud, the UK’s national fraud and cyber crime reporting centre – it’s easy to do it online at www.actionfraud.police.uk. If the fraudulent invoice arrived in the post, the government advises you to keep both the invoice and accompanying envelope in a plastic sleeve and handle it as little as possible to help the authorities take further action where they can.
Invoice fraud is a growing problem. Don’t be a victim – be aware of it and have the necessary measures in place to help ensure you’re able to spot it, not fall for it.
This article Sneaky tricks of the invoice fraudster to look out for first appeared on Concur.
16 Oct 2017 – Digitization in the freight transport industry is inevitable, and investment in technology savvy startups is a gateway for formerly traditional transporters.
The world’s third-largest shipping line has recently shown it is willing to partner with digital natives offering innovative solutions. The company was one of the four major shipping lines to invest in the New York Shipping Exchange, an ocean freight contracting startup. CMA CGM also partnered with Alibaba to boost its visibility to small and medium enterprises in China, showing its deals are not limited to startups.
Yet, beyond those two deals, opportunities abound for traditional carriers to boost customer service with digital tools.
Since the process of information integration within digitization involves all participants, the benefits of transparency can be applied to each step in the supply chain: pricing, contents of containers, tracking products’ location en route, among others. Online customs processing, too, is emerging as a popular tool.
Given all the different use cases, it would be unfeasible for a single company’s R&D team to develop all the new tools. That’s why established companies worldwide, like D.B. Schenker or UPS, are targeting startups to facilitate their expansion and growth.
In Saadé’s words, adapting to a “digital ecosystem” is a “transformation,” and startups — developed for specific business cases through an incubator — can help accelerate the process.
This article first appeared in Supply Chain Dive.
IBM and a number of banks have launched a new blockchain-powered solution to clear and settle cross-border payments using cryptocurrency. The move could see cryptocurrencies integrated with IBM’s trade finance blockchain projects at a later stage.
As Sibos, one of the world’s largest finance events, commences today, the tech giant announces it has developed a new cross-border payments solution in collaboration with blockchain startup Stellar and KlickEx, a money transfer operator in the South Pacific region. More than 13 banks are involved in the project.
The aim is to help simplify the way money is transferred across borders. Today, making international payments in multiple currencies can be costly, labourious and error-prone and require multiple intermediaries. By utilising the Hyperledger Fabric blockchain framework and Stellar’s cryptocurrency lumens, IBM says it can reduce the time it takes to transfer funds across borders “from days to seconds” as well as the cost to do so.
Speaking to GTR, Keith Bear, vice-president of global financial markets at IBM, says the payments solution is currently in “an early stage of implementation”. The parties have successfully conducted pilots and the first transactions are now flowing on it. As to when it will go into production, Bear says is still to be “determined through consultation with the banks that we are working with”.
The participating banks include BBVA, Sumitomo Mitsui Financial Group, Mizuho Financial Group, National Australia Bank, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia, Kasikornbank Thailand, RCBC Philippines, TD Bank, Wizdraw HK and “several big names” which have not been named. They will help expand the solution beginning early next year.
The initial focus will be on retail and SME payments in the South Pacific region, but ultimately the solution is designed to augment financial flows worldwide for all payment types and values. In the future, it could also be expanded to enable parties to enter trade agreements, manage trade documentation, secure letters of credit and finalise transaction terms with immediate payments.
“Clearly the ultimate value will come from a high level of adoption, but we are starting off with a low-volume environment around the Pacific Islands, which is a great place to start because it’s – relatively speaking – a neglected payment corridor. It demonstrates what the potential is and how it can work in practice and then we can work out, together with the banks, how to scale from there,” he says.
Settlement instructions are provided via smart contracts on the Hyperledger blockchain platform, but the actual settlement will be carried out via Stellar’s network. Stellar’s custom cryptocurrency lumens will “act as a bridge currency between fiat currencies on each side of the transaction”, Bear explains. The customer doesn’t touch the cryptocurrency themselves.
KlickEx, he adds, will serve as a market maker, buying and selling lumens for the banks to facilitate the process.
This method for settling cross-border payments is already being used or explored by some banks and payment providers. More than 100 financial institutions have to date joined Ripple’s enterprise blockchain network, RippleNet, to settle global payments leveraging blockchain technology. SEB, for one, has processed more than US$180mn in payments for a large corporate customer between Sweden and the US over the network.
Another example is BitPesa, an online payment platform, which helps thousands of clients in Kenya, Uganda, Tanzania, Nigeria and the Democratic Republic of Congo make international payments using bitcoin to settle between fiat currencies.
Cryptocurrencies in trade finance
IBM’s decision to enter the cryptocurrency space may be of particular interest to the many players already working with the tech company on a range of other blockchain projects.
For example, IBM and seven major European banks – the Digital Trade Chain (DTC) consortium – are soon going live with a blockchain trade finance platform for SMEs. The platform will enable buyers and sellers to agree on their transaction in a smart contract, to follow the physical flow of the goods through a track and trace system and to obtain financing.
IBM is also working with UBS and a number of banks on a similar project under the name Batavia. Both powered by Hyperledger’s Fabric, the platforms focus on the digitsation of processes around trade finance, but they use conventional methods for the payment itself.
According to Bear, the fact that the technology is consistent means that the new payments solution is “well-suited” to integrate with its other projects. As such, we could well see other consortia extend their trade finance platforms to involve payments using cryptocurrencies.
“Whilst the immediate implementation is just focused on payments, the potential is certainly to go into other areas as well. The overall design we are taking is certainly extendible to other asset classes,” Bear says.
“This solution is another example, on top of the what’s happening with DTC and Batavia, to potentially provide a better service to SMEs or corporates using trade finance facilities from their banks. Not only by providing more credit facilities, but in this particular example being able to reduce the cost and time of the payment transactions as well.”
IBM notes in a statement that financial institutions in the future will be able to choose the settlement network of their choice. This could involve the likes of Ripple or bitcoin. The solution will also be able to support the exchange of central bank-issued digital tokens.
Compliance software provider Accuity has partnered with R3 to integrate its financial crime screening tools with the Corda distributed ledger technology (DLT) platform.
It is Accuity’s first foray into blockchain, and it will mean that those who are licensed to use its software will be able to screen transactions conducted on Corda without leaving the platform.
An ‘oracle node’ has been developed which can be activated by Corda users to screen transactions for compliance with areas such as the EU fourth anti-money laundering directive, the USA patriot act, as well as regulatory guidelines from the US’ Office of Foreign Assets Control (OFAC) and the Monetary Authority of Singapore.
“This means customers working on DLT won’t have to take transactions outside DLT and screen them separately,” Bharath Vellore, product innovation manager at Accuity, tells GTR.
The node was developed in Singapore, where Accuity have been working on blockchain for some time. The company chose to launch with R3 because the “partner ecosystem is already in place”, meaning they are able to bounce ideas from banking clients who are also members of the R3 consortium.
However, Vellore confirms that Accuity is also studying developments on Ethereum and Hyperleger with a view to developing on those platforms too.
It is ready to use, but the company is still ironing out the details of a licensing model, Vellore says. However, the solution will likely see commercial use in line with the production phase of blockchain for trade finance, which is expected in 2018.
The past two years have been dominated by proof of concepts (POCs), but a number of banks in Asia have told Vellore that they expect to migrate certain aspects of their operations to DLT next year.
R3 for its part has been very keen to ensure that its Corda system meets regulatory requirements. Enabling banks to use Accuity software on DLT may offer peace of mind about the system’s security.
“KYC and AML compliance is a key regulatory requirement for financial transactions. Accuity is the known market leader in the area of financial crime compliance screening. We look forward to leveraging our combined expertise to address solutions in this space,” says Todd McDonald, co-founder of R3, in a statement.
R3 has been announcing a flurry of partnerships in recent days and weeks. The most recent was with trade finance digitisation company Bolero, which partnered with R3 to redesign its electronic bill of lading on blockchain.
It is also working with a 13-bank consortium to design a prototype that will process sight letters of credit, partnering with fintech startup TradeIX and 12 banks on an open account trade finance platform as well as building a blockchain-powered syndication marketplace, with Finastra and seven banks.