Bitesize Impact 25: TradeIX
July 6, 2018 Chris Sandilands
TradeIX provides an open platform, built on blockchain technology, and tools for participants in the $8tn trade finance market (principally banks, insurers, corporates) to streamline processes.
Last month the company concluded a $16m Series A raise from investors including ING and BNP Paribas, both of which are also paying clients. Chief Marketing Officer Oliver Belin says the funds will be used to accelerate development of the platform but adds that “the biggest challenge is to the find the right people with the right level of IT and blockchain expertise.” Headcount has more than tripled in the past year to around 70.
Oliver describes the platform as a “single, unifying information layer” for trade data. “If data is the new oil, then together we provide the pipelines, refineries, and storage tanks,” he says.
An example of functionality is provided by a 2017 pilot – now being scaled to production – with DHL, the logistics company. DHL used the platform to address challenges with the efficiency of its existing trade credit capabilities – for example, differences between regional programmes and difficulty generating global views, multiple bespoke integrations to banks and customers and a lack of automation. The solution puts TradeIX’s platform at the centre of an ecosystem, where Standard Chartered provides financing and AIG credit insurance. The solution is described in more detail here and there’s a video here.
The company uses distributed leger technology to support its platform. The company believes that this allows it to scale faster, for example by creating a single version of the truth for source data, transparent permissioning for different parties and rapid execution through smart contracts.
Other direct clients include Commerzbank, Sumitomo, Natwest and Natixis. DNB, the largest financial services provider in Norway, joined the list this month.
TradeIX’s current product focus is developing solutions in three areas: receivables discounting, factoring and payment commitment. On the roadmap are plans to add more data inputs to the platform, such as warehouse inventories which would help reduce fraud. The company is also developing a solution for aiding the undisclosed sale of assets between banks, for which no system currently exists.
The Oxbow Partners view
TradeIX is an example of two interesting trends.
The first is the operationalisation of some distributed ledger platforms for B2B ecosystems. A recent example is Insurwave, the marine insurance platform piloted by Maersk with Willis Towers Watson as brokers and MS Amlin and XL Catlin providing capacity. Both have a private distributed dataset at their core with various automated legal or financial actions triggered by certain data signals. There is clear evidence that InsurTech (broadly defined) has proved that it can work.
Second, trade finance is a rapidly evolving segment which is becoming increasingly important as companies manage their cash more tightly, unbundling credit risk from sales. TradeIX is focusing on connectivity between institutions and large corporates. Others are focusing on penetration in SME – for example Nimbla (in the Munich Re Digital Partners stable) and Hokodo (set up by the former CEO of Euler Hermes Digital Agency and Group COO of Aspen). Common to all parts of the market is the increased use of data in decision-making processes – something we discuss in our profile of Euler Hermes Digital Agency.