In global trade, as in any competitive field, there are winners and losers. Digitisation can iron out the inefficiencies for all participants in what is a very complex process, but who will move first? Joshua Kroeker, Chief Product Officer at Contour, shares his thoughts.


Our thinking on digitisation has evolved a lot since Contour transitioned to live production in January 2021.

When we launched, the future was blockchain. Today, the headlines are more about Web 3.0 and the metaverse. Regardless of your buzzword of choice, Contour maintains the same goal: to build a future-proof digital network for global trade finance.

However, in the past year, the inefficiencies in global trade have far from improved. The trade finance gap widened, and working capital continues to be trapped in global supply chains of S&P 1500 companies – US$507bn-worth of inefficiencies, to be specific, according to Accenture.

We understand that the world of trade is huge, with corporate counterparties, banks, ports, shipping agents, insurance agents and so on. Building a solution for everyone is a great long-term vision, but Contour is starting the journey with a key subset of this wider process: the people and process of trade finance.


Connecting the dots

The foundation of Contour’s promise is to utilise the right technologies to solve the key problem in trade finance: connectivity. We approach connectivity in three ways.

Firstly, to simplify and digitise trade with streamlined workflows, applications and tools. This means moving away from using multiple disconnected messaging platforms and a mixture of paper, fax and email.

Secondly, to ensure that everyone’s data is kept safe and private. Data privacy is a key business concern, and data localisation is a regulatory requirement for many banks. The solution? Own your own data, whether on premise or in an encrypted cloud database with a trusted SaaS provider. Ownership allows you to share and monetise your data with your trading counterparties and trade finance providers when you want, not just when it suits the platform operator.

Finally, to synchronise that network. A system in which everyone owns their data does not usually lead to connectivity. However, enterprise blockchain has solved this problem for us. Much like a digital wallet for storing and spending on things of value, connecting to a digital trade network like Contour helps you use your data in our applications to conduct your trade and trade finance activities, while maintaining real-time data synchronisation every step of the way.

This is our baseline at Contour and our approach to building this network.


Who wins? Who loses?

But who gains when trade finance is digitised? The buyer, the seller, or the bank? And who will encourage their counterparties to join a network like Contour to realise those gains? For banks, we know digitisation will attract new clients, expanding their financing reach while lowering the costs involved.

But what about buyers and sellers? Typically, sellers want to be paid as soon as possible, whereas buyers prefer to pay as late as they can. It’s a system fraught with friction.

But friction cannot be easily turned on and off, and it can cause serious pain for all parties. In short shipments where the goods arrive before the documents, or when uncertain working capital cycles cause wasted buying power, friction certainly impacts buyers the most.


Creating win-win solutions

Fintechs like Contour solve this problem by providing buyers with flexible digital trade solutions that remove friction from complex transactions. Previously, if a buyer wanted to use Contour, they could do so only if their supplier joined the network. That means initiating a commercial negotiation, which adds another layer of complexity.

To avoid this complexity, we are simplifying our core proposition and launching Contour Import. This focuses on the benefits to buyers and eliminates the need for sellers to initiate a transaction. Buyers can benefit from bank-agnostic solutions like Contour, which allows them to manage several relationships on one platform. Things will only improve when the seller eventually joins the network on their own accord, without undue pressure from any counterparty.

We also want to ease the referral process when our customers are ready. Through our new referral programme and low-cost SaaS offering, we are lowering the barriers to entry even further. This programme gives beneficiaries and other parties the opportunity to join our network for free for six months, further reducing commercial tension between the parties.

Over the past year, we have learned that there is less to fear than what corporates sometime imagine. Both parties a buyer and a seller) joining Contour does not reduce benefits for one party – instead, it creates benefits for both.

With Contour, there are many avenues to a win-win for both sides. With pre-application drafting, both the buyer and seller can agree to all terms before it goes to the issuing bank, resulting in fewer discrepancies, which then translates to fewer amendments and reduced fees. Additionally, fewer chances of discrepancy mean presentations can get made on time, allowing buyers to gain access to their goods without delay.

If an amendment is needed, then it can be agreed upon or declined by both parties in an afternoon, rather than requiring a week-long email marathon.


Building the future of trade finance

With a larger, more complicated, and more globally diverse supply chain, global trade has become increasingly inefficient. If the pandemic and its impact on supply chain disruptions has taught us anything, it’s that this topic must be prioritised in your boardroom.

It is not just about digitising letters of credit. We are currently building more and more flexible solutions through our Future of Finance lab that can be used for a wide variety of trade finance products, both existing and new. Contour’s goal is to make digitisation a reality – and a win for all parties involved.