In February this year, a group of trade and technology veterans announced the formal launch of the Verifiable.Trade Foundation, a Basel-headquartered non-profit organisation with a unique plan for digitalising trade. John Basquill speaks to three of the foundation’s founding members – chairman Stephan Wolf and board members Hans Huber and Daniel Cotti – about the vision behind the project and the progress made so far.
Unlike the array of digital trade platforms already on the market, the Verifiable.Trade Foundation plans to provide a crucial piece of underlying infrastructure: an open-source protocol that bridges gaps between different platforms, banks, buyers, sellers and other parties.
The project remains in its early stages, but its vision is that an International Secure Trade Transfer Protocol (ISTTP) will function similarly to those used for web browsing or email. The ISTTP would be able to retrieve, standardise and exchange trade-related data, as well as verify participants’ identities, without users having to join platforms or set up new systems.
GTR: What progress has been made since the foundation launched in February?
Wolf: First, we have launched a website with basic information and a white paper to download. We are now collecting feedback from people who have reviewed the first version of the document, and will soon issue an updated version of it. That would describe all the requirements and the challenges we need to address, and possibly some more views on the competitive landscape.
Second, an important piece of work has been putting together a team of senior experts that functions as a sounding board, that we can ask for help and input as part of our various workstreams. It’s quite a substantive list of people from around the world, and they all add different perspectives and focus points.
This is important because the many little details we are working on now – like which open-source framework or which programming language we are going to support – are fundamental decisions that must be made at the beginning of a project.
GTR: For lenders or companies reading this, how can they interact with the foundation now and start contributing?
Wolf: I would suggest they read the white paper and give us their feedback. We want to learn from them what their problems are, and what their vision is. It’s not so much that we need project people now; we’re in the intellectual process of producing and reviewing material and use cases that we will distil later, and produce specifications and software libraries the industry can benefit from. We hope to find more experts representing buyers and sellers, and maybe some logistics firms too.
GTR: The Verifiable.Trade Foundation is a non-profit. What is the significance of that model, compared to building a digital trade platform?
Wolf: That was the plan from the very beginning of this whole journey, nearly two years ago. We immediately thought about whether the world needs another platform, and all agreed wholeheartedly that is not the case. Platforms have all kinds of features but we do not believe there will be a one-size-fits-all option for the whole world.
So we asked ourselves, if we want to digitalise trade but don’t want to build another platform on yet another blockchain, what can we do? And the idea of a protocol was born. This protocol must be open, barrier-free and without a commercial interest. The not-for-profit foundation ensures that these criteria are met.
Huber: Platforms tend to pursue a winner-takes-all strategy. ‘Everybody please use mine, and eventually we’ll somehow make everything interoperable, or maybe we don’t need interoperability as long as everyone’s on my platform.’
That will never happen in trade, because the number of participants is just too vast and the interests are too different. Nobody is going to consent to using one platform, and if that did happen, that platform would have gained too much power.
A good example for protocols that work is email. When one person sends an email to another, they don’t need to think about the email client the other person is using. They produce the email in their own client, send it, and regardless of what the other person is using it always works.
That could work for trade as well. One person might be using Surecomp, one is using Finastra, another just has an ERP system, but in the future, the messages that are being transported between these systems will identify the sender. The content can therefore be immediately acted upon, and reliably authentic data has legal force.
GTR: What is your plan for funding?
Wolf: So far, the foundation is financed by the founders. We are starting to engage with people on our fundraising initiative, where we look into additional seed funding for this year and longer-term funding for the coming years, and we’re making good progress there. There are many programmes out there – governments, development funds, philanthropic supporters – and what we are doing now is reviewing for which we could be the best fit.
There are a couple of entry points for this discussion. One aspect of this is the discussion around sustainable development goals, and how you can construct supply chains to meet those. Another is the tariff discussion.
This world is anything but steady, and what the American administration is asking for is a complete dismantling and reaggregation of supply chains on a global scale. When you look at agricultural trade, or industries like automotive, they are really struggling with supply chains. SMEs especially experience lots of challenges. That kind of rapid change requires a robust, open and decentralised infrastructure.
To give an example, one story we heard was a company that has 46,000 suppliers, and is still using paper in many cases because it’s easier than having 46,000 bilateral software interfaces with each one. With our mantra – connect once, connect everywhere – we are addressing exactly that point. Each of those 46,000 suppliers would need to connect only once, and then could connect with everybody.
GTR: Turning to trade finance, a bit further down the line, how will this technology improve delivery? Are there particular examples you can give?
Cotti: Financing is the key aspect. Creating liquidity for small and mid-sized companies around the world is the holy grail in global trade, and at the moment it works in a very fragmented and limited way.
What we will probably see emerge is more marketplaces where a corporate of any size can go with an invoice or a promissory note and request funding. The problems that Verifiable.Trade is trying to solve are identification of the counterparty and authentication of the transaction.
Now, Verifiable.Trade is not the product that the corporate will use to get its money, but it allows such products to be integrated into the supply chain and connected with any third party. It’s part of the decentralised underlying infrastructure of separate systems that all participants use today, but in the future the communication among these systems will be easier with the ISTTP.
It is imperative that the ISTTP protocol is open source, to enable anybody who is working on a supply chain tech solution around the world to use it. This will make processes smoother and allow corporates to get access to more funding and more investors.
What I mean with this is that nobody is wasting time to identify a counterparty and check the legitimacy of the message content. It is a given. They can concentrate on the drivers of their underlying commercial activity and their risk profile, which is essential to obtain funding.
Huber: In terms of products, take supply chain finance, where a supplier is getting an invoice paid early and at favourable rates. If you look at a tier-three or tier-four supplier in a larger supply chain that eventually delivers merchandise to Lidl’s shelves, that supplier is probably totally unknown to the banks. But all the banks know Lidl, so you can finance that tiny SME based on the favourable terms offered to Lidl.
The problem is there are risks. A lot of fraud is committed in this market, the know-your-customer procedures are expensive and cumbersome. We can alleviate all that, and then supply chain finance works better, even down to those final tiers.
GTR: What can we expect to see from the foundation over the next few months, and looking ahead, what would be your message to the industry as a whole?
Wolf: For the rest of the year, we are working with our technical experts on protocol specifications, message types, templates and things like that, which we can take next year into the programming. Because everything is open, we will collect feedback from interested parties, and next year move into pilot projects where we do some actual implementation.
The important message there is we are not sitting here developing something for the rest of the world to use. We want to provide a network where everyone can join us and work together with us on their own problem solutions. It’s a community effort, more like Wikipedia, but where we produce software rather than text.
Cotti: I’ve been in this industry for 40 years, and in terms of collaboration within the industry across various domains, what is happening here is the most exciting thing I’ve seen. This isn’t just about trade or trade finance. This is a much bigger undertaking for the whole process of commercial digitalisation, overcoming those issues around digital islands and connectivity. I am seeing the industry at its best, and we will only see in a few years’ time how huge the impact was and continues to be.
Who is Verifiable.Trade?
The foundation’s board is chaired by Stephan Wolf, chair of the industry advisory board at the International Chamber of Commerce’s Digital Standards Initiative, and former chief executive of the Global Legal Entity Identifier Foundation.
Hans Huber is a former Commerzbank project manager for trade finance innovation, while Daniel Cotti is a founding partner of the T3i Partner Network and the founder and chief executive of Cotti Trade & Treasury. Its seven founding members collectively bring experience from financial services, trade technology, digital identity, government and several other areas.
Board members
- Stephan Wolf (chair)
- Daniel Cotti
- Hans Huber
- Chad Pasha
- Timothy Ruff
- Daniel Säuberli
- Thibault Serlet
Senior expert advisory group
- Robert Beideman
- Shawn Butterfield
- Stephane Canon
- Chandra Challagonda
- Eva Chan
- Alisa DiCaprio
- Pascal Gottret
- Georg Greve
- Gerard Hartsink
- Ralf Herrmann
- André Kudra
- Oswald Kuyler
- Andrea Frosinini
- Angela Kyerematen-Jimoh
- Scott Perry
- Ivan Mortimer-Schutts
- Viola Pamela Ndlovu
- Mohan Ramaswamy
- Gianluca Riccio
- Meral Şengöz
- Vasily Suvorov
- John Turner
- Jacques von Benecke
- Michael Vrontamitis
- Randy Warshaw
