The coronavirus crisis, which has severely impacted global trade, has also encouraged the banking industry to embrace digital platforms and accelerate the transformation of manual workflows into efficient, paperless processes, writes Sumit K Roy, Co-founder and Chief Marketing Officer of TradeAssets.


TradeAssets, which is an e-marketplace for trade finance origination and distribution, has seen an increase in demand as the industry moves faster towards digitalisation. Working with a virtual office concept since inception, the TradeAssets team faced no workplace disruption due to lockdown measures.

Its blockchain-powered distributed ledger engines, which are on Microsoft Azure remote cloud servers, have always been managed remotely by the support and technology team.


Destination digital

In this changing world, technology has a huge role to play, and this has become clearer with the pandemic. TradeAssets allows banks to list assets such as letters of credit, trade loans and guarantees, and enables buyer banks to negotiate pricing with the seller banks without the need for phone calls or emails. The objective is to automate market pricing and communication on a global scale.

In a recent survey of various stakeholders, answering the question “Has the lockdown situation changed the way you view online solutions?”, 70% of respondents said they believe more in such solutions now because of the current situation, representing a paradigm shift in thinking.


Financial inclusion

A huge obstacle to the fight against global poverty is financial exclusion. Recognising institutional exclusion as a cause of this problem, impacting many developing countries, there is a strong case for transparency and visibility amongst trade finance institutions globally. To help promote financial inclusion through real-time access and visibility for all, the TradeAssets e-marketplace is creating an ecosystem that will create a level playing field for all participants.


Closing the gap

An inclusive and transparent institutional e-community is essential to address the US$1.5tn trade finance gap as a global priority. This gap represents the shortfall in supply of trade finance versus the demand for it. While there are several contributing causes for this gap, it is undeniable that small, self-serving clusters have to join to form all-inclusive ecosystems such as TradeAssets. Only then can we alleviate this growing, pernicious problem that is hurting those most in need of finance, such as the smallest enterprises in emerging economies.


Building the ecosystem

As a team of 30 senior bankers in 18 countries, Team TradeAssets represents a unique pool of talent in international banking, trade finance and technology. This talented group of individuals, having served their erstwhile employer institutions successfully, are now creating an e-marketplace that benefits a much wider community.

Building one of the world’s largest banking ecosystems is not about making more margins at the expense of others, it is about making the entire process more open, fair and profitable for all.

It is important to understand that TradeAssets is not a counterparty or intermediary, it is an ecosystem of member banks and market participants. The greater the participation, the more the benefits. Since going live, 50 banks have joined, while 200 more are in the process of doing so. In recent weeks of activity, member banks posted over US$250mn in assets.


Members with benefits

So, what are the real benefits of a membership in an e-marketplace when there is a traditional way of doing things? It is, quite simply, a combination of many factors such as time and process efficiency, greater access and transparency, optimised pricing and an increase in capacity to process much greater volumes.

We should also not forget the old adage that “time is money”, which is very relevant here. For instance, when we are looking at generating revenues by deploying capital, the faster this capital is churned, the greater the returns. For example, a reduction in deal-making time from four days to three days represents a 25% increase in time efficiency and the increased churn this creates, in a world where global trade can touch US$20tn annually, is worth billions of dollars to the industry in the form of opportunity gains.

The other benefit is simply the convenience of on-screen, three-click deal-making, which has been happening in the foreign exchange markets for decades using online portals. Why should trade finance fall behind? It is very important for the market to think of online solutions as generating greater returns for themselves and for the entire industry, making it a “win-win” situation. All that is needed is to become comfortable with change, as many other aspects of our lives have already transformed in recent months.


Back to the future

Many banks are now being extremely cautious about risk-taking and lending, as the financial impact of the pandemic slowly unfolds. However, global trade will increase again as countries come out of lockdown and demand for goods and services increases consumption. Financing institutions will resume efforts to enhance their returns on equity.

More efficient balance sheet utilisation through faster usage of capital has to be supported by technology adoption. The future, as it was looking in January 2020, may appear distorted today as we look through the lens of the pandemic, but one forecast is unanimously agreed – efficiency, cost optimisation and process improvement will become top priorities as our resilient world goes back to the future that we were envisioning just a few months ago.


About TradeAssets

Founded by senior banking professionals Lakshmanan Sankaran and Sumit K Roy, Team TradeAssets consists of banking industry veterans with decades of experience in international banking.

TradeAssets was built to create efficiency and transparency in the traditional deal-making process, increase connectivity between institutions globally, make trade finance more accessible, and improve profitability for clients.

TradeAssets is a user-friendly and multi-functional live portal which has generated high transaction volumes in a short period of time. This portal for banks has been built by bankers, is simple and functional, with an experienced team around the world to give members the technical and relationship support needed to transition from the current state into an open, benevolent ecosystem.

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