Interlinkages, an online trade finance origination and bidding platform, has been launched in Hong Kong.
The cloud-based, cross-border marketplace allows companies to access finance from around the world and financial institutions to originate targeted business where they don’t have a physical presence.
Bidding to “democratise the cross-border trade finance marketplace through use of technology”, Interlinkages founder Anindita Ghosh, a former banker with ICICI, compares it to eBay or Uber, since it “makes the market for trade flows but does not take the credit risk at any stage”.
She tells GTR that Interlinkages is the first online platform in the world with a product suite to include tools such as the letter of credit, standby letter of credit and irrevocable undertaking.
The final risk is assumed by the deal participants and thus the buck stops with the FIs, corporates or the credit enhancers (for example insurers, export credit agencies or guarantors) involved. Participants from lower-rated countries or banks can match with such such guarantors online.
There is no ceiling or floor for transaction size, with Ghosh saying that they are agnostic about deal value. She explains that Interlinkages is targeted at markets that are currently priced out of borrowing for trade.
“Our target markets are countries that can benefit from lower US dollar financing costs as compared to high interest rates in local currencies in economies providing partial account convertibility. We are starting with South Asian origination and have a time-bound strategy to cover entire Asia. The platform has seen significant interest of large banks and corporates with South Asia appetite and business dealings respectively,” she says.
Companies unused to international lending markets can dip their toes in such waters online.
No detail of the lenders or corporations currently enrolled is available, but the system is subscription-based. Interlinkages makes money from consumer subscriptions, as well as a fee charged on each concluded transaction, payable by all counterparties.
Lenders are classed as ‘buyers’ on the system, with hedge funds, banks or other FIs shopping for transaction requests from potential borrowers, or ‘sellers’. FIs can theoretically put idle capital to work and find lending opportunities outside of their customary geographical limits. Meanwhile companies unused to international lending markets – perhaps lacking contacts to borrow cross-border – can dip their toes in such waters online.
It is another example of the cottage industry in trade digitisation sprouting up in Hong Kong. Last month, GTR reported on Freightos, a new platform that pairs exporters with freight providers in a manner comparable to SkyScanner or Expedia.
Speaking on the product launch, Freightos director Eytan Buchman said that an industry-wide move in this direction is inevitable.
He said: “According to PwC, by 2020, 50% of the workforce will be millennials, who have grown up in an era of instant access, payment, and delivery. Procurement managers who were raised on the likes of Amazon, Netflix and Airbnb will expect a similar level of transparency and accessibility in the workplace, creating a demand for newer and more efficient technologies like the marketplace.
“The freight industry likewise understands this – when asked about their future plans, a full 86% of senior logistics providers report plans to enhance their technologies, acknowledging the need to adapt to the emerging consumer class expecting immediacy in all things. Furthermore, companies such as Amazon and Uber entering the logistics space and enterprise logistics companies moving online – like Kuehne + Nagel – are further proof points that there is significant demand for a marketplace.”