Singapore’s digital national trade platform has launched Tradeteq’s AI-based credit scoring system to enable its users to better assess counterparty risk in trade deals.

The system is being used to leverage various data sources to provide thorough credit reports for users of Singapore’s Networked Trade Platform (NTP) that subscribe to the service, including data on each company in the supply chain as well as each receivable.

The NTP is a digital national trade information management system backed by the Singaporean government, which aims to make trade flowing through Singapore more efficient.

Launched in September last year, the NTP brings the entire trade ecosystem to a single online location, digitising the trade processing process. It will replace two existing trade facilitation platforms in Singapore, TradeXchange and TradeNet.

Tradeteq, meanwhile, is a fintech company that launched a trade finance distribution platform last year. The platform allows banks and institutional investors to transact trade assets and also provides users with AI-powered credit analytics to assess counterparty risks.

It is Tradeteq’s credit scoring system that will now be available on the NTP, enabling all parties in the NTP trade finance ecosystem that have subscribed to the service to evaluate the risk of trade partners. When a firm initiates a trade via the NTP, Tradeteq’s technology will automatically create a credit rating report for a new trade partner in a matter of minutes.

“Credit rating is an integral part of trade finance, and for the market to function smoothly it needs better transparency,” Michael Boguslavsky, head of AI at Tradeteq, tells GTR. “Automation of the trade assessment process is crucial, because it is not viable for a person to analyse the credit risk for every small exposure coming into a portfolio.”

Tradeteq’s credit scoring system analyses a much broader range of data sources than traditional methods, including historical data such as credit file information and archives of payment and trade transactions. “We look at companies involved in transactions that happened a year ago. We analyse what happened at those companies in the year after those transactions were made and to what extent those events could have been predicted by AI algorithms,” says Boguslavsky.

Addressing the new partnership with NTP, he explains that users of the NTP previously used a very ad-hoc assessment process that would vary from company to company. “The traditional way is to use a long checklist on a spreadsheet; our way is significantly fairer for companies as it is evidence based,” he says.

Apart from helping importers and exporters better assess counterparty risk, the hope is that such an AI-based credit rating system could give financiers confidence to support transactions they would traditionally have perceived as too risky. Additionally, it provides benefits by reducing duplication and improving the time taken to process trade requests.

Tradeteq’s NTP announcement follows the launch of a joint government-industry partnership between Singapore Customs, the Monetary Authority of Singapore (MAS) and financial institutions to address the region’s trade finance compliance challenges.