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Paperless trade enabler essDocs has revealed that several banks have commenced testing of its CargoDocs Transaction Matching Application (Cmatch), which replaces Swift’s soon-to-be-discontinued Trade Services Utility (TSU). GTR speaks to essDocs’ co-founder Alexander Goulandris about the solution and why Swift’s TSU failed to catch on.

Swift’s TSU, commercialised in 2007,  was created to improve the flow of supply chain information, but initially failed to catch on. It wasn’t until 2013, when the Bank Payment Obligation (BPO) was launched and onboarded the system to match purchase orders and shipping documents that take up mildly improved. However, last year Swift said it was in talks about the future of TSU, with essDocs seen then as a potential suitor. Following this, Swift told GTR this year that it plans to axe TSU in 2020 because of low adoption rates.

essDocs’ new solution Cmatch will enable banks to continue offering two-corner BPOs, alongside four-corner Bank Payment Undertakings (BPUs), by replacing TSU. If the system finds a match between the seller’s data and that required in the purchase order, automatic payment is activated.

There are many banks convinced of the BPO’s role. As proponents of the original solution point out, unlike blockchain solutions which are still in pilot phase, BPO exists today and can be leveraged upon. The key benefits of BPOs include assurance of payment at the due date for companies, quicker handling of goods, and earlier receipt of trade documents.

Goulandris tells GTR that Cmatch delivers a “future-proof offering” as it aligns with the ICC’s Uniform Rules for Digital Trade (URDT), which came into effect in July, as well as offers interoperability with blockchain platforms, something TSU doesn’t. “Essentially, we have copied the rules the TSU system uses, so if something matched in TSU it would match in Cmatch. But we’ve gone off and we’ve applied new design rules, so the solution is more user friendly, it has open APIs and the design is intuitive. It is simpler,” he says.

Cmatch will be rolled out by the end of the year to more than 20 bank branches across four countries, commencing with MUFG and UniCredit. Testing will also involve various other European, North American, African and Middle Eastern banks.

 

“For some banks it seemed quite expensive”

Marc Delbaere, global head of corporates and trade at Swift previously told GTR: “TSU has been a very niche success and important for banks and corporates using it, however its adoption has been limited, and as a cooperative we have to focus on solutions with wider adoption and application.”

At one point there were approximately 60 banks signed up to TSU, but the number of active banks using it were far less, Goulandris says.

He explains why he believes TSU failed to make a lasting impression: “The matching engine was limited in its scope, there was a lack of investment and there were issues on pricing; for some banks it seemed quite expensive. We’ve done some work on pricing and we’ve explored what the road map will look like in terms of investments we’re going to make, but as a solutions company it is much more in our wheelhouse than someone like Swift.”

Goulandris adds that there were complexities in TSU that were not used. “We did research with our underwriting banks to understand how they were using it. We’ve taken out much of the complexity of TSU and we have left ourselves with a simpler but more scalable solution. Extra features that add value will be gradually built back in, no one was using those functions. The most important thing is to allow the banks who are using TSU to continue to operate after it stops,” he says.

While the BPO is not yet the most successful of trade finance digitisation tools, essDocs is making its mark when it comes to trade technology. It signed a memorandum of understanding (MoU) in September with Vakt, a blockchain platform for commodity post-trade management, to digitise the post-trade process for the north-west European barge market. essDocs also linked up with the Voltron bank consortium to implement its CargoDocs DocEx to the Voltron application, enabling banks and corporates to access CargoDocs data when executing a Voltron-based letter of credit.