Having gone into production earlier this year, we.trade has brought in a new general manager to lead the commercialisation of the blockchain platform. In this exclusive interview with GTR, Ciaran McGowan talks about we.trade’s roadmap, expansion plans and potential partners.
Backed by a consortium of some of the world’s largest trade finance banks, we.trade is a blockchain-based platform targeted at SMEs in Europe, helping them to manage, track and protect open account trade transactions. The platform gives them full visibility on transaction and shipment status, digitalises the whole process from order creation to payment execution, and enables them to access financial services from their banks.
The genesis of we.trade has been underway since 2017 and it was incorporated as an independent legal entity in Dublin in April 2018, with 12 shareholder banks. This was followed by the announcement earlier this year that the firm had signed its first licence agreements. McGowan took on the role of general manager in May, replacing Roberto Mancone.
GTR: What has been your first priority since you joined we.trade?
McGowan: One of the first things I wanted to focus on in conjunction with the shareholder banks was to get some client feedback.
The feedback has been very positive, in that it’s an innovative and intuitive solution. But it can be improved: our clients would like much more. For example, in terms of the efficiency of the end-user, they would like integration with their ERP system rather than having to duplicate entries. They are also very keen to have logistics services as part of the offering.
The other feedback we’re getting is the search facility for pairing companies – they want more customers on there in terms of opportunities. So that’s driving our priority number one, which is expanding the we.trade network and going global.
GTR: How many banks and corporates are live on the platform today?
McGowan: At the moment, out of the 12 shareholder banks, there are nine banks live (CaixaBank, Deutsche Bank, HSBC, KBC, Nordea, Rabobank, Santander, Société Générale and UniCredit), and UBS and Erste Bank will be joining in the next month. Natixis is still in the planning stage and a go-live date has yet to be confirmed.
In terms of customers, there are hundreds of customers and hundreds of transactions, but the specific information is private to the banks.
GTR: Are the banks offering this as a commercial product to their clients or are they still piloting it?
McGowan: Some banks have definitely moved across to full commercialisation. Nordea, Santander and Société Générale are driving ahead and fully commercialising. Different banks are at different stages of maturity but they are all very engaged and fully believe in the value of we.trade and the proposition to their customers and themselves.
At this point it isn’t easy to get end businesses to jump onboard. Just sending an email campaign isn’t going to work: it isn’t a simple sale, it’s new territory, a new concept and it does take a little bit to explain the proposition and show clients the system. So the sales process is a bit longer, but that will change over time as we get to a critical mass and we get more transactions and volumes. And as we add value-added services and go global, it will gain even more traction. Certainly we are seeing the momentum, we’ve seen consistent growth rates, and that’s helping to feed the roadmap.
GTR: What is your roadmap?
McGowan: Our top priority is enabling us to go global. Number two is to enhance the ability to search, find and onboard end-users easily.
Then number three would be to rebuild the smart contracts to add value-added services. If you think of a journey for a business through a trade process, there’s about 10 steps: search counterparty, engage and negotiate a trade, contract and agree that trade, product quality assurance, packaging, shipping, receiving, invoicing, payment, right through to being paid.
If you think of the whole process from end to end, there are so many different elements that we can add to that journey. This could be credit rating, pre-shipment financing, internet of things on the shipping and packaging side, transport transparency and insurance on the shipping, and e-invoicing.
GTR: How will you go about expanding the platform’s footprint?
McGowan: First, banks will join the existing platform, what we call we.trade Europe. We’ve reduced our pricing to make that more attractive.
The second way is to take what we’ve built in Europe and package it up and sell a licence in a new territory. I would expect that to happen early next year. I have started discussions with banks in Africa, Turkey, Latin America and India about creating a we.trade in those regions and then creating connectivity to the European platform.
For example, a consortium of banks in Africa would for an initial period trade with each other, pan-Africa. We’re just thinking through the business model for that and there are lots of things we need to consider, for example the branding, the terms and conditions around pricing, and different regulatory requirements. Technically it’s very straightforward, but it’s important to get the legal elements ironed out first. The next step would then be to connect the networks, so you allow the African, Indian, Latin American or Turkish banks’ customers to trade with European customers.
Thirdly, we will continue to engage with Hong Kong Monetary Authority (HKMA). We’ve done an initial proof of concept and are now going to phase two, which is getting end-users on each end to complete a trade. We expect to have that concluded by October.
GTR: we.trade has previously mentioned TradeLens, the blockchain-based trade platform owned by Maersk and IBM, as a prospective partner. Are you in discussions with TradeLens?
McGowan: Yes. We have a two-day workshop in October, and the way we are approaching this is to look at the business model first and understand the commercial elements, and then the data model will follow from that. So yes, we are talking to TradeLens, it’s absolutely part of the vision and the strategy, but the finer details of how this is going to work I don’t know until we start engaging in those workshops.
GTR: Are there other companies or consortia you are looking to partner with?
McGowan: One we’re really keen to partner with is the Trade Club. Aligning with them for the search and onboarding of customers would make sense strategically. A number of our banks are already using Trade Club.
GTR: Finally, we.trade is opening up an investment round next year. What are you looking for in an investor?
McGowan: Up to now, we.trade has been completely funded by the banks. We are in discussions with IBM about them potentially becoming a shareholder, but nothing has been agreed. We are looking to open up to any other interested party. It would make sense if it’s a value-added service provider or partner, who can earn and generate revenue for themselves on the platform. We’d much prefer a company like that to invest in we.trade rather than a venture capital firm.