The International Chamber of Commerce (ICC) and fintech company Finastra are piloting a new SME funding marketplace, and have chosen Ecuador as the first market to trial the solution.
ICC Tradecomm, which runs on Finastra’s technology, was initially announced in March this year. An ICC spokesperson tells GTR that it is a web-based platform that will enable SMEs to secure funding from bank and non-bank financiers on their electronic invoices, with transaction risk and diligence scoring carried out using an automated know your customer (KYC) and know your transaction (KYT) engine.
“Once the ICC Tradecomm KYC engine has verified the SME, the new participant will be able to upload invoices which will be risk scored and submitted to financiers for funding,” the spokesperson says, adding that the streamlined KYC and KYT process will “bolster the economic viability of lending down-market to SMEs with multiple options of risk profiles”.
The ICC says that the marketplace is aimed at reducing trade finance barriers for SMEs and enabling all parties to benefit from improvements in matching supply and demand, ultimately decreasing the global US$1.5tn trade finance gap. Throughout the process, ICC Tradecomm will seek to provide support to SMEs to improve their risk financing profile over time through education and guidance.
According to World Bank research, 99% of Ecuador’s 900,000 businesses are microenterprises and SMEs, which create 60% of all jobs. Ecuador is also a world leader in female-led enterprises. With limited access to financing for these small firms, the segment faces many challenges for maintaining its productive activity.
“We all have an obligation to redefine finance for good and to help drive global economic equality of opportunity,” says Simon Paris, CEO at Finastra. “In orchestrating this ecosystem with the ICC, we expect to build a financing marketplace that will provide support to SMEs which desperately need access to a broader set of alternative financing resources. Ecuador is a growing, emerging market and we hope the pilot will demonstrate how we can help to facilitate significant levels of trade financing for local organisations, creating the showcase that will then allow ICC Tradecomm to enable more markets where we could potentially facilitate billions of dollars in trade.”
The world is not short on SME financing marketplaces. In recent months, Surecomp, dltledgers, and MarketInvoice, to name a few, have launched similar propositions. However, the ICC spokesperson tells GTR that ICC Tradecomm differentiates itself through accessibility, liquidity, efficiency and the ICC network.
“ICC Tradecomm will offer seamless simplified access to financiers, targeted information to SMEs to improve scoring, such as access to financial education, and clarity of processes and transaction. The marketplace will bring together large numbers of financiers to increase the available pool of capital and provide a transparent bidding process allowing SMEs to meet their working capital needs,” the spokesperson says, adding: “ICC Tradecomm provide a streamlined risk management process where clients determine their risk appetite and limits via the marketplace directly. ICC Tradecomm will also work hand-in-hand with trusted local partners from the ICC network ensuring an optimal product-market fit, local product recognition, trust, and credibility.”
The ICC says that new markets for additional pilots have already been identified and will be revealed soon.