Traydstream will soon release the first version of its solution for digitising and automating trade, which it will bring into production with its first bank client.
The news comes as the fintech firm announces the conclusion of a US$3.5mn funding round to scale up its offering after a number of successful pilots.
Three years in the making, Traydstream’s solution uses OCR (optical character recognition) to read, scan and structure paper-based information digitally – essentially digitising the full trade transaction. It then uses AI to automatically process and check the documents for anti-money laundering and compliance issues. Within many banks this is still a manual, labour-intensive job.
Having closed its pre-series-A financing round, Traydstream is set to release new features and “grow exponentially” over the next few years, the firm’s CEO Sameer Sehgal tells GTR. Among the features that will be rolled out in 2019 are a blockchain functionality, a mobile solution and data analytics. Insurance and FX capabilities are also on the roadmap.
A former banker, Sehgal joined Traydstream in August from Citi, where he was most recently head of trade for Europe, Middle East and Africa. He says he has seen the harsh reality of banks rejecting SMEs because the processing of transactions is too costly. “With this technology, that’s history,” he notes, expecting that banks will be able to develop new financing offerings on the back of the solution.
The first release will come out in December and be implemented in production systems with Pakistan-headquartered Meezan Bank, with which Traydstream has secured a five-year mandate.
Simultaneously, targeting both banks and corporates, Traydstream will seek to conduct more pilots and acquire more clients through its emerging hubs in India, Pakistan, Dubai, Italy and the UK. The fintech company has already carried out a series of pilots with other major players, including a leading Southern European trade finance bank, a big Japanese bank and a Switzerland-based commodity trader, but has not yet revealed any specific details.
The second release of the solution, which will be made available early next year, will implement blockchain technology, Sehgal explains. “The first step was to accelerate processing, automate it, and make it exceptionally fast at an individual level. If you give the solution to a bank, it would be much faster, cheaper and more efficient than today, and the reliance of humans comes down drastically,” he says. “However, with blockchain, you can get the other parties constituting a transaction to partake in that transaction at the same time, which does not happen today. With blockchain you can make data available right away for them to process in a distributed manner.”
Traydsteam is not the only young fintech player seeing huge opportunities in making an extremely paper-based and manual industry more digital and automated. Conpend is another firm that helps clients digitise trade documents, flag deviations and conduct automatic document checking and sanctions screening. It recently announced it is working with Germany’s Commerzbank to integrate the system into its back office, with the bank claiming to be able to automate 80% of its “first line of defence” compliance checks of its trade finance processes by 2020.
More established players are also attempting to reinvent themselves to keep up with the demand for emerging technologies. Bolero, which has been around since 1998 and whose solution digitises trade and logistics documentation, is working with R3 and the Voltron blockchain consortium to provide digital bills of lading as part of ongoing pilots, with the consortium also in discussions with essDocs to enter a similar partnership. Meanwhile, Accuity, a compliance software provider which was founded in 1990, is also collaborating with R3 to integrate its financial crime screening tools with the Corda blockchain platform.
Traydstream, too, is looking to partner with other parties and technology providers, including blockchain consortia, such as komgo. Launched as an independent legal entity in September, komgo’s blockchain platform focuses specifically on commodity trade finance and making commodity operations more efficient and secure.
According to Sehgal, Traydstream, is having “initial conversations” with komgo on a potential partnership. The fintech firm sees commodity finance as an area ripe for collaboration. “Even if you have komgo for interacting with each other, unfortunately the backend processing is still done manually today,” Sehgal says.
The company’s new financing round was led by a group of ultra-high-net-worth individuals and Gauss Ventures, a venture capital firm specialising in fintech, and brings Traydstream’s total funding to date to approximately US$6mn. Its activities had previously been self-funded by its shareholders.