we.trade, the Europe-based blockchain platform for open account trade finance, has signed its first licence agreements with 14 banks and is now looking to expand to more regions globally.
Speaking to GTR, Roberto Mancone, COO at we.trade, also expressed interest in partnering with other platforms at a later stage, listing TradeLens, Tradeshift and B3i as prospective partners.
we.trade, a solution for managing, tracking and protecting open account trade transactions between SMEs, is one of the first blockchain platforms for trade finance to go into production. Powered by Hyperledger Fabric and built by IBM, the platform connects parties involved in a trade deal in one place, helps SMEs initiate new trading relationships and provides them with access to financing solutions.
The bank consortium-led initiative has been underway since January 2017 (at the time it was known as Digital Trade Chain) and was incorporated as an independent legal entity in April 2018. Having since merged with Batavia, a similar blockchain platform, the entity today has 12 shareholders: CaixaBank, Erste Group, Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale, UBS and UniCredit.
SMEs will be able to use the platform via their banks, which are onboarded on a licence-type basis. According to Mancone, it takes two to three months for a bank to be live on the platform after an onboarding agreement has been signed.
He emphasises that from a technology point of view the platform is fully live and the first contractual agreements are now finalised. In addition to the 12 shareholders, he says two other entities have entered licence agreements with we.trade: UniCredit Germany and CBC Banque, the Belgian subsidiary of KBC.
“At this point it’s up to the banks to sell the platform to their clients,” Mancone says. “We completed the agreements at the end of last year and now the banks are developing their own distribution models. Some banks will start with a soft launch, initially with a set amount of clients, based on their distribution capacity. And of course the banks – like with any other product – need to train their sale force, launch campaigns and so on.”
He continues: “I expect that in this quarter there will be a systematic slow adoption by the banks – to make sure that the clients give proper feedback and, based on that feedback, we will continuously add and adjust features so that, little by little, we can gain the satisfaction of the clients.”
we.trade will also be marketing the platform to non-shareholder banks, and outside of Europe, where we.trade’s initial focus had been.
“Banks in Europe, but also from outside of Europe, are now expressing interest in our platform,” Mancone says. He explains that technically, the platform can work anywhere in the world, but geographical expansion will take place one step at a time to ensure that local regulatory requirements are met, particularly around the handling and protection of personal data.
One region we.trade is keen to enter is Asia. Since late October, the firm has been working with eTradeConnect in Hong Kong, a similar blockchain platform that went live last year with 12 banks and 18 corporates, to explore how the two solutions could work together.
“It’s a very important project for us, because we want to demonstrate how we can connect two platforms so that a transaction can be initiated in Europe and completed in Hong Kong and vice versa,” Mancone explains. “It is a proof of concept, so we are focusing on one product only, invoice financing. If it is satisfactory, we will then decide if we want to move to a production environment in order to make it available to our and their clients.”
He notes that the proof of concept is expected to be completed in mid-March, with the goal of having a production-ready solution by the end of 2019.
Commenting further on the platform’s long-term strategy, Mancone said we.trade would “inevitably” look to partner with other solutions that fit well with we.trade’s aim of creating a seamless customer journey within the supply chain.
“If you could combine we.trade as a trade and trade finance platform with other platforms which are digitising logistics or providing procurement or instant insurance, for example, it would create value for the customer. These are partnerships I would like to see happening in the future because it is definitely beneficial for the client,” he says.
TradeLens and Tradeshift are among the firms that we.trade has an eye on as prospective partners. TradeLens is the blockchain platform built by Maersk and IBM to enable the global logistics industry to interact efficiently, access real-time shipping data and digitalise and exchange trade documentation.
Tradeshift, meanwhile, is a cloud-based platform that helps more than 1.5 million companies digitalise and manage their supply chains, offering services such as e-invoicing, financing, payments and compliance.
Mancone is also keen to bring insurance solutions to the we.trade platform. “For sure there are some actors that we are interested in. If you think about the B3i insurance consortium, I’m sure in our smart contract, which is basically the condition of payment, we could also include some potential insurance cover. That is definitely something that our clients would appreciate,” he says.
An acronym for the Blockchain Insurance Industry Initiative, B3i is a joint effort between 13 insurance and reinsurance companies, which, since October 2016, have been looking at how to use blockchain technology and smart contracts to improve the way insurance data, claims, capital and payments are disclosed, automated and managed.
Mancone emphasises that, so far, we.trade is in no formal partnership discussions with these players, but is having “informal talks from time to time” to “understand how the technology is evolving”.
“At the moment each initiative is on its own journey in its own independent way,” he says. “But obviously we look to each other to understand in which directions we are going. In the future, when the platforms are mature enough to move to the next step, then I’m sure discussions will take place.”