The trade industry’s newest fintech company, TradeIX, has developed the first trade finance-specific open-source blockchain platform.
The platform, called TIX, is described by TradeIX CEO Robert Barnes (former founder and CEO of PrimeRevenue) as “infrastructure to connect different players in the trade ecosystem”.
TIX is targeted at large corporates, banks, alternative financiers, business-to-business networks and technology providers. “We believe that connecting them all within the trade ecosystem will drive tremendous value,” Barnes tells GTR.
But it’s not only about connectivity. Daniel Cotti, TradeIX CFO, tells GTR that the platform is effectively an “operating system” for the trade finance industry. “We develop our own applications, and banks and B2B networks can also develop their own applications for interacting with their clients using our technology,” he says.
TradeIX claims to be “rewiring global trade” by providing what it calls “the most connected and secure platform infrastructure” for the trade finance industry. It also says that its platform applications, developer tools and core protocol represent the dawn of the “internet of trade”.
But how exactly does the platform work? Barnes explains that TIX comprises four components: TIX Apps, TIX Developer, TIX Composer and TIX Core.
TIX Apps are client-facing solutions which run on the platform. “These could be legacy applications that a bank or B2B network has, or applications that they want to build on an existing platform,” he says. TradeIX also offers its own open account trade finance apps to support transactions and drive adoption of the platform.
TIX Developer provides APIs (application programming interfaces), SDKs (software development kits) and microservices (which structure an application as a collection of loosely coupled services) that enable users to integrate and interact. “That’s where the bank or B2B network works out how it connects to our platform,” says Barnes.
The Composer component is the trade finance “orchestration engine” that enables secure and flexible creation and management of the rules, logic and smart contracts for all interactions on the TIX Platform, including onboarding, underwriting, pricing assets, payments, credit and risk management, asset distribution and other critical data and functions to and from approved parties across the trade ecosystem . TIX Composer also provides the “world’s first graphical interface for the creation and management of trade finance smart contracts” reads the company’s website. “This defines the rules and sequence determining how the interaction between the users will work,” says Barnes.
TIX Core is the infrastructure where it all takes place, based on a combination of TradeIX’s own technology and the Hyperledger’s blockchain. “It provides secure, distributed data storage and bookkeeping, execution of complex business logic, automated contract enforcement, identity and reputation management, asset verification and tracking and a dynamic transaction and settlement engine, all in near real time between all parties in global trade,” reads the TradeIX website.
The platform is styled in such a way that it can be tailored according to the business requirements of the key parties: banks, large corporates or B2B networks.
The end result? Banks can lower processing and back-office costs, improve commercial offerings and generate new financeable assets, increase traceability and reduce risk. B2B networks, for their part, can generate additional revenue streams by simply connecting through the shared platform to multiple financial institutions, offering new value propositions to their client base.
“By applying blockchain technology to trade finance, the TIX platform reduces complexity and the number of intermediaries involved, eliminates the settlement, custodian and counterparty risk and manages credit risks better and more efficiently,” explains CTO Andy Berti.
Barnes became interested in distributed ledger technology (DLT) years ago because of the way it addresses the issues of trust and provenance, which are key to the trade finance industry, but also the manner in which it can connect the trade ecosystem and rid it of its siloed approach, which he calls “incredibly dysfunctional”.
Last year he and his colleagues noted the developments taking place at Hyperledger and its peers and decided to take the punt that the technology was going to evolve.
At the same time the company built out its own APIs and other tools needed to develop connectivity.
“We depended on the fact that blockchain was going to come to us, and our bet was correct – it started to move closer to where we needed it to go,” says Barnes. “But we also needed to make the platform incredibly flexible to orchestrate and deliver trade finance based on the various business requirements.”
GTR caught up with Barnes for an exclusive interview ahead of the launch:
GTR: What problem is TradeIX trying to solve?
Barnes: If you look at the way trade finance operates today, it’s a high-cost, high-maintenance, old-world model which involves multiple parties and an over-reliance on human intervention and interaction. A lot of it has got antiquated paper-based systems. What we’re doing is creating a highly automated, more open and inclusive infrastructure.
The infrastructure is everything: we build the ecosystem, and it’s up to the participants to build value-added components to plug into the ecosystem.
We’re not driven by a consortium, but rather a means and a desire to create a commercial model that really works and drives value.
If you looks at the R3s of the world, the difference with us is that we’re 100% focused on the trade finance ecosystem.
GTR: What timeline are you working to, and who has shown interest?
Barnes: We’re in the pilot phase and will be doing full transactions at the end of June or beginning of July.
At the moment we’re waiting for the legal side to catch up with the technology.
We currently have a large customer going live with a bank. And we’re in the process of signing up two large B2B networks. We will be doing transactions with one of them in Q4, across their suppliers.
We are also finalising a large insurance partnership, which will allow to credit underwrite on a transaction-to-transaction basis.
This is all going live over the next few months.
GTR: How do you structure your fees?
Barnes: The TradeIX platform is designed to be ultra-flexible depending on individual corporates, B2B networks and banks’ needs, and easily adapts and integrates with existing set-ups. For the banks we can, for example, use a subscription model as we don’t get in the way of their transactions.
Or, for example, B2B networks can use our platform on a transactional basis: we share whatever revenue they make by originating to banks. We are flexible and it really depends on the type of party working with us.
GTR: Are you focused on the primary or secondary market?
Barnes: We’re focused on both. The advantages we have over other platforms that connect parties is that whoever is buying in the secondary market will see the asset and understand the true origination. This provides more underlying visibility and trust.
GTR: What can’t the platform do?
Barnes: What we can’t solve for is the traditional KYC that a bank needs to do. We can make the information more readily available, open and secure, and connect with the other parties that can help with that. But we don’t solve for that. And we don’t solve for the legal side either.
Where we do solve for is the execution side – the operation and technology. That’s where we’ve placed our focus.