New fintech player, Traydstream, has launched a solution to digitalise trade documents and automate regulatory compliance screening using artificial intelligence.
As is often the case when talking fintech, it didn’t take long before the word ‘blockchain’ entered the conversation when GTR met with Uzair Bawany and Achille D’Antoni, the co-founders of Traydstream – one of the newest global fintech companies hoping to revolutionise the way banks and companies process trade documents.
But Traydstream’s solution itself contains nothing related to blockchain or distributed ledger technology. “Everyone talks about blockchain, but blockchain doesn’t do the processing. So that’s how we came about with the idea,” says Bawany. “Trade is one of the few bastions of banking that remains extremely manual. We thought, there has got to be a way to automate some of this.”
In short, Traydstream’s new solution digitalises the whole trade transaction – from invoice to Swift – and is targeted at banks as well as corporates.
While other players such as Bolero and essDocs have already developed similar platforms for paperless trade, the Traydstream founders believe their solution is unique in that it also processes the documents and rigorously checks them against a library of tens of thousands of global and regional trade finance regulations and rules. Within many banks this is a manual, labour-intensive job.
“Document checks tend to be done by very experienced senior professionals who have been in the bank for many years, who know all the tricks,” Bawany says. “We’ve made that into a smart process using technology. So what typically takes a human being between four and 10 hours, we’re aiming to do in three minutes.”
Utilising semantic analysis techniques, the engine can quickly check all trade data for a range of issues – blank fields, the inconsistency of names, industry-specific legislation, sanctions and country restrictions – thus helping banks tackle anti-money laundering and compliance sensitivities.
The machine is not only quicker, it is often more reliable, they say. And using machine learning technology, the system only learns and develops as it is fed more data.
“Imagine a document checker, he’s working late on Thursday night and comes in on Friday feeling tired,” Bawany says. “He may miss something, a payment is made, and the bank is on the hook for it. A machine doesn’t have tired days. It never forgets either. So the efficiency is a huge value.”
Together with a team of ex-trade finance bankers and industry professionals, Bawany and D’Antoni have spent the last two-and-a-half years diligently developing the new solution. The company has to date spent US$1.2mn building the platform, self-funded by 15 shareholders, and is now looking to raise series A financing to commence pilot tests of the software with three banks and a large corporate.
Having already spoken with dozens of financial institutions, D’Antoni says they have received a huge amount of curiousity and interest for the platform. The banks, he adds, are facing the same challenge:
“A lot of people who know how to read a document and how to process it are about to retire. This is a global problem. This means they have to be replaced by others, and the cost of training, to bring people to that level, is huge,” he says.
With or without OCR
With trade being a paper-heavy industry, the first step of Traydstream’s process is really to convert all trade documents to a digital format.
To do so, Traydstream has developed its own OCR (optical character recognition) engine, which can read, scan and instantly structure and store paper-based information digitally. Although the OCR engine is not its main selling point, and not a new invention, the company has built it after struggling to find one that met the specific needs of the trade industry.
“Trade business is made up by paper with different formats, fonts, issuers and structures,” D’Antoni says. “We looked at a dozen OCR products, but none served the idea that we had, namely, to have an OCR that could put together all the different formats and make it work. That’s the reason we had to develop it ourselves.”
He adds that the OCR solution’s accuracy on the extraction of clean data is 97%. And instead of being saved on another piece of paper, the data can be stored on the cloud for life.
But ultimately, the goal is a world where there is no paper in the first place, and thus an OCR is not even needed. “We are trying to work with clients to load data straight onto our portal, so the scanning is not even required,” Bawany says. “That would be our dream. The OCR is the headache we wish we didn’t have to deal with.”
The Traydstream founders are not short on ideas for how the platform could be expanded and integrated with other technologies in the long run, not to mention the most obvious:
“There’s a possible connection with blockchain,” Bawany says. “The digital information from the blockchain can be put onto our platform, which removes all the OCR issues, so we see blockchain as an enabler for us, which is quite exciting.”
He also sees the possibility of expanding the solution into a crowd funding platform where private investors could chip in to a letter of credit, for example. But for now, the goal is to develop and test the solution as it stands.
“At the moment the focus is on building this platform and hopefully make it into a unicorn,” he ends.