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Digital trade finance hits new milestones

The digitisation of the trade finance space has continued apace this week, with news of a successful transaction in Chinese renminbi (RMB) and a new partnership.

First, open trade finance network Contour has announced the completion of a Baosteel and Rio Tinto deal, supported by Chinsay, DBS Bank, essDOCS and Standard Chartered Bank. The transaction marked the first fully integrated paperless trade for Rio Tinto with a Chinese counterpart.

This was the first paperless deal in the iron ore industry to be transacted in RMB. The collaboration between Rio Tinto and Baosteel also showcases how digital initiatives can effectively enhance the efficiency and security of cross-border trade finance flow, at a time when delivery of physical documentation can be more challenging.

“The successful conclusion of this transaction with Baosteel demonstrates Rio Tinto’s commitment to collaborate with our customers and drive yet another first in the iron ore industry - paperless RMB trade,” said Simon Farry, vice president, Sales & Marketing for Rio Tinto’s Iron Ore business. “We will continue to utilise technology such as blockchain and end-to-end paperless solutions to enhance our customers’ experience and bring the industry closer to a full cross-border digital trade future.”

The paperless trade was possible thanks to Contour’s partnership with Chinsay - previously covered on CTMFile - and Chinsay’s ICP platform, which provides the corporate workflow and data for the process, allowing companies to easily collaborate in one place. The letter of credit (LC) issuance and approval of key contract terms was performed digitally and completely paperless, enabled by Chinsay and its ICP software.

essDOCS, another Contour partner, managed the electronic bill of lading and other documentation through their CargoDocs service. Rio Tinto, Baosteel, ship agent, shipowner, DBS Bank and Standard Chartered Bank collaborated to draft, approve, sign, issue, transfer and electronically present the eB/L plus upload supporting documents. This resulted in significantly reducing trade document turnaround times and accelerating the trade via integrated data flow enabled by the CargoDocs-Countour interface. Contour says that this application is vital in a new era where physical documents could be a major barrier to completing a trade.

“To have another transaction take place on Contour’s network by two well-renowned names highlights the relevance this technology has for the sector,” said Carl Wegner, CEO of Contour. “Now, more than ever, there is a greater demand for seamless, digital sign-off for the LC process. The delays and archaic processes that have marred the trade finance sector can no longer happen, and effective solutions are vital to keeping the sector alive. This transaction, combined with another well-respected financial institution joining our network and our ongoing relationship with Chinsay and essDOCS, furthers Contour’s aim of providing a neutral network where LC transactions can be conducted from start to finish.”

The transaction also marks DBS Bank’s first on Contour as the latest member to join the network. DBS was the advising and nominated bank for the deal, together with Standard Chartered Bank, a founding bank of Contour, as the issuing bank.

“Sustaining and developing supply chains has never been more essential than it is right now,” commented John Laurens, group head of Global Transaction Services at DBS Bank. “As businesses accelerate their digitalisation objectives to find new opportunities and counter challenges in the current trade environment, a collective effort across banks, industries and technology providers is key to driving digitalisation in a manner that delivers the network effect that is vital to trade. Digitalisation of trade presents an opportunity to not only transform the long term relationships with our clients, but also provide the necessary means to bring about sustainable and transformational changes to businesses, large and small, and across the ecosystems they are part of. As the latest member to join the Contour network, we are proud to have played an integral role in this landmark transaction by facilitating the first cross-border RMB-denominated trade settlement done digitally, where DBS took the lead as Rio Tinto’s nominated and advising bank to effectively manage forex risks pertaining to the transaction.”

New partnership targets increased automation

Elsewhere in the trade finance space, Traydstream, a fintech that applies artificial intelligence (AI) to trade document scrutiny has announced the signing of a joint partnership agreement with Infosys Finacle, part of EdgeVerve Systems, a wholly owned subsidiary of Infosys.

As part of the partnership, Traydstream’s solution will be integrated with Finacle’s blockchain-based trade finance solution, Finacle TradeConnect, to enable further automation of trade finance processes.

Traydstream’s modular technology extracts data intelligently, using AI and optical character recognition. It is designed to cut down the time it takes to complete checks on the dozens of documents generated by a single shipment, using a machine learning-based engine to check against the underlying trade transaction with over a quarter million rules permutations. The fintech says this is a huge advantage for all exporters and banks when trade operations expertise is in short supply and billions of trade documents are in circulation at any time. Mistakes or delays can be very costly.

Traydstream’s platform can automatically recognise over 160 different document types and is able to extract as well as understand over 3,000 attributes, allowing it to support export and import LCs (issuance, amendments and document presentation); documentary collections (imports and exports) and open account transactions.

Finacle Trade Connect is a blockchain-based solution designed to automate inter-organisation processes for trade finance. The solution digitises the trade finance business processes, including validation of ownership, certification of documents and making payments, while working on a distributed, trusted and shared network. Finacle TradeConnect is available for a range of functions, including bill collection, letters of credit, open account for trade, C2C transactions for trade, B2C transactions for trade, PO financing and invoice financing.

“We believe that Traydstream can add value very quickly to Finacle clients and contribute to their overall vision” commented Shishir Vyas, head of Partner Solutions at Traydstream. “Our objective is to improve the quality of trade rules and compliance checking by automating the most manual and error prone parts of the process so that people can truly focus on the discrepancies that are going to save their business time and money.”

“With Finacle Trade Connect, we are helping our clients reimagine the trade finance processes to deliver unprecedented levels of digitisation and automation across the ecosystem,” said Venkataramana Gosavi, senior vice president and global head of Sales at Infosys Finacle. “The solution delivers significant improvement in transparency, speed, and operational efficiencies, among trade parties. Consequently, our clients have experienced processing time reduction by nearly 75 %. We believe the partnership with Traydstream will further enhance our value proposition and help our clients unlock greater value.”


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