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How confidential computing can transform global trade finance - Industry roundup: 21 April

How confidential computing can transform global trade finance

Global Shipping Business Network (GSBN), an independent, not-for-profit technology consortium building a blockchain-enabled operating system designed to redefine global trade, has announced the completion of a proof-of-concept with HSBC to harness confidential computing technology through Decentriq Data Clean Rooms to transform global trade finance.  

Trade finance is the lifeblood of global trade, yet the financing gap is estimated to reach US$2.5 trillion by 2025, according to the World Economic Forum. One of the reasons why funding applications are rejected is due to the lack of information from the requesting entities. HSBC, as one member of GSBN’s Trade Finance Advisory Group, has responded to the unmet demand by collaborating on several solutions and proofs-of-concept that harness trusted digital data from the supply chain. 

To better serve customer needs in trade finance, banks must first understand clients’ business by looking into their working capital cycle, trade routes, counterparties, etc. This information can only be obtained by asking customers to produce a checklist of paper documents from various parties, such as bills of lading, invoices, contracts, etc. This lengthy process becomes an administrative burden for all parties involved and increases review time.  

Confidential computing is the latest privacy-enhancing technology designed to protect data at the hardware level. While GSBN’s platform is built upon blockchain technology with strict access policies, some scenarios require more complex data collaboration processes. Trade finance is one such scenario in which banks need alternative and aggregated insights from various entities involved in a customer's supply chain to build a holistic understanding. In particular, shipment records can shed light on business operations in terms of volume and business nature, which are valuable insights that help banks tailor appropriate financing solutions that cater to the working capital needs of their customers. 

The latest proof-of-concept unlocks a brand-new way of data collaboration that allows the aggregation of shipping records across shipping lines through the use of a data clean room, which is a solution provided by technology partner, Decentriq, harnessing confidential computing technology. In the proof-of-concept, synthetic shipment details provided by carriers via GSBN are aggregated and processed in the clean room, where HSBC can access the statistics to understand better customers’ shipping activities, i.e., number of shipments, distribution of cargo nature, and average cargo quantity, and so on.

Not only does this strip away sensitive or unnecessary information, displaying only the necessary statistics and insights to the bank for its assessment, but it also increases the representativeness of the statistics enabled by data aggregation across multiple parties. Moreover, the combined use of blockchain and confidential computing technologies ensures ease of insight sharing while maintaining a high level of privacy, security, and auditability throughout the data lifecycle. 

“Alternative data opens a new path to simplifying trade finance as it allows banks to gain more timely, accurate and relevant insights of clients’ activities,” commented Aditya Gahlaut, HSBC Managing Director and Head of Global Trade and Receivables Finance, Hong Kong and Macau. “We will continue to leverage the latest technology and collaborate with different stakeholders in the industry to make trade finance faster, easier and more accessible for importers and exporters.”

European and Asian corporates requesting enhanced ESG service and advice

Large companies in Europe and Asia are asking their banks for advisory services, enhanced customer service and other forms of practical support to help them sustain and grow their businesses amid growing economic headwinds, according to a new report from Coalition Greenwich.

Companies, frustrated by cumbersome documentation and compliance, are requesting accelerated processes and improved customer service to make day-to-day operations more efficient.  Corporates also seek advisory services to help them optimise cash and treasury management, financing and business performance.

“Since technology has become the core delivery mechanism for many bank services, companies are now asking for digital implementation support to help them leverage the benefits of innovative product offerings, enhanced digital platforms and automated execution of transactions,” said Gaurav Arora, Co-Head at Coalition Greenwich and coauthor of ‘As Challenges Mount, Corporates Seek Enhanced Support from Their Banks’.

Most large companies globally have adopted some form of ESG goals, and almost 60% of large European companies want their banks to act as educators and advisors on ESG. In Asia, nearly half of corporates are looking for banks to advise and anticipate regulation changes and to explain how ESG regulations will affect their businesses. 

Today, banks are well positioned to support companies in their sustainability journey through financial products and solutions, including advice, guidance on regulation and implementation, and robust reporting tools to measure and track progress toward ESG targets.

“By providing access to sustainable financing products and by using their in specific industry and regional expertise to help companies identify material ESG risks and opportunities, corporate banks are invaluable partners to companies,” added Dr. Tobias Miarka, Head of Corporate Banking at Coalition Greenwich and report co-author.


Nordic instant payments zone blow as P27 withdraws clearing license application

P27 has withdrawn its clearing license application from Finansinspektionen, Sweden’s financial regulator. The company says that the prerequisites for building a new Nordic system critical payment infrastructure have changed since its launch in 2019. 

New requirements and regulations have challenged P27’s operating model. The fact that P27 will not handle the Swish flow in Sweden and the recent decision by the Danish banking sector to proceed with other payment solutions has put the company in a new position.

“We fully understand and endorse the high requirements and expectations which applies to us as a provider of critical payment infrastructure,” commented Paula da Silva, CEO of P27. “We are now in a dialogue with our owner banks to evaluate the best options going forward. We have a strong banking community in Sweden that have always taken common responsibility to ensure a resilient and robust payment infrastructure.”

In 2019, P27 set out to transform the Nordic payment markets and build the world’s first real-time, cross-border payment system in multiple currencies. P27 is a joint initiative by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank, exploring the possibility of establishing a pan-Nordic payment infrastructure for domestic and cross-border payments in the Nordic currencies and the Euro.

P27 is the owner of Bankgirot. A statement from P27 said that the two companies will continue to cooperate to ensure that the current payment infrastructure is operational as long as needed.

“Our vision was to provide a better payments infrastructure to the 27 million people living in the Nordics, with an optimistic timeline,” added da Silva. “Lately, it is evident that our vision was too ambitious and complex. Hence, we need to reassess our future ambition in the Nordic payments market.”


Societe Generale–FORGE stablecoin added to public blockchain

Societe Generale–FORGE (SG-FORGE) has launched the EUR CoinVertible, a digital asset that purports to maintain a stable value (stablecoin). EUR CoinVertible is deployed in the euro denomination on the Ethereum public blockchain.

Based on the CAST open-source interoperability and securitisation framework, this project is designed to bridge the gap between traditional capital markets and the digital assets ecosystem. It is part of Societe Generale group’s strategy, developing initiatives in the field of digital assets in a secure and transparent framework for institutional investors, in line with banking, legal and regulatory standards.

While the regulatory framework related to digital assets at the European level will be modified by the upcoming European digital assets regulations “MiCAR” and “Pilot Regime”, EUR CoinVertible, per the French legal framework applicable to digital assets, has been designed to address growing client needs for:

  • A robust settlement asset for on-chain transactions.
  • An innovative solution for corporate treasury, cash management and cash pooling activities.
  • On-chain liquidity funding and refinancing solutions.
  • A solution for intra-day liquidity needs, such as margin calls.

EUR CoinVertible is a ‘digital asset’ (“actif numérique” as defined in Article L. 54-10-1 of the French Financial and Monetary Code) designed to fulfil institutional investors’ expectations. Its legal structure guarantees (i) the complete segregation of the collateral assets held to back the value of the stablecoins from the issuer, (ii) direct access given to token-holders on the collateral assets, and (iii) the implementation of business continuity plan mechanisms in case of a market or technological event. For example, the institution says it meets stringent and predefined collateral eligibility criteria regarding minimum rating and liquidity.

Daily transparency is available on the EUR CoinVertible amount and collateral positions, as well as on the value and composition of the collateral, on SG-FORGE website. Access to the stablecoin is limited to investors onboarded by Societe Generale group through its existing compliance procedures, such as KYC and AML-CFT. Interoperability and compatibility of the EUR CoinVertible with traditional systems and financial practices are possible thanks to its implementation under the principles of the CAST framework. At the same time, the bank says that the source code of the EUR CoinVertible’s smart contract is published under the Apache 2.0 open-source license.

For this first CoinVertible issuance, SG-FORGE has been advised by the law firm White & Case. Equitis Gestion has provided the role of the initial fiduciary, while PwC has audited the smart contract. The smart contract’s public address of the EUR CoinVertible is listed as the following: 0xf7790914Dc335B20Aa19D7c9C9171e14e278A134

“Digital assets with stabilisation mechanisms – i.e. stablecoins – built under a robust banking-grade structure will be a key element to increase trust and confidence in the native crypto ecosystem,” said Jean-Marc Stenger, Chief Executive Officer at SG-FORGE. “This issuance is a major step in Societe Generale–FORGE’s roadmap to deliver innovative solutions to its clients, either real-money institutions and corporates or entities of the crypto industry, and to facilitate the emergence of new market infrastructures based on blockchain technology.” 


Airwallex launches global payments in Canada

Airwallex has launched its global payments services in Canada. Canadian businesses can tap into the firm’s global payments and financial platform, which are marketed as offering a faster, more cost-effective and transparent alternative to the traditional banking platform. 

The offering now available to Canadian companies includes local currency accounts in over 12 currencies, a multi-currency wallet in 44 currencies and payouts to 150 countries with its proprietary local payment network. Airwallex announced that the full suite of its global products, including multi-currency cards, spend management, and online payments, will be progressively rolled out in the market.

Airwallex supports several Canadian businesses across e-commerce, professional services and technology sectors. These customers use the centralised Airwallex platform for collections, payouts, and multi-currency management.

“To thrive in today’s challenging global economy, businesses must be able to scale without borders, move money across currencies with ease and manage their finances across markets with a single integrated platform,” said Ravi Adusumilli, General Manager of Americas. “Airwallex is excited to support the ambitious Canadian businesses who wish to grow internationally, quickly and economically, as well as international businesses who have operations in Canada.”


Green loans launched to generate carbon credits in European agricultural land

HeavyFinance, a European climate tech investment marketplace for the agricultural industry, has launched Green Loans to tap into a rapidly growing carbon credit market. This debt instrument enables retail and institutional investors to get returns from selling CO2 removal credits generated in European farmland. With the urgent need to take action on climate change and the high demand on the voluntary carbon credit market, HeavyFinance suggests that investors in Green Loans can now expect up to 30% annual returns with an investment period of four years.

With this financial product, farmers taking a Green Loan do not pay an interest rate, as returns for investors are generated from the sale of CO2 certificates. HeavyFinance estimates to facilitate €7-10m of debt capital during the first year after the launch of Green Loans, providing high-quality carbon certificates for investors while supporting farmers with the mass adoption of regenerative practices to tackle climate change.

The programme represents a solution to the agriculture sector being labelled the third largest contributor to greenhouse gas emissions in Europe, according to the quarterly greenhouse gas emissions in the EU report. 

Green Loans was set up to support carbon farming – an innovative approach aimed at reducing the amount of carbon dioxide entering the atmosphere by storing it within the soil, leading to increased yields. This regenerative approach to farming is based on sustainable agricultural practices such as no-tillage, strip or minimal cultivation, as well as crop rotation and management of crop residues, and according to a recent report by the Food and Land Use Coalition, regenerative agriculture could remove 1 billion tons of carbon dioxide equivalent per year by 2050.


Open finance drives new cloud-based core banking platform from Intellect

Intellect Global Consumer Banking, the consumer banking arm of Intellect Design Arena Limited, has announced the launch of what it describes as the world’s largest open finance-based core banking platform on the cloud, with pre-integrated marketplace for the UK and Europe markets. The platform - - is hosted on AWS cloud and is designed to support financial organisations’ design products and deliver experiences for their customers. The platform covers current accounts, savings accounts, deposits, lending, cards, payments, trade finance, treasury and digital banking.

The platform aims to design the future of financial institutions with what the firm describes as future-ready technology solutions. Based on the five principles of configurability, richness, scalability, ease of integration, and composability, aims to help banks create their own ‘My Signature Solution’ using artificial intelligence and optimising operations. 

The platform includes a flexible commercial model enabling banks to ‘Pay As You Grow’. The AWS cloud hosting should reduce business and technology risks, lower maintenance costs, and increase agility and scalability. It includes an ESG rule engine in compliance with global standards, which should promote sustainability.

Intellect says that banks can onboard a customer in three minutes, leverage and integrate with fintechs to offer deposits through aggregators, offer services outside the bank’s core strengths, drive 'Application To Sanction’ in minutes, and offer credit experiences like ‘Buy Now, Pay Later’. 

“The platform enables banks to connect with partners and drive value creation for their discerning customers,” said Rajesh Saxena, Chief Executive Officer of Intellect Global Consumer Banking (iGCB). “It democratises the financial services space by creating a level playing field for all types of banks in the UK and Europe, giving them equal access to opportunities to launch products fast, leverage the pre-integrated partner ecosystem, scale on the cloud, design and deliver contextual experiences to their customers. Eventually, banks can create their signature banking solution through our new Intellect’s Open Finance platform.”


ACI Worldwide integrates fraud safeguards for US real-time payments systems

ACI Worldwide has made its fraud protection services available as part of its Real-Time Payments Cloud for US customers preparing for the July launch of FedNow. With integrated fraud protection in partnership with Microsoft Azure, ACI Real-Time Payments Cloud is a multi-tenant SaaS platform supporting connectivity to The Clearing House Real-Time Payments network and FedNow.

The Federal Reserve has designated ACI Worldwide as a FedNow Instant Payment Pioneer. Its real-time payments platform uses AI and machine learning-based fraud scoring services. These services include patented proprietary incremental learning technology delivered as a service in the cloud through an API. Its scoring engine is used for real-time payments on both send and receive, providing a dual layer of protection.

ACI currently processes over 500 million instant payments monthly across cloud and on-premises platforms. The company says its international experience enables it to embed a specialised solution for real-time payments customers, allowing them to scale as transaction volumes increase quickly.


Crédit Agricole and Worldline target merchant services in France

Worldline and Crédit Agricole have signed a non-binding exclusive agreement regarding a strategic partnership to create a new entity in the French payment market. France is the second largest economy in mainland Europe, enjoying a robust economic performance sustained by consistent policy frameworks, strong institutions, and an attractive investment environment.

The French payment industry shows solid dynamics with a sizeable and growing addressable market and a high readiness and receptiveness towards cashless payment methods. The country has aggregated Merchant Sales Value (MSV) of approximately €700bn.

With cash penetration still high, at around 40% of payment volumes, the French market offers an attractive growth opportunity driven by the secular shift from cash to card and continued demand for innovation. Combined with the French “Cartes Bancaires” domestic scheme and its strong and resilient market share capturing c.80% of card transactions volumes, these market trends make France a particularly attractive country in the broader European context.

The contemplated alliance between Crédit Agricole and Worldline is an opportunity for both companies to expand their merchant services activities in this market significantly.

The contemplated partnership would offer a combination of technological and commercial offerings at scale to adequately respond to any evolving merchant needs, whether local or global. The pair say that this would be fuelled by Worldline’s in-store and online capabilities to serve merchants at scale, and Crédit Agricole’s strong distribution networks, deep French market presence and more than 16,000 banking advisors for enterprises and local knowledge in merchants acquiring.

The joint company would be majority owned (50% of total capital plus one share) and fully consolidated by Worldline. It would leverage Worldline’s global European processing platforms and develop all the products dedicated to the French market. The joint company would also be in charge of the commercial development of the alliance, both directly for the most prominent merchants and by providing active support to the bank distribution channels.

The contemplated joint company would offer to the key accounts in France a full-service offering leveraging Worldline’s global acceptance and acquiring platform, including the domestic “Cartes Bancaires” scheme. In parallel, Worldline could offer its international merchants access to the domestic scheme, further expanding its broad range of payment schemes.

The contemplated operation remains subject to both parties’ works council consultation and corporate authorisations and customary regulatory approval, and they expect the timeline to run as follows:

  • 2023-2024: Joint investment phase of €80m equally financed by Worldline and Crédit Agricole for the product and offering design, and joint company implementation.
  • 2025 onwards: Full implementation of the joint company starting to generate revenues and operating margin before depreciation and amortisation.

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