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Industry roundup: 18 August 2020

Standard Chartered supports Bangladesh’s first blockchain letter of credit

Standard Chartered Bank has executed the Bangladesh's first blockchain transaction by issuing a letter of credit (LC) for Viyellatex over the Contour blockchain network.

Viyellatex, one of the country’s biggest ready-made garments exporters, imported textile items from Viyellatex Spinning. Standard Chartered acted as the issuing bank for the applicant, as well as the advising bank for the beneficiary of the LC. The entire transaction was paperless and completed digitally through Contour’s network. 

Contour provides a distributed trade network enabling an enhanced degree of collaboration across the main elements of trade with all participants leveraging the network to create and renew trade data in real-time. Built on R3’s Corda blockchain, Contour aims to improve data transparency, remove administration costs and reduce friction in global trade: all of this leading to an overall increase in efficiency and reduction in costs for all parties.

As one of the founding members of Contour, Standard Chartered benefitted from Contour’s network which simplifies the LC process, delivering shorter settlement times, instant discrepancy resolution and simplified sanctions screening.


American Express to acquire Kabbage

American Express has announced that it has entered into an agreement to acquire substantially all of Kabbage, a financial technology company providing cash flow management solutions to small businesses in the US. The transaction represents an step toward American Express’ goal of being an essential partner to small businesses through a broad range of payment, cash flow and financial management tools.

Under the terms of the agreement, American Express will acquire Kabbage’s team and its full suite of financial technology products, data platform and IP built for small businesses. Kabbage’s products include access to flexible lines of credit, online bill payment, cash flow visualisation tools, e-gift certificates, and the ability to centralise funds through the company’s recently launched business checking account. This product suite is integrated into a single online platform that uses real-time data processing to help small businesses better understand, forecast and manage their cash flow.

With the addition of Kabbage’s technology, products and people, American Express says it plans to offer a broader set of cash flow management tools and working capital products to its millions of small business customers in the US.

The acquisition is expected to close later this year, subject to customary closing conditions. Kabbage’s pre-existing loan portfolio is not included in the purchase agreement.


80% of SMEs confident of COVID-19 recovery despite gloomy outlook

Four in five (80%) UK small and medium-sized enterprises (SMEs) are confident they will recover from the Covid-19 pandemic, according to research conducted by the Great British Entrepreneur Awards alongside its partners Starling Bank. The survey of more than 300 UK SMEs across a range of sectors also found that two-thirds (68%) of business owners believe they will return to pre-COVID levels or better by 2021.

Despite last week’s warning from the Chancellor Rishi Sunak of hard economic times ahead, the findings suggest that many SMEs are feeling positive about the future and their ability to bounce back. Their outlook also appears to be improving as lockdown continues to ease, with three quarters (75%) of business owners saying they feel more confident than they did a month ago.

One factor potentially playing a part in this sentiment is the adaptability of SMEs, with nearly two in five (39%) firms changing their line of business to survive the impact of the pandemic. Of this group, many have shifted their business model by going online, prioritising digital products and setting up delivery services. However, there is no doubt that COVID-19 has been a deeply worrying time for SMEs. One in five (20%) business owners said they have considering closing as a result of the pandemic and nearly two-thirds (63%) have seen a decline in revenue, with 19% making no profit at all during lockdown.

The research also shows that many business owners have had to make tough decisions during the crisis, with a third (30%) using their own money to keep the business afloat and a similar number (33)% being forced to furlough staff. More than a fifth (21%) are not confident they can pay their bills each month. It’s clear that these pressures are taking their toll on business owners, with two thirds (66%) saying their mental health has suffered as a result of the pandemic impacting their business.

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