Trade Ledger: A Disruption in Trade Bureaucracy

A recent report by the Asian Development Bank highlights that the estimated global trade finance gap lies at around $1.6 trillion, and that as many as 50 percent of trade finance applications by SMEs get rejected. These statistics bring up an obvious question—how can SMEs operate in an environment where their requests for trade finance are more likely to be rejected than funded?

The same report also states that an increment of 10 percent in trade finance would enable SMEs to recruit in average, 1 percent more employees. Therefore, since trade finance has additive effects on employment, in absence of its underlying support, trade opportunities that create growth and jobs are lost.

Answering these questions and addressing the socio-economic development issue of unmet trade finance demands is Sydney-based fintech firm, Trade Ledger.

The company has developed a unified digital business-lending operational platform that creates a channel to support all major types of cash flow lending products, from invoice funding to debtor financing, to supply chain financing. According to Martin McCann, CEO of Trade Ledger, “A highly problematic reality is that most of the world’s SMEs are considered credit-unworthy when the truth is that the credit modelling and underwriting processes are simply set up to deal with MN’s and large corporations and cannot address the SME market. We are solving that market problem with technology.”

Trade Ledger offers a unique range of solutions for corporate lending in its platform-as-a-service model. One of its components, Credit and Fraud Analysis, calculates the entire depth and breadth of credit and financial metrics, directly from the business’s financials system. It also provides definitions of each metric, along with the relevancy and parameters considered behind calculation, creating a truly accurate picture of credit worthiness in real time. On the other hand, Trade Ledger’s B2B e-commerce platform also allows banks to customize risk and credit processing variables according to policies that suit their needs. The platform, which runs on AWS, can autonomously update invoice status, offer transparent credit rating summary, and collect requisite customer details for a seamless approval and instantaneous transfer of business loans. Cumulatively, the digital lending platform covers every aspect of business lending, from customer application and on-boarding, to due diligence, settlements and payments.

To better elaborate the applicability and efficiency of Trade Ledger, McCann cites a case study of an Australian alternative lender, who was amongst the first adopters of the solution. The firm previously had to execute manual and time consuming processes, owing to its dispersed and non-connected credit decision-making, customer engagement, CRM, and financial data systems. Moreover, their legacy systems failed to guarantee consistency of applying risk and credit policies country-wide, which caused grave financial risk for the business. To mitigate these ever-growing challenges, Trade Ledger digitized the company’s complete array of offerings, and automated their back-office operations. This resulted in a much-improved lending facility, structurally speaking, at a far lower cost. Trade Ledger also implemented new and numerous automated risk controls in their operations, which significantly raised the client’s profit margins, while reducing risk.

Advancing its platform for future, Trade Ledger is now incorporating AI, machine learning, Distributed Ledgers and service bots, which would substantially add to the platform’s predictive capabilities and banking industry utility. With further expansion plans in Singapore, New Zealand, Hong Kong, Malaysia, Europe and the USA, Trade Ledger is definitely re-imagining the future of business lending technology— Banking as a Service.