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Blockchain-powered trade finance to help SMEs expand in EU

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A number of banks are facilitating trade financing for Small to Medium enterprises (SME) and helping them to expand their business outreach. Trade and export has been an indispensable element for global distribution of goods. Being in Australia, you can taste Italian wine but have you ever imagined how intricate might be the process! Generally, for global trading system, associated companies are issued trade finance which is kind of credit providing from the banks.

Reportedly in 2017, the global trade finance transactions totaled over $9 trillion however, the companies were based on mostly paperworks. Additionally, for a number of SMEs, getting issued by trade financing was difficult to obtain as most of the financing were reserved for bigger companies as well as linear relationships with the banks. But with the emergence of Blockchain technology, many SMEs would probably be able to develop stronger ties with the banks.

In this aspect, looking into the flexible customs and varying regulations on trade, EU is widely recognized. This has opened the doors for many SMEs to gain trade financing throughout the union. For instance, we.trade is working towards trade finance while leveraging IBM’s blockchain solution and building up a network that was unfeasible 5 years back. To leverage the trade finance initiative, 14 major EU banks agreed collaborate with the firm that would facilitate 70% of SMEs in EU.

CaixaBank, Deutsche Bank, Erste Group, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale, UBS and UniCredit.

While working with IBM’s blockchain ecosystem, the associated banks will be able to provide a trusted and transparent lending process and help the SMEs to forge better trading partnerships.

trade finance

The blockchain-backed financing solutions will boost the outreach which would allow SMEs to reach wider customers. CEO of an instant funding provider, Radoslav Albrech said:

The key advantage from the cost-effective and fast payment processing via the Stellar blockchain, in our case, is that one can reach many more markets than conventional lenders. Lack of credit is one of the primary growth obstacles for small business owners so making credit accessible to nearly all business owners who have access to the internet is a big boost for these SMEs.

We.trade’s CEO, Roberto Mancone spoke about the trust and reliability among lenders with the help of blockchain-powered financing model:

For the first time, competitors are joining forces to solve all the complexities of trade finance. We’ve moved quickly and deliberately to do it, and we’ve guaranteed a user experience that enables businesses to trade, seamlessly, simply and with trust.

Additionally, Mancone foresees his firm to expand to 200 global banking options by the next year which would let the businesses to opt among their appropriate financing providers and draw new marketplaces for customers.

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