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Trade Finance in APAC | Embracing the future.
June 2016
2
Trade Finance industry is facing new challenges which are reshaping the way traditional banks are conducting business
• Concentrating industry, as some actors are retreating from this activity (e.g. ANZ in Asia)
• In the recent years, FinTechs and market places or specialized niche companies focusingon commodity finance or SME trade finance have emerged
• Marketplaces such as Alibaba are showing an alternative model, by leveraging on theirtrade-centric positioning to launch banking activities and finance activities
Changing competition
1
• Supply Chain financing has been focusing on the buyers-side (with sound credit ratings) andthe supplier-side is still underdeveloped despite the needs (e.g. payment assurance)
• There are real Financing needs in emerging markets where SMEs and distributors arestruggling to gain access to affordable working capital. According to ADB, the trade financegap in Asia has been around US$700Bn
Untapped segments
2
3
4
• Strengthening regulations around KYC, International Sanctions and AML havedeeply impacted traditional banks’ business processes, lengthening the on-boarding process and increasing workload on Operations
• Basel III requirements have triggered the deleveraging of balance sheets andhave reduced the liquidity available for the financing business
Relentless regulatory pressure
• Trade Finance is still relying on heavy processes involving the exchange of paperdocuments between multiple parties, threatening the customer experience andincreasing the banks’ overall operational cost
• Ongoing Digitization is paving the way to a renewal of this industry, for instanceby digitizing the entire chain via Blockchain / Smart Contracts
Obsoleteprocesses
Trade Finance challenges
3
Agenda
Overview of the key trends in the Trade Finance industry in Asia1
3 Our credentials
Our expertise2
Appendix4
4
Source: WTO 2015, CH&Co analysis1Asia CAGR is based on data from 2010 – 2014; Regional trade flow growths are based on 2013 and 2014 data
Asia > Africa and Middle EastUS$ 509 bn|+11.1%
Asia > North AmericaUS$ 1,065 bn|+5.2%
Intra-AsiaUS$ 3,093 bn|+0.5%
Asia > EuropeUS$ 900 bn|+5.3%
Asia > Latin AmericaUS$ 185 bn|+3.2%
Asia’s trade flow with the world has been steadily growing at 4.5% CAGR1 since 2010
5
Asia’s Trade Finance volumes are expected to grow with more focus on supply chain finance
Projected export and import volume growth
Asia ExportVolume
Asia ImportVolume
Global TradeVolume
Trade Finance Product Mix Projection
Total stocks of Trade Finance transactions (Trends)
0
200
400
600
800
1000
1200
07 08 09 10 11 12 13 14 15 16p 17p 18p 19p
China
India
GlobalUS$ bn
0
2
4
6
8
2015 2016p 2017p
%
Source: WTO 2016, CH&Co analysis
Source: BIS, IMF, World Bank, CH&Co analysis
33%
15%
52%
2014 2020
33%
52%
15%
45%
36%
19%
Traditional Trade Finance
Payments
Supply Chain Finance
Source: MISYS, 2015
6
An evolving competitive landscape in both MNC and SME markets, with relentless pressure from new players on traditional segments
Asian Regional Banks
Boutique SCF Companies*
Marketplaces
FinTech
MNC (80% of current traditional activity) SME (20% of current traditional activity)
Targeting primarily large corporates and MNC
• Tier 1 and 2 Asian banks are developing a strong financing & payment network for intra-Asian flow
• In particular, Japanese banks are proposing cheap liquidities with the help of BOJ stimulating bank lending facility: 0% interest rate for loans
• In South-East Asia, sub-regional actors such as DBS are riding on the good dynamics of exchanges in the area
Targeting primarily SMEs
• Marketplaces rely on their centric positioning to build an exhaustive ecosystem for synchronized data flow in trade finance
• FinTech introduce disruptive technologies aiming primarily at serving SMEs and develop new standards (e.g. blockchain-based trade)
• Boutique SCF Companies compete by providing non-conventional business models
*Refer to B-Case 5 to 7 in Appendix
7
The Trade Finance levers for traditional actors: increase revenues & reduce costs
Limit the Capital consumption of Trade Finance products, as Basel III requirements (Balance Sheet as well as Off-Balance Sheet) are more stringent
Managing constraints on pricing
3
Bridge the funding gap for SMEs in Asia and turn this market into an engine growth
Broaden the scope of Supply Chain Financing offer
Sourcing of new businesses
1
Partner with marketplaces and leverage on their trade-centric positioning would allow traditional Trade Finance actors to gain information, expertise and new customers
Leveraging on marketplaces
2
Answer rapidly to tightening regulation without increasing the operational cost of compliance
Leverage on RegTech ecosystem can help banks to secure and enhance the setup
Reducing operational risk
4
5
Automate manual operational tasks by leveraging on FinTech would contribute to reducing processing costs
In particular, assess the impacts of Blockchain, Big Data, Robotic Process Automation and Machine learning
Automating operations
Increase Revenues
Reduce Costs
8
Bridge the SME funding gap: 50% of Asian of SMEs are underserved financially
Source: World Bank, 2015, CH&Co analysis
Underserved
SMEs (in %)
40-50%
50-60%
0
20
40
60
80
100
120
140
160
180
East Asia &Pacific
South Asia
Number of SMEs in APAC
Underserved With Loan/Overdraft With Checking Account
(millions)
35%
13%
52%
42%
14%
44%
How to turn Asian SME market as a growth
engine for Traditional Trade Finance actors?
Major impediments in financing SMEs
Current global credit gap of SMEs is estimated at US$2.6tn, with wide gap in Asia accounting for US$700Bn to US$850Bn
Lack of collateral and information asymmetry cause low credit scores for most SMEs
The high risk profiles associated with SMEs cause long approval process for loans from banks
What levers to bridge the gap?
The ultimate goal is to fasten SMEs onboarding and loans application processing
Develop improved decision making tools via better data acquisition (e.g. third-party partnerships) and more accurate risk credit scoring for SMEs
Sample of CH&Co SME credit risk scoring model:
1
20%
80%
Legal agreement to be completed ?
70 %New
client ?
Yes
No
Amount
Interest rate
Maturity
Internal Risk checking ?
Calibration of the deal?
Final decision ?
10%
90%
Yes
Stop
Stop
40%
No
MaybeInteresting
profile ?
YesNo
10%
20%
Under delegation
New product ?
Above Limits ?
Guarantee required ?
15%
10%
10%
25%
9
Banks to adopt 4-corner Supply Chain Finance model to provide financing for underserved small and medium suppliers
3-corner closed model 4-corner interoperable model
SCF Service
Provider
Buyer
Seller
Tra
de
Co
ntr
act
Risk and processing
services
Financing services
Seller’s Bank
Buyer’s Bank
Buyer
Seller
SWIFT TMA
Tra
de
Co
ntr
act
BPO
BPO
Risk. Financing &
Processing services
Risk. Financing &
Processing services
• Business relationships are mainly between SCF serviceproviders and “cash-rich” large corporate buyers withhigh credit rating
• Buyer-led solution: SCF service providers finance theirbuyers’ accounts payable to provide early payment fortheir clients’ suppliers (Approved Payables)
• The approach is buyer-centric with frequent occurrencesof suppliers on-boarding issues
• Standards and channels are proprietary as determinedby the SCF providers
• Business relationships are between banks (partnerships)and all types of business profiles, including SME suppliers
• Supplier-led solution: Banks provide early payment forsuppliers by purchasing their accounts receivables(Receivables Finance)
• The on-boarding processes of suppliers and buyers areconducted independently with their respective banks
• This model supposes the existence of open, interoperablestandards: BPO can be used as an electronic letter ofcredit in a multi-bank industry standard
1
Processing platform
Routing &
settlement
Routing &
settlement
10
Marketplaces are disrupting the traditional trade finance model: the example of Alibaba’s developing financial ecosystem
Buyer Seller
Marketplace
Buyer’s Bank Seller’s Bank
Exchange of Goods
Payment
Collection of information from multiple parties/channels, at multiple stages (KYC,
credit approval, transaction documentation, etc.)
Reporting Reporting
Buyer Seller
Financing (CN, UK, US)
Investments / Treasury management
From a desynchronization between trade & financial flows… … to an exhaustive ecosystem relying on data flows
The current Trade Finance model relies on a separation between
the flow of goods on a marketplace and the related financial flows
(payment, credit, etc.)
In this scheme the Banks, as Trade Finance instruments providers,
are not accessing all the data required to support the financing
process (e.g. KYC, credit process) and thus are losing time and
effort to gather required documentation and substantiate the
transaction
This impacts mainly SMEs (small merchants and distributors)
Alibaba has built an ecosystem relying on its centric positioning as
marketplace for multiple segments (Alibaba for wholesale, TaoBao
for retailers): it has access to a huge database of buyer/seller
information, trade payment & settlement behaviors, cash flows
All this information is tracked and analyzed through a cloud-based
IT infrastructure which allows to speed up the credit process and
reduce the risk by enhancing the reliability of the data collected
This allows Alibaba to enhance its Financial Services offer by building
blocks: payment, financing, investment of excess cash, etc.
Data
Analy
tics / C
loud c
om
putin
g
2
11
Collaborative partnership with marketplaces is an opportunity for traditional Trade Finance players to access broader information, better expertise and a new reservoir of customers
Provision of payment services between buyers and suppliers
Provision of credit line for marketplace users with appropriate credit history
Offering investment products for excess cash
Determination of customers’ outstanding debts and credit history
Additional data input for improving the discriminatory power of existing risk models
Prediction of customer’s future credit behaviour
Determination of customers’ purchasing behaviour and current industry trend
Identification of customers’ payment patterns and financing need
Direct marketing of appropriate products for each clients
Marketplaces have a holistic view of the information
related to the flow of goods in each trade
BuyerSupplier
Marketplaces
Bank Bank
Exchange of Goods
Exchange of data on clients and trades
(Big Data)
Provision of Financing solutions
2
Clients & transactions information
Credit and Counterparty
risk
Revenue generation
Example of target model Benefits of this model
12
Overview of leading B2B marketplaces in Asia: while global players are proposing full range of financial means, leading local players are still focusing on the exchange of goods
Glo
bal
Ch
amp
ion
sLo
cal C
ham
pio
ns
April 2016 Traffic1
605.2M
13.4% 13.4% 4.5%
20.9M
27.4% 12.1% 7.3%
11.2M
18.9% 13.2% 5.7%
14.1M
88.4% 0.6% 0.6%
Overview
4.9M
95.6% 0.4% 0.3%
1.3M
34.5% 9.8% 6.6%
Founded in South Korea, 1997 > 2.5M registered members >5,300 product categories
Founded in Indonesia, 2001 > 4.4M registered members with
a focus on serving SMEs
Founded in India, 1996 > 26M buyers and > 2 M suppliers > 33M product offerings Started focusing on serving SMEs
since 2012
Founded in China, 1996 Focused on promoting Chinese
suppliers to global buyers Best Cross Border Trade Solution
provider in 2014
Founded in China, 2004 > 1.2M suppliers and > 10M
buyers > 40M product offerings
Founded in China, 1999 Largest B2B market place in the
world with > 400M active users Extensive financial services
through its subsidiaries
Payment Services
Financing services
Investment services
2
1 Expressed in Nb of website views for the month of April 2016 (%= percentage of views split for the top 3 countries)
13
Increased capital requirements cause higher capital consumption of traditional trade finance products: Supply Chain Financing as a way to optimize Balance Sheet
Constraints on traditional products
RW
A r
eq
uir
em
en
tsB
ase
l III
–Le
vera
ge R
atio
The capital requirements via Risk-Weighted Assets
(RWA) has become the new standard for economic
capital management across banks
Both standard or internal valuation models highlight
the high consumption of capital for Off Balance
Sheet products including Credit Guarantee Facilities,
Revolving Credit Facilities, and other liquidity facilities
Biggest challenge for Banks in Trade Finance activities:
adjust their activities to products and maturities with
lighter capital weightings (Credit Conversion Factors)in % of undrawn notional
Rules # CCF <= 1yr > 1yr
15
Commitments (non-securitisation, but including cash advances) unconditionally
cancellable at any time without prior notice, or cancellable automatically if the
borrower's creditworthiness deteriorates
22 Undrawn cash advances or facilities unconditionally cancellable without prior notice
20Short-term and self-liquidating L/Cs, linked to material goods (to be applied to issuing
and confirming banks)
15Commitments (excluding securitisation liquidity Facilities)
with original maturity <= 1yr20%
15Commitments (excluding securitisation liquidity Facilities)
with original maturity > 1yr50%
22 Other eligible liquidity facilities, including cash advance
18Transaction-related contingent items
(ex: Performance / Bid bonds, Warranties, Standby LC)
19Revolving underwriting facilities (RUF)
Note Issuance facilities (NIF)
22Off balance sheet securitisation exposure
(except eligible liquidity facilities / servicer cash advances facility)
16Standby L/C as financial guarantee for loan / securities, acceptances (incl.
endorsments..), warranties (except securitisation exposures)
17Forward asset purchases, forward forward deposits, partly paid shares / securities
(commitment with certain drawdonw)
21 Commitment on Off Balance Sheet item
50%
Based on original
10%
10%
20%
50%
50%
100%
100%
100%
The lower of the 2
3
Example: Supply Chain Finance benefits
Bas
el I
II
pri
cin
gC
om
mo
n
set
up
Delivery(4 months)
Sow(6 months)
Trade & Transport(3 months)
Bank A Bank B Bank C
Total yearly banking cost:
27,5
Doc. collections
D/C
Total yearly banking cost:
31,7
Capital
Liquidity
Funding
21
5
1,5
Capital
Liquidity
Funding
25
5
1,7
Capital
Liquidity
Funding
31
7
2,2
Total yearly banking cost:
40,2
Doc. collections
D/C
Total Basel III capital cost without SCF: 99,4
Total Basel III capital costs with SCFCost Bank A * 7/12 + Cost Bank B * 2/12 + Cost Bank C * 3/12 = 31.4
Wit
h S
CF
ben
efit
s(99,4-31,4) = 68
-68%Expected Benefit of SCF under Basel III
The first positive consequence of SCF, is that the overall bank matches funding needs to the payment schedule of buyers and suppliers. This way, the own banking facilities of the parties during the entire process could be drastically reduced. Following this application of SCF the cost of all Basel III drivers can be reduced for the supply chain.
14
Increased AML & KYC requirements cause significant impediments to Trade Finance
Source: ICC/ADB 2015, CH&Co analysis
17%
45%
40%
8%
17%
14%
26%
9%
7%
9%
39%
24%
23%
31%
28%
32%
25%
21%
20%
12%
33%
18%
22%
41%
32%
32%
19%
39%
38%
25%
10%
13%
15%
20%
24%
24%
29%
31%
36%
54%
High transaction costs or low fee income
Lack of dollar liquidity
Constraints on your bank's capital
Low any/obligor credit rating
Insufficient collateral from company
Basel regulatory requirements
Previous dispute or unsatisfactory performance of issuing banks
Issuing banks' low credit ratings
Low country credit ratings
AML/KYC requirements
Very insignificant
Insignificant
Significant
Very significant
Banks’ survey results on impediments to trade finance
Source: ICC/ADB 2015, CH&Co analysis
88% of banks agreed thatKYC requirements areimpacting on-boardingtime
88%
12%
Source: Finextra corporate banking survey-2015, CH&Co analysis
79%
21% Only 21% of banks thinktheir KYC technology andprocess is flexible enough tohandle changing regulationsrapidly
4
15
Banks can leverage on new players in response of regulatory pressure on trade finance
0
5
10
15
20
25
0 1 2 3 4 5 6
Maturity - Years of Incorporation
75
80
85
Size
-Fu
nd
ing
Am
ou
nt
(US$ m)
Big Data Analytics
Cloud Platform
Automation
Examples of RegTech actors (ranked by maturity) proposing innovative solutions
Minimize cost through information sharing of PEPs and regulatory updates
Enhance identity check and verification of individuals and companies with data mining
Replace manual spreadsheet reporting with automated compliance check, formatting andreporting based on regulators’ standards (using Blockchain or robotics)
4
16
Digitization of manual trade finance processes can reduce cost and improve security
Trade Finance is a
complex process
involving multiple
manual checks to be
carried out throughout
the lifecycle…
...Hence the capacity
to leverage on digital
to lower the
processing cost and
decrease the risks will
be key in the next
decade
Illustration:
Paper intensive process
Digitized Process
Digitised records Digital signaturesReal time transactions
Digital distributed ledger
Payment aggregation
Advanced cryptographic
Blockchain
Machine
learning / RPA
Big Data
Analytics
Foreign exchange
Sample FinTechs Key Trends Key Functionalities
5
17
Intelligent PDF,
Smart Forms
Pap
erle
ss
tech
no
logy
Fin
Tech
Receive application
Check applicant’s
identity
Verify applicant’s signature
Request validation from FO
PO & Trade Docs.
KYC Docs
Issue LC to advising bank
Receive shipment
documents
Bill of Lading
Release payment to
advising bank
Receive financing
payment from applicant
Documents processing & fees collectionCompliance processesOnboarding
Refer to Business Cases 1 to 4 in Appendix
RFID, Barcode
Lett
er o
f cr
edit
p
roce
ssin
g
Online identity verification for KYC purposes
Streamlines onboarding, account opening
and client maintenance process
Blockchain based
bill of lading
Digital certificates with
full audit trail for security
Imp
rove
men
t A
rea
Letter of Credit
Banks can leverage on paperless & digital technologies to enhance trade finance processesBusiness Case: Letter of credit processing steps for issuing banks
Blockchain financial operating
network for global commerce
5
Electronic Document
management solutions
Integrated Cross-
border payments Robotic Process
Automation
Instant online
loan facilitation
OCR, ICR, smart scanningE-signatures
18
Type Supply Chain Finance
Launch 2015
COMPANY OVERVIEW
Fluent provides financial supply chain platform and cutting-edge software solutions targeted for banks, businesses and lenders
Fluent is built by a team of enterprise software developers, blockchain experts, banking gurus and FinTech pioneers to solve inefficiencies in complex global commerce with antiquated and siloedfinancial systems
Business Case: Fluent provides transformative technology solutions for global commerce (1/3)
St. Louis, USABase
Mentorship
Fluent is under the mentorship of Patrick Bucquet of ChappuisHalder & Co.
Investors
Thomson Reuters
Draper Associates
FF Venture Capital
UMB Bank
Digital Currency Group
SixThirty
Fenbushi Capital
Arch Angels
500 Startups
Caoital Innovators
TECHNOLOGY
INDUSTRY REVIEW
Fluent provides distributed financial network based on blockchain technology to modernize trade and the financial supply chain
Fluent uses its financial network to provide services in terms of payment platform, supply chain financing, receivables marketplace and supplier management
“They have a team of blockchain experts and core technology that could be applied to use cases across Thomson Reuters.”
“Fluent can provide a common platform which would greatly facilitate treasury management. Digital assets reduce fraud and improve visibility across the
supply chain through the use of a distributed ledger”
5
19
Business Case: Fluent provides transformative technology solutions for global commerce (2/3)
FUNCTIONALITIES BENEFITS
Banks Buyers SuppliersPayment Platform
Cloud based secure and flexible P2P payments in real time
Supply Chain Financing
Approved payables financing by buyers for early supplier payments
Receivables Marketplace
Cloud based multi-bank and multi-lender secondary market to finance payables
Supplier Management
E-invoicing and buyer/supplier collaboration tools
Developer Platform
Customizable development of tools on a distributed network
Eliminate manual and costly processes in receivables finance
Streamline settlement
Gain more data on buyers and suppliers
Improve auditability and transparency
Reduce fraud risks
Drive revenues
Create powerful platform for future development
Extend payment terms and Days Payables Outstanding (DPO)
Streamline supplier payments and supplier data management
Simplify and secure approval hierarchies
Optimize working capital and earn better returns on surplus cash
Enhance buyer/supplier collaboration
Reduce Days Sales Outstanding (DSO)
Streamline receivables financing process with one-click function
Improve cash flow with just-in-time financing and better rates on short-term financing
Improve turnover in accounts receivables
Reduce paper-based processes
5
20
Business Case: Fluent provides transformative technology solutions for global commerce (3/3)
Global Payment Platform Procure-to-Pay Platform
Working Capital Solutions Receivables Marketplace
User-friendly supply chain finance platform provides convenience in approving payables and supplier early payments with a clear display of discount rates and expected return
Receivables market allows banks and lenders to finance payables based on their risk appetite and desired rate of return by showing buyers’ credit rating with real-time automated settlement
Cloud-based supplier portal facilitates e-invoicing and purchase order management with live-chat capabilities and in-document editing features
Peer-to-peer commercial payments platform facilitates approval and payments of accounts payable in real time with secure multi-signature verification
5
21
Agenda
Overview of the key trends in the Trade Finance industry in Asia1
3 Our credentials
Our expertise2
Appendix4
22
Our expertise: we aim at accompanying your Trade Finance business transformation with tangible solutions
Accompany the regulatory change
Design the Core Business Model
Design the Target Operating Model
CH&Co capabilities Examples of achievements
Define business plans & opportunity studies
Evaluate & implement partnerships with local actors, Marketplaces or FinTech
Design Digital strategy: client channels, products, innovation labs
South-east Asia Trade Finance business development plan for a major CIB
Coordination and support for the onboarding of clients from a bank ceasing its Trade Finance activities in Asia
KYC, AML & Sanctions remediation and target setup implementation
Credit & counterparty risk modelling, SME scoring models
Pricing review and Capital charge optimization
Setup the new Sanctions Screening organization of a major Corporate Bank
KYC remediation taskforces across APAC locations for several players
RWA optimization for a major French Bank
Digitization of Operations: paperless, automation, robotics & machine learning
Organization transformation: centralization, offshoring and outsourcing strategies
Mentoring a blockchain-based financial network for Trade Finance
End-to-end process review for payment-related processes
23
Our team of Subject Matter Experts bring together business, functional and technical competencies with field experience across the full Trade Finance spectrum
Benoit has 15 years international experience in Risk Management & Modelling and currently heads CH&Co.
global research and analytics team. His relevant wide-scope engagements include validation of Credit and
Counterparty risk models, design of funding strategies, diversification of refinancing sources and impact
calculation and strategic management/ICAAP/Economic Capital, design and measurement of European stress
scenarios: impact on bank P&L, balance sheet / off-balance sheet (regulatory capital) for top European banks.
Benoit Genest
Partner
London, UK
+33 78768 8177
Patrick is the leader of the Digital practice at CH&Co. He has pioneered client-centric innovation and designed
several concepts of mobile bank and mobile payments over the past 10 years for several actors such as BNP
Paribas, DBS or AXA. More recently Patrick has been mentoring Fluent, blockchain-based Trade Finance
FinTech based in the US. Patrick has also initiated the development of proprietary CH&Co tools such as
HighwayToMail (mail parser).
Patrick Bucquet
Partner
New York
+1 347 419 7709
Partner at CH&Co in Asia since 2010, Charles is leading the Global Business Transformation expertise at CH&Co.
He has handled multiple major transformation projects for Corporate Banking operations in APAC across several
businesses (Cash Management, Trade Finance, Commodities, Capital, Markets) and Functions. Charles has been
involved recently in a project aiming at onboarding Trade Finance clients from a Tier 2 European bank ceasing its
activities to a major Global Corporate Bank.
Charles Dally
Partner
Hong Kong
+852 6624 4947
Since 2009 in Asia, Guillaume is Manager at CH&Co Hong Kong office. He has handled a broad array of
transformation projects covering Cash management and Trade Finance businesses for major players, generally
with a regional or a global scope. Examples of accomplishments in the fields of Trade Finance include the setup
of a regional organization in charge of International Sanctions screening, and review of payment processes
related to Cash & Trade flows to improve operational efficiency.
Guillaume Rico
Manager
Hong Kong
+852 6624 3371
Jackrit is a Manager with 15 years of experience and high exposure to South East Asia (Singapore, Indonesia,
Vietnam, Thailand, Philippines). Expert in Public Policy research, advocacy and Asian Trade regulatory
environment, Jackrit is in charge of the Public Sector offer, working closely with institutions participating to the
development of the Asian trade (e.g. ADB). Jackrit has contributed to high-profile Trade Finance assignments,
such as the definition of Trade business entrance strategy in South East Asia for a major banking player.
Jackrit Watanatada
Manager
Singapore
+65 6222 8664
24
Agenda
Overview of the key trends in the Trade Finance industry in Asia1
Our credentials3
Our expertise2
Appendix4
25
Our credentials: some examples of wide-scale projects related to the Trade Finance industry
Project Description: Transfer of a Trade Finance client portfolio to a target bank (our client) after original bank ceased its Trade Finance activities in Asia
Results
✓ Conducted a comprehensive check of client list to facilitate smooth on-boarding and transition processes from the original bank to the substitute bank
✓ Managed an exhaustive review of clients’ documents to ensure compliance with the KYC requirements
✓ Monitored, controlled and resolved all on-boarding issues with full recovery of all escalations
Client: Tier 1 Global CIB
Project: Trade Finance portfolio transfer
Location: Hong Kong and Singapore
Duration: 6 months
1
Project Description: Establishment of a new organization to manage the International Sanctions framework for all Trade Finance activities across APAC
Results
✓ Centralized the alert management functions within APAC through 40+ dedicated headcounts that ensured homogeneous alerts handling and reduced 1st level escalation by 60%
✓ Implemented and deployed a new filtering tool with strict compliance to the regulator’s deadline
✓ Established a monitoring dashboard with semi-automated data production capabilities
Client: Tier 1 Global CIB
Project: International sanctions alerts filtering management
Location: Regional – Asia Pacific
Duration: 12 months
2
Project Description: Establishment of a project management office for the monitoring and management of 4 dedicated projects in the regional business development plan and creation of a KPI dashboard for regional monitoring of Commodity Finance business activities
Results
✓ Produced monthly dashboard with improved automation and shorter production time
✓ Provided a precise overview on the progress of each project milestone and improved communications between business lines
Client: Tier 1 Global CIB
Project: Project management office and dashboard business monitoring in the Trade Finance business line
Location: Singapore
Duration: 5 months
3
Project Description: Feasibility study, gap analysis with existing IT architecture (e.g. accounting , regulatory, risk), target workflow design and deployment of a new Trade Finance booking tool for Asian operations
Results
✓ Ensured a smooth IT implementation and a perfect synchronization with business workflows
✓ Identified and included all necessary regulatory reports in the new tool to ensure data consistency
✓ Deployed the IT system on time and in line with the business launch without requiring any further development or tactical tools
Client: Tier 1 French CIB
Project: Feasibility study and implementation of a new front-to-back Trade Finance system
Location: Korea
Duration: 10 months
4
26
Agenda
Overview of the key trends in the Trade Finance industry in Asia1
Our credentials3
Our expertise2
Appendix4
27
TypeClient Lifecycle Management
Launch 2009
ILLUSTRATION
VALUE PROPOSITION
BUSINESS OVERVIEW
Client lifecycle management software solutions for CIB
Onboarding workflow technology which streamlines onboarding, account opening and client maintenance process, while delivering regulatory onboarding processes that ensure compliance with global and local regulations based on clean, golden source entity data
Fenergo has a rules-driven platform that ensures compliance with multiple global and regulatory frameworks
The Regulatory Rules Engine determines the legal entity’s regulatory and assigns a compliance policy to the legal entity, deciphering the KYC questions that need to be answered and the data and documentation that needs to be collected.
Globally compliant
KEY TAKEAWAYS
Client onbaording could be reduced from 34 weeks to circa 6 weeks
Cost of compliance could be significantly reduced as tool is able to tackle multiple regulations in one go
Dublin, IrelandBase
Key Clients
Scotiabank
Bank of Montreal
Lloyds Banking Group
RBS
Rabobank
Centralized master data system designed to help financial institutions to acquire, validate, store and distribute legal entity data across product lines, business lines and jurisdictions
Allows tracking, merging and grouping legal entity identifiers to create a holistic single view of the client and all its associations
Centralised
Addepar
Swipely
Yodlee
Competitors
Business Case 1: Fenergo offers lifecycle management software to streamline compliance processes
28
Type KYC Compliance
Launch 2009
ILLUSTRATION
VALUE PROPOSITION
LexisNexis
Experian
Idology
Callcredit
Avoka
Partnerships
Amex Ventures
Blumberg Capital
BDC Capital
Tenfore Holdings
Lead investors
Global Data Company
Acquisition(s)
BUSINESS OVERVIEW
Canadian-based online identity verification company specializing in AML and KYC
Enables trust and safety online - flagship product, GlobalGateway, compares registration information against data collected by credit bureaus, utility companies, mobile carriers and government agencies to verify users’ identities.
More than 100 sources of data in more than 40 countries
Trulioo’s products are designed for the web, and suited for moderately valued transactions where the amount of work and cost required to perpetrate the fraud exceeds the transaction value
Its services provide global coverage, are low friction for users, and are priced to support SMBs
Cost-effective web-based ID solutions for
SMBs
KEY TAKEAWAYS
Product created specifically to help businesses comply with international AML and KYC rules
Comprehensive match information - provides advanced analytics based on traditional information, such as public records, credit files, and government data, as well as alternative sources, including social login providers, ad networks, mobile applications, e-commerce Websites, and social networks.
Comprehensive and regulation-
compliant
Check identification by entering - Name- Address- DOB- Passport No. (if
applicable)
Step 1
Trulioo checks inputs against sources e.g.- Public databases- Birth records- Electoral role- Tel. records
Step 2
Results will be populated- All match
indicators from Trulioo’s sources will be shown in a table
Step 3 Identity verification is made simpler and
more cost-effective with Trulioo
Traditional risk management tools need to consider cyber data and cyber identities
>40 countriesFootprint
Coverage >4 billion people
Business Case 2: Trulioo provides comprehensive online identity verification for KYC purposes
29
Type Trade Finance
Launch 2014
ILLUSTRATION
VALUE PROPOSITION
BUSINESS OVERVIEW
Wave (previously OGYDocs) is a blockchain-based FinTech focusing on trade finance solutions
Trade contracts repository that records ownerships of goods and documents all along the supply chain, connecting all relevant parties in a trade
Sees replacing Bills of Lading as its first concrete application
Wave's products don't threaten to remove any intermediaries - incorporates industry standard workflows, according to the company, replacing printed documents with versions stored electronically in blockchain transaction metadata
Developing versions on top of bitcoin and litecoin testnets – i.e. follows the consensus protocol but not based on a specific digital currency
Wave has created a peer-to-peer and completely decentralized network that connects all parties of the international trading supply chain
Thus, the Wave network will not have any single point of failure and will not rely on any entity.
Secure
KEY TAKEAWAYS
Blockchain trade finance startups gaining popularity
Digital solutions based on the blockchain can already outperform pen-and-paper processes
Business Case 3:Wave offers blockchain based bill of lading for security and affordability
Tel Aviv, IsraelBase
Partnerships
Freight forwarder
Importer
Importer’s bank Exporter’s bank
Exporter
Carrier
Ledger – record of ownership
Application –smart Bills of
Lading
Protocol – BTC or LTC
consensus
Partnered Barclays Corporate Bank to assist its clients to reduce costs related to supply chain management
Blockchain-based tools help business clients reduce costs associated with pen-and-paper and traditional supply chain management
Affordable
Gazebo
Skuchain
Competitors
30
Business Case 4: OTDocs uses blockchain to reduce fraud risk in trade finance
Type Trade Finance
Launch 2015
BUSINESS OVERVIEW
Open Trade Docs is a powerful tool in reducing frauds in international trade finance
Open Trade Docs (also known as OTDocs) reduces fraud risk in trade finance by complementing paper documents with unique digital copies that have full life cycle and audit trail.
It is one of the pioneers that use custom blockchains to identify, store and verify entities, documents and transactions, allowing participants to remain in control of all data and access rights instead of relying on a third party.
The messaging module can be integrated withexisting systems, and offers the followingfeatures:
Text and multimedia content;
Audit-ready and mathematically guaranteed message life cycle;
Guaranteed timestamps;
Ultra high availability
Businesses can reclaim full governance andownership over messaging data, as well as thefollowing benefits:
Onshore data ownership for easier compliance
Better prevention against data breaches
Elimination of risks related to 3rd party data storage
Full lifecycle of messages with immutable
CONCEPT
Benefits for businesses
A major risk in international trade finance is the exchange of invoices and other documents multiple times to multiple financing entities, involving trust and data ownership to third parties.
OTDocs’ Messaging module removes the need to trust third parties by using private industry blockchains to securely send and store messages and documents.
Its Duplicate Document Detection module flags a document that has been uploaded before.
OTDocs provides a full audit trail with its blockchain technology in ensuring that once written, data cannot be amended, even by administrators.
SingaporeBase
31
Business Case 5: PrimeRevenue partners with insurers to offer SCF services for non-rated buyers
Overview
Incorporated in 2003 with more than 20,000 customers in over 70 countries
Serving all sized companies with US$ 120bn supply chain transaction processed annually
Business Case - Success Stories
Sjørring Maskinfabrik faced cash flowproblem when Volvo extended itspayment term and it approached theloan limits on its banks.
SCF relieved SM from bank loan through early payment with lower financing cost
AIG Partnership for serving mid-market buyers
Buyer
Buyer
1. Accounts Payable
AVIC corporation acted as thesupplier of a leading discount storesin Australia on open account termswith lengthy payment period
Seller
Funder
PR & AIG
2. Accounts Receivable
3. Accounts Receivable and Credit Risk Insurance
4. Early Payment
5. Payment on due date
Early payments from SCF increased its working capital by 20% p.a. as of 2013
Opensci cloud-based platform facilitates cashflow management, dynamic discountingprogram and access to funders and suppliers
Significantly lower financing rates forsuppliers at 1-3% compared to traditionalfactoring
Flexibility in selecting financing sources frombanks, non-bank founder and self-fundingoption with OpenSci Multibank capability
Provision of the first SCF services to mid-market and non-rated buyers with 100%insurance on the credit risk throughPartnership with AIG
One-Stop Application
Favourable Financing
Serving mid-market
clients
BUSINESS OVERVIEW
VALUE PROPOSITION
32
Business Case 6: C2FO offers a financing rate matching platform between suppliers and buyers
Overview Illustration
• Incorporated in 2008, with > US$ 70MM funding in 4 rounds and rapid growth in capital flow (US$ 2.7bn in Q1 2015 - US$ 5.4bn in Q4 2015)
• Partnering with Tradeshift with >500k active suppliers to intergrate its e-procurement and e-invoice services with C2FO’s financing rate matching platform
• >90% supplier satisfaction rate supplier participation rate
BUSINESS OVERVIEW
VALUE PROPOSITION
• Online platform with proprietary “Name Your Rate” model facilitating direct discount rate negotiation between buyers and suppliers
• Automated selection process that match the closest rates between buyers and suppliers for early payment
• Lower financing cost for suppliers and higher average APR for buyers than other investment alternatives (6.8% vs 0.6% AA corporate bonds)
Operating Model
Rate Matching
33
2. Approve invoices
Business Case 7Taulia offers supplier financing with integrated management tools
Overview Process flow of Taulia supply chain finance
Investor
BuyerSME
Supplier Taulia
1. Issue invoices
3. Apply for supply chain finance
4. Approve and provide financing
5. Provide financing to suppliers
6. Fulfill payment at maturity
BUSINESS OVERVIEW
VALUE PROPOSITION
Taulia dynamic discounting method
Incorporated in 2009 with > US$ 135MM in 8 rounds
120,000 active buyers, 700,000 suppliers in > 100 countries and 100% customer retention rate
292% bookings increase in Q4 2015 - 50,000 new suppliers on-boarded
• Online platform with complimentary supplierengagement programs, such as digitalizedcash management tools for suppliers andautomated approval processes
• Dynamic discounting for upfront paymentbased on time period and supplier’s cost ofcapital in Taulia’s database
• SAP Gold Partner as the only provider of SAPcertified dynamic discounting portal
Dyn
amic
Dis
cou
nti
ng
CHAPPUIS HALDER & CO.
MONTREAL
1501 McGill College
avenue – Suite 2920
Montreal H3A 3MB,
Quebec
PARIS
20, rue de la
Michodière
75002, Paris, France
NIORT
19 avenue Bujault
79000 Niort, France
NEW YORK
1441, Broadway
Suite 3015, New York
NY 10018, USA
SINGAPORE
60 Tras Street,
#03-01
Singapore 078999
HONG KONG
1205-06, 12/F,
Kinwick Centre
32 Hollywood Road,
Central, Hong Kong
LONDON
50 Great Portland Street
London W1W 7ND, UK
GENEVA
Rue de Lausanne 80
CH 1202 Genève,
Suisse
Charles Dally| Partner | [email protected]
Guillaume Rico | Manager | [email protected] er.com
CONTACTS
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