How TradeFlow Capital's FinTech disruption helps closing $1.5tn trade finance gap and enabling trade for SMEs globally

However, the trade finance gap this sector needs to cope with is estimated to be $1.5 trillion. Most commodity trade finance transactions are below $15m, which is exactly the chronically underfunded transaction size and underserved by the traditional banking sector.

Already in 2016, the founders of TradeFlow Capital Management realized that trade finance was ripe for a FinTech disruption and designed a solution in collaboration with global banks as partners to solve their challenge to effectively support the trade finance needs of SME firms in the bulk physical commodity markets whose transaction sizes were below US$15m. Tradeflow‘s unique business model works with Banks preserving their customer relationship whilst Tradeflow Capital supports the SME’s trade finance needs and enables their import/export trades.

TradeFlow’s holistic digital solution enables a non-credit / non-lending approach which is key to being able to support SME firms without taking credit risk directly on them but instead investing in and taking full ownership and logistical control of the Commodity in their underlying transactions. It steps in between suppliers and buyers with a Master Agreement, becoming the Principal and owner of the goods, instead of a lender. Thus, they have created a trade finance fund that doesn’t lend out money, eliminates a lot of the traditional challenges in trade finance, digitises the entire trade finance workflow, utilises technology to enhance security, increase operational efficiency, and reduce risks and costs. Its digital platform can handle and scale large numbers of transactions including Electronic Bills of Lading, and Documentation processing and offers automated Insurance services for cargo risk, and other standard shipping / storage risk cover. It offers scalable and secure access for investors to trade finance, bulk commodities, SMEs - but not through credit but by investing in and taking full ownership of the underlying commodity transaction.

The platform has already been operational for over 1.5 years but has already put its mark on international trade by allowing the opening of new trade routes between countries that never exported to each other, making a "material differences" to farmers in Africa. Another major achievement has been technology and big-data enabled automation to solve the KYC bottleneck which often was the key operational hurdle for trade finance, bringing down processing time from 6 months to just 3 hours.

In this Opalesque.TV BACKSTAGE video, the TradeFlow founders Tom James and John Collis also talk about:

• How being the Principal and owner of the trade goods eliminates a lot of the traditional challenges in trade finance
• Best risk management: Complete elimination of risks. Clearinghouse-like risk management. Selection of trades and deals
• The true cost of KYC. How Tradeflow’s scorecard technology allows for immediate processing of transactions
• What Tradeflow isn’t financing or dealing in
• Adding Big Data, Blockchain, AI

Tom James is CIO & CEO and a co-founder of TradeFlow Capital Management which offers an innovative digitised trade finance solution for bulk physical commodity transactions being shipped or stored around the world. Tom is widely recognised as a leading practitioner in the global natural resources market with over 30 years of commercial exposure gained through broad ranging senior regulated roles in financial institutions (including Bank of Tokyo Mitsubishi UFJ, Credit Agricole and Credit Lyonnais) and various trading firms including BHP Billiton. These roles have enabled him to gain a holistic industry perspective, covering a full range of functional areas including trade finance, project finance, investment banking, supply chain/operations, derivatives, physical markets, and fund management. During his career he has operated in many countries in Africa, Europe, Middle East, and Asia Pacific. Tom has authored/edited over nine books in the energy & commodity trading and risk management field and served as Chair Professor and Adjunct Professor at various universities around the world including Korea, Singapore, India, U.K. and is a former member of the United Nations FAO Commodity Risk Management Advisory Group, and former Senior Energy Advisor to United States Department of Defense (TFBSO).

Co-founder John Collis holds the position of Chief Legal Officer (CLO) and Head of Compliance. John has overseen the classification of the specialist intellectual property developed and acquired by TradeFlow and its licensing; and has worked with insurance underwriters and external lawyers on the legal aspects of the firm’s risk matrix and specifically with reference to bulk commodity transactions and their exposure to multiple jurisdictions. John is a commercial lawyer with expertise in regulatory, compliance, structuring, and transactional matters. John operated his own law firm from 2003, specialising in international commercial work. John has written and lectured about the rule of law, Eurasia Economic Union, CSTO, and International Commercial Enforcement. Before becoming a lawyer, John worked for Ernst & Young, he was educated at Oxford University and is chairman of Hertford College RFC.

Tradeflow Capital is a member of the Alternative Investment Management Association (AIMA) and a corporate member of the Singapore FinTech Association (SFA).
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However, the trade finance gap this sector needs to cope with is estimated to be $1.5 trillion. Most commodity trade finance transactions are below $15m, which is exactly the chronically underfunded transaction size and underserved by the traditional banking sector.

Already in 2016, the founders of TradeFlow Capital Management realized tha ...more