How Privacy Enhancing Technology Can Close the Gap in Trade Financing
QEDIT and Tradeshift Offer New Marketplace for Financiers With An Innovative Mindset
The Supply Chain Finance (SCF) market has experienced tremendous growth over the past decade, and is currently estimated at $475 billion of annual traded volume. This financing process has revolutionized trade finance, enabling supply chain buyers and suppliers to optimize their working capital while offering financiers higher returns on short-term and uncommitted investments.
Yet despite the immense growth and size of the SCF market, it represents only a small fraction of the total demand for trade financing which is estimated to be $1.9 trillion worldwide. Today's SCF programs cater mostly to Fortune-500 buyers and suppliers in developed countries, leaving small and mid-size enterprises (SMEs) as well as buyers and suppliers in developing regions largely underserved.
Closing the Trade Finance Gap
The gap in trade financing presents a massive growth opportunity, one where large swathes of financiers can potentially overcome impeding inefficiencies and join the market. Let's take a look at the main challenges that must be overcome to unlock this market:
The inhibitive costs of KYC and onboarding processes for new SMEs with lower trade volume.
Difficulty in determining credit risk for non-rated businesses or businesses in developing regions.
Many market experts have recognized blockchain as a means to streamline existing SCF processes. However, without robust privacy technology to ensure that the details of all trades and finance transactions are not made available to all competitors, such blockchain solutions are impractical.
To tackle these problems, QEDIT has teamed up with Tradeshift, a leading platform for supply chain payments that handles half a trillion USD in transaction volumes and has over 1.5 million companies across 190 countries connected to its platform.
Together, we developed a marketplace that leverages the data Tradeshift accumulates regarding buyers and suppliers, and uses QEDIT's privacy-enhancing technology to drastically reduce onboarding and due diligence costs. With a robust privacy layer in place, enterprise blockchain technology is harnessed to streamline processing and approval workflows, while QEDIT's suite of auditing tools enable financiers to stay compliant with regulations.
Take Part In A New Finance Category
The QEDIT-secured Tradeshift platform is a game-changer on multiple levels; it opens new revenue channels for financiers, lowers the cost of credit for companies while optimizing their working capital, and accelerates due diligence processes. While doing so, it preserves the full transactional privacy of the participating companies – a fundamentally critical requirement for such a marketplace to exist.
We're thrilled to be a partner of Tradeshift and excited to be using privacy enhancing technology to create new opportunities in the Supply Chain Finance market. Contact us to find out how your institution can join the Tradeshift marketplace as a trial financier.