I had the chance to catch up with Martin McCann, the CEO and Co-Founder of Trade Ledger, the newly launched platform-as-a-service for business lenders and claimed as the world’s first open digital banking platform exclusively for business lending. The platform, they say, will help banks assess business lending risk in real time and will so address the US$1.7 trillion global under-supply in trade finance lending, so providing high-growth companies with much-needed working capital.
Martin McCann has a long history is tech, including time with SAP in their Business Networks Division, and applied this experience to seeking out the best fit opportunities as companies digitise their supply chains. He thinks businesses, especially those in the mid-market who are growing fast, are completely underserviced by banks and other financial institutions, and so built Trade Ledger to close the “last mile” gap between these firms and their lenders; something which is now possible thanks to the migration of business data into the cloud.
McCann says he does not see Trade Ledger as a Fintech, as it does not lend to firms directly, but rather is a technology company which via its platform, facilitates the connection between lenders and businesses. And he has ambitious growth plans, not just in Australia but beyond over the next 3 years.
Targeting mid-market firms, with a turnover of around $20-100m, the platform ingests data from their invoicing and accounting systems via an open api, (and can also pull information from enterprise systems like SAP), as well as trading documentation, financial information, bank statements and credit bureau data. Trade Ledger also has its own trade invoicing solution, which can also be used. They apply custom analysis to these datasets on the platform.
Then they work with Lenders who want to use the platform, getting the lending, risk and product teams in the bank to define their trade finance underwriting processes, giving the opportunity to transform these processes, before customising the Trade Ledger platform to meet their specific credit assessment requirements.
Once set up a lender can make trade finance lending decisions more quickly, and accurately, and McCann says the business case to these banks is very compelling. Currently they have a couple of Australian non-bank specialist lenders on the platform, and expect a global top-20 bank to come on board soon.
And here is the rub, their experience to date has been that banks in Australia may recognise that Fintechs should not be regarded as competitors, but rather partners (something which has changed relatively recently); but the process of working inside their slow and complex decision making machinery means lenders are missing the boat. In fact, McCann points to the UK, where lenders are up for the challenge, and cites examples of organisations who say within 4 weeks of engaging with a new concept, they guarantee a decision, so as not to waste time. Hence the global focus.
McCann and his team are clearly on a mission, and already have plans to bolt in additional added value functionality into the platform, based on artificial intelligence and machine learning which can leverage the rich data in the system.
Whilst he sees potential for Blockchain down the line, they are focussing on accurately predicating the probability of default and fraud within a firm and transaction set, complete with confidence scores. This should be operational in 1Q 2018. This will enhance the lenders underwriting ability and provide greater benefits across the value chain.
Another innovation which he calls Conversational Commerce, is aimed at the owner of the business, by providing analysis of their working capital and offering these insights by a bot, thus enabling the owner to benefit from the knowledge and experience contained in the platform. This solution will appear sometime next year.
So this is one to watch. They have spotted a real niche, are harnessing the best of digital transformation to help firms source the trade credit they need to grow, and assist lenders to improve their underwriting processes and operational efficiency. Through their open platform, they are, we think, on the Digital Innovation Front Line.