Our client Tradeteq, the London-based provider of technology and software solutions to the trade finance industry, has today published a whitepaper titled Trade Finance in 2020: Asset Distribution – A Macro-economic Necessity. The paper not only highlights how the current Covid-19 pandemic is putting greater strain on SMEs, but how a greater distribution of trade finance assets to non-bank investors will help small business weather this storm. 

Unsurprisingly, Tradeteq has identified SMEs amongst the worst hit by the current lockdown measures. As these businesses are less likely to receive Letters of Credit from banks during this period, the need for other options must be considered in order for these organisations to continue to operate during this period. Tradeteq’s solution is to distribute trade finance assets to non-bank investors helping both banks and businesses continue to function in this uncertain climate.   

Trade Finance in 2020: Asset Distribution – A Macro-economic Necessity

The paper also emphasises how distributing assets to alternative investors has the potential to unlock millions of dollars in liquidity, helping to plug the trade finance gap which currently stands at least US$1.5 trillion. This in turn will greatly reduce the risks banks have on their balances, creating new avenues for growth in the market. 

The distribution of assets to investors comes as a natural extension of Tradeteq’s credit scoring service.  The machine learning and Artificial Intelligence (AI) tools that enable Tradeteq to provide a rigorous, evidence-based credit score are also subsequently applied to gauging the risk of trade finance assets for investors when they purchase.   

This also coincides with the rapid growth of the Trade Finance Distribution Initiative (TFDI), for which Tradeteq is the technology infrastructure provider and which has nearly doubled its membership to 30 since launching in 2019. Through growing the members of the TFDI, the trade finance industry is making yet another vital step towards the improving the accessibility of liquidity to small businesses.