Our Chief Solutions Officer Enno-Burghard Weitzel, recently recorded a podcast with Tedd George, Chief Narrative Officer at Kleos Advisory. Tedd has known about Surecomp for many years but was intrigued by our digital evolution, especially our collaborative trade finance SaaS platform, RIVO™, and how its forming part of a new wave of fintech that is transforming trade finance in Africa.

Here we summarize their discussion and unpack some of the latest insights into what lies behind the rapidly increasing adoption of digital trade finance, from digital trust to the value of collaboration.

Lack of credibility and trust is a major barrier for SME traders, especially in Africa where the availability of data is poor. Lack of available data causes problems for African traders, especially SMEs, frequently returning to the question of trust. Could the fact that letters of credit (LCs) remain the bread and butter of African trade, while less used in developed markets, indicate the general lack of trust between exporters and foreign importers? Could the next generation of trade tech move beyond the era of LCs? Not in Enno’s view:

“Why do we use the LC? Because it’s crisis proven. Previous attempts to bridge the gap between the LC and open account trade finance, such as the payment commitment, have failed, because they are not crisis proven. Tech solutions can help build trust and enable lenders to move from LCs to more open account trade finance over time.”

The tech doesn’t matter, it’s about developing new solutions. One of the first things to keep in mind about disruptive technology is that it’s not about the technology, it’s about the disruption! The tech may be shiny, but if it doesn’t disrupt the way business is done, it’s a gimmick, and often an expensive one. Enno was in full agreement:

“It’s not about the tech. We are bringing business solutions. And in developing markets these solutions need to solve a problem, be easily available, easy to use, and commercially attractive to SMEs. This is why blockchain solutions haven’t taken off in trade finance. While theoretically a blockchain LC solves a number of issues, it’s not a solution in reality. And if we don’t deliver value for real, we don’t deliver value.”

As a banking partner to hundreds of SMEs, technology proponent and long-standing customer of Surecomp, South Africa’s Absa bank recognizes that the shift towards digital trade finance can help to simplify and broaden access to finance and is therefore a significant focus in supporting its growth strategy. Michelle Knowles, Managing Director: Head of Trade and Working Capital Product (Pan Africa) at Absa gives us her view on how technology can help provide value and solutions to their customers. 

“African SMEs face two major financial challenges; accessibility and affordability. To better support this vital sector of the economy, it is important to understand the financial difficulties that these businesses face,” explains Michelle. “Absa is taking steps to address these challenges by investing in solutions that reduce the complexity and cost of financial instruments, which can create barriers to access. Digitizing trade has the potential to address or reduce some of the structural challenges banks face when providing financing to SMEs. However, it is important to keep in mind that the challenges often differ from country to country, so a “one size fits all” approach may not work. Absa believes that increasing access to trade finance is critical and has the potential to unlock significant economic activity at relatively low risk. Therefore, we are actively enhancing our digital capabilities and partnering with development finance institutions, multilateral development banks, and fintech companies to increase the level of financing available.”

The flexitech approach enables co-creation of solutions. The flexitech approach is data-agnostic and based on applying tech solutions in different ways to meet the specific needs of the client. This requires a high level of collaboration which is very much Surecomp’s way of working, as Enno explains:

“We don’t sell products. We try to bring solutions. We work to develop a deep understanding of our customer’s business so we can co-create solutions. Having that collaborative space brings new options to the table.”

One example Enno gives is using generative AI to check guarantee texts, a time-consuming process that often requires legal expertise. An AI can carry out pre-checks, confirming for example if there is an end date. This not only speeds up the administrative process but is beneficial to the workers, as Enno describes:

“We can lift them off repetitive low-value-adding tasks and enrich their jobs by enabling them to focus on the interesting part where they can input all their experience.”

Surecomp is running a proof of concept of this solution with a client and, if successful, they plan to roll it out to other clients next year.

The RIVO™ platform is building the ‘network of networks’ which, as Enno describes it, “connects the dots between the corporates and the banks, both of which are using Surecomp’s systems.” RIVO™ enables corporate to manage all their trade finance business on a single platform and collaborate with all the required parties through an intuitive web interface. The platform is connected to back-office systems, bringing operational efficiency gains, and SMEs can benefit from building credibility through peer-to-peer review by other traders and lenders using RIVO™. All of this supports the long-term goal of creating a network of networks, ensuring the free flow of data between trusted parties to enable seamless, sustainable trade for everyone.

The future of trade finance in Africa is about empowering SMEs. When it comes to the future of trade finance in Africa, Enno’s focus is very much on the SMEs:

“We need to lower the friction and reduce barriers. As a tech provider, we can work on one dimension of that, which is making the flow easier. Data flow, building a track record. And empowering the small unseen SME and making it visible, creating verified information points that will help the business do more business.”

By opening up the ecosystem and giving unseen SMEs exposure, Surecomp aims to drive growth and collaboration. Michelle Knowles agrees that this could be the key to unlocking the potential of African trade.

“SMEs play a vital role in the African economy by contributing to economic growth and trade. However, these businesses often face significant challenges, such as a lack of access to finance and trade finance, which hinder their growth. Increasing financing options for SMEs can enhance the trading potential of many small businesses and individuals. Unfortunately, providing finance to these crucial parts of the economy tends to be high cost, viewed as high risk and low margin. To digitize trade finance, the entire ecosystem needs to participate in integrating activities among all role players, including regulators, logistics companies, banks, and other fintech innovators who will digitize all parts of the ecosystem, not just some. We need to adopt digital platforms that can create networks, facilitate the flow of data, and eliminate the friction currently experienced. Standards and interoperability between various parts of the ecosystem can reduce complexity and facilitate frictionless data flows.”

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You can listen to the full podcast between Tedd and Enno here. If you’d like to get in touch with Surecomp just fill in the form on their contact page to set up a call.