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Blockchain-Enabled Trading and Trade Finance Platform

Technology Overview

Trade finance is a highly complex process involving dozens of parties and documents. It is a paper intensive industry with significant overhead costs, and it is plagued with documentation discrepancies, delays in trade financing and the risk of fraud.

The World Trade Organization (WTO) estimates small and medium-sized enterprises (SMEs) have $1.5 trillion in annual unmet trade financing needs and have 60% of their financing requests rejected by banks.

Our custom built, blockchain-enabled, end-to-end global trading and trade finance solution addresses this unmet market need by joining forces with alternative lenders and private equity managers to provide financing to these SMEs that are underserviced by the banks. This shortfall has been caused by banks exiting the industry as their compliance costs and Basel III capital requirements increased.

The platform brings all stakeholders (traders, lenders, insurers, shippers, etc.) to a trade transaction together – providing solutions through its module offerings that include trade finance, trade discovery, insurance, logistics and risk management. SMEs can pursue opportunities in trade and trade finance with more confidence and lenders can originate loans from anywhere in the world with more knowledge.

In using the platform, trade processes are being digitized. This streamlines transactions, reduces overhead costs, enhances compliance, and reduces risk for its customers. It allows all parties to a given transaction to have complete knowledge of its status and progress. This brings the much-needed visibility across the trade chain and increased efficiency to the trade and trade finance processes.

Technology Features & Specifications

Our platform offers:

  • Secure Environment

All SMEs have undergone bank grade AML/KYC checks when onboarded and periodically updated every six months. Lenders can do additional KYC/AML checks or credit checks to verify client details and enhance security and compliance

  • Ease of Trade Finance

Matches lenders with finance-seekers; increases borrower visibility to potential financiers; accelerates funding

  • Trade Digitization

Fully electronic document exchange between buyers, suppliers, lenders, and other stakeholders; Makes the transaction process faster and less prone to human errors; Documents are digitally uploaded – drastically reducing the chances of document alteration

  • Transparency

Instant sharing of status between transaction stakeholders, ensuring transparency throughout the process and reducing cycle times

  • Validations

Checks for bills of lading and other key documents

  • Analytics & Reporting

Supports strategic decision making with relevant data; Creates a dashboard with key metrics and analytics

 

Key features of the platform:

  • Bank-Grade KYC/AML

Bank-grade Know-Your-Customer (KYC) / Anti-Money Laundering (AML) background checks to verify client details and enhance security and compliance

  • Digital Contracts

Trade documents are digitized and stored in blockchain to ensure transparency and efficiency and reduce the chances of document alteration

  • Dashboards

Customizable data visualization via modular dashboard to support strategic decision-making and provide actionable insights

  • User Permissions Control

Role-based and/or user-based permissions are assigned to individuals to specify what actions can be performed

  • Notification System

System notifications through the platform and email are in place to update users on their transactions

  • Chat Functionality

Communicate directly with counterparts and lenders in your network and access chat history for easy reference

Potential Applications

The platform was developed for the benefit of commodity trade and trade finance industries.

It is currently used by small and medium-sized commodity trading companies (both buyers and sellers), alternative lenders/funds, insurers, and in the future to be used by shippers.

Market Trends and Opportunities

Trade finance is the $40 trillion business of financing the movement of goods across oceans and borders, according to Allied Market Research. This centuries old industry has not undergone much transformation and is still resistant to change.

The World Trade Organization (WTO) estimates SMEs have $1.5 trillion in annual unmet trade financing needs and have 60% of their financing requests rejected by banks.

For SMEs seeking trade finance, they face:

  1. Difficulty in sourcing finance
  2. Subject to delays partially due to required paperwork, logistical coordination and regulatory compliance
  3. Extremely paper-intensive and prone to document errors
  4. Risk of potential fraud given the historic lack of transparency
  5. Highly fragmented

Our trading and trade finance technological solution addresses these issues.

Customer Benefits

Shared benefits for lenders and traders:

  • Risk & Fraud Mitigation

Less risk of data modification & data tampering, as data is stored in a distributed and replicated chain of servers

  •  Trade Digitization

Fully electronic document exchange between stakeholders thus faster and less prone to human errors

  •  Operational Efficiency

Reduces overhead costs and allows faster & efficient trade transactions with real-time status sharing and document access

  •  Transparent & Traceable

Allows all parties to a given transaction to have complete knowledge and traceability of history since transactions are timestamped

  •  Connected Ecosystem

Brings all stakeholders (traders, lenders, insurers, etc.) on the same platform to interact and conduct business

 

Traders Benefits

Kratos enables traders seeking trade finance to access tailored financing options quickly through a transparent blockchain-enabled system that facilitates their growth

  • Ease of Sourcing Trade Finance

Proposes prospective lenders to buyers; increases visibility to potential financiers; timely availability of funding for trading

  • Less Paper Intensive

Moves the processes and documents onto the platform converting paper transactions into digitized ones

  • Analytics & Reporting (Trader)

Supports strategic decisions with customizable data visualization via modular dashboard that focuses on trading metrics

 

Lenders Benefits

Kratos gives lenders access to a market that they want to lend in, but often cannot otherwise reach in a practical and cost-efficient manner

  • Portfolio Diversification

Instant access to other commodities and new borrowers for a greater range of investments that fit the lenders’ risk appetite

  • Validations

Minimizes operational risks through KYC/AML checks, company credit report checks and checks for bill of lading & other key documents

  • Analytics & Reporting (Lender)

Supports strategic decisions with customizable data visualization via modular dashboard that focuses on financing metrics

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