Insurance giant American International Group (AIG) has partnered with specialist technology firm TradeIX to enable firms to access trade finance using a blockchain-enabled platform.
AIG and TradeIX have completed the first blockchain-enabled trade finance transaction, for a global logistics company, with financing provided by Standard Chartered plc.
AIG, as well as being a partner in the initiative, also offered credit risk mitigation to the logisitics company.
The completed transaction was for invoice finance, enabling the logistics firm to help its customers extend their payment period whilst maintaining receivables at current terms.
By using a blockchain based distributed ledger platform there are benefits of real-time visibility for managing customer terms and credit risk, with details of the invoice and the eligible insured amount securely recorded on the distributed ledger.
All of the invoices are credit insured by AIG and the insurer also provides the benefits of Aronova, its trade finance technology provider, which tests policy invoice eligibility for the insured financiers.
Marilyn Blattner-Hoyle, Head of Supply Chain and Trade Finance at AIG, commented; “Using blockchain technology to facilitate trade finance transactions makes it easier for companies to benefit from trade finance, allowing more companies better access to working capital and making insurance more available to finance-providers. By using this blockchain-enabled platform, clients are able to benefit from the extended ecosystem that trade finance brings, but with a reduction in friction and cost and an improvement in speed and transparency.”
Farooq Siddiqi, Global Head, Trade, Transaction Banking at Standard Chartered, added; “Digitalisation of trade and trade finance is integral to our strategy and by working together with leading fintechs, we can create innovative solutions to better support the financing and information needs of our clients and their ecosystem of buyers and sellers.”
Rob Barnes, CEO of TradeIX, also said; “We are changing how trade finance is being offered through our Trade IX platform. It is designed and positioned as a “Network of Networks” platform focused on low-cost transaction execution in a highly-secure environment, representing the world’s first shared and open infrastructure for global trade. The launch of our first major transaction with AIG marks a significant step forward in bringing our innovative solution to leading financial institutions and global corporate clients. We look forward to expanding our relationship with trade finance parties to reduce cost, lower risk and enhance funding opportunities in the large and growing trade finance market.”
Neil Ross, Global Head of Trade Credit at AIG, stated “This relationship with TradeIX reflects AIG’s commitment to seek out partners with the best technology so we can explore innovations that will benefit our clients. We selected TradeIX as a partner because of its rare combination of deep technology expertise and extensive knowledge of the trade finance market. This partnership is part of our ongoing commitment to co-develop new technology that matters to our clients; first demonstrated in the multinational blockchain pilot announced earlier this year, also with Standard Chartered.”