THE ITFA FINTECH COMMITTEE – MAKING THE MOST OF THE FINTECH OPPORTUNITIES By André Casterman, ITFA Board Member, Chair of the ITFA Fintech Committee and Founder, Casterman Advisory

Disruption – which disruption?

Much has been said about the upcoming “fintech disruption”. About 4 years ago, emerging technology companies identified as “fintechs” were mostly finger-pointed as attempting to create the next wave of competition against established financial institutions (FI’s). At that time, most bankers viewed fintechs as new entrants trying to enter the financial services industry using advanced technologies and innovative business models. Fintechs were perceived as attempting to grab market share from the trusted incumbents. 2017 and 2018 have shown that the tide has turned.

The last 18 months have proven indeed that this “emerging fintech competition” gradually converted as it emerged as a strategic opportunity for FI’s. If any disruption, it is now generally accepted it won’t be driven by those specialised technology players. On the contrary, the recent fintech news are reporting various “bank – fintech“ adoption contracts. In many cases, banks become clients of fintechs as they recognize the important value brought by those innovators.

Disruption in some areas of the financial services industry such as consumer payments may be expected though. But it will most probably find its roots with dominant platforms such as the so-called GAFAs (Google, Apple, Facebook, Amazon) as recently reported on finextra.

Fintechs as new partners of trusted incumbents

In addition to the growing adoption of fintechs by banks, we can also witness new long-term partnerships being sealed between banks and fintechs as the former engage as long-term fintech investors. Examples includes SC Ventures (by Standard Chartered Bank) as well as InnoVentures (by Santander) and ING Ventures.

Fintechs bring new propositions that differentiate in approach vs. traditional software development. Here are key characteristics:

  • Fintechs are laser focused on delivering specific value propositions; they often become the best at it
  • Fintechs are very agile and will consider their early adopters as partners in their product development roadmap; co-design becomes the norm
  • Fintechs are best positioned to take advantage of very recent technologies whilst caring about the need to integrate seamlessly with banks’ legacy systems
  • Fintechs sometimes operate common communications or trading platforms and are therefore creating new eco-systems, also called market networks, for financial institutions, their clients and/or suppliers; platforms often become new sales / distribution channels for banks
  • Fintechs are not biased by legacy revenues and technologies – they want to demonstrate their value add in the fastest and most cost efficient way. Increasing actual adoption is the key objective rather than protecting a legacy revenue stream or developing short-term license-based revenue.

As a consequence, partnering with fintechs bring many benefits to transaction banks, their clients and their investors:

  • Short time to market thanks to use of cloud-based platforms
  • Non-intrusive technologies ensuring seamless integration with exiting systems
  • Low set-up cost and usage-based running cost
  • Optimal user experience
  • Continuously evolving products
  • Strategic enablers for banks to innovate as a community (multi-banking)
  • Business expertise beyond technology.

I experienced the above during my last 5 years at SWIFT (2010-2015) when I initiated and completed various bank – fintech collaboration deals to the benefits of all parties involved: fintechs, banks and their corporate clients. Such innovations were focused on providing multi-banking trade finance innovations to multi-national corporations.

Chairing the ITFA Fintech Committee since Q4 2017

Having worked for and with incumbent institutions and fintechs over the last 30+ years, I am now focused exclusively on further promoting the “bank – fintech” collaboration opportunities. I therefore engage with a select number of fintechs as well as with various financial institutions to design the best collaboration opportunities.

Being convinced that financial institutions will increasingly take advantage of multiple fintechs in parallel, I am helping them sequence adoption and define their selection and adoption plan.

In order to offer a neutral space to debate those many opportunities, the ITFA Board set up the ITFA Fintech Committee in Q2 2017. The committee acts as a forum for the ITFA membership to keep abreast of the fintech innovations in trade finance, focusing on both primary and secondary spaces.  The Committee produces educational opportunities on technology innovations aiming at automating trade finance and establishing trade finance as an investable asset class.

The Committee is organised around four key themes as depicted below. As shown, the use of data technologies as well as trading platforms is high on our agenda:

In 2018, the committee organised the following educational events:

  • March 2018 in London with INTIX, Tradeteq, CCRManager, Toredo, R3/TradeIX and LiquidX
  • June 2018 in Frankfurt with INTIX, Tradeteq, CCRManager, LiquidX and TrustBills
  • September 2018 in Cape Town with INTIX, Tradeteq, LiquidX, Toredo, TradeAssets and Interlinkages Online
  • October 2018 in Sydney with INTIX, Tradeteq, CCRManager, TradeIX, TradeAssets, Interlinkages Online and Mitigram

Joining the ITFA Board in Q4 2018

I am delighted to continue chairing the FinTech Committee forward in 2019 and to join the ITFA Board to strengthen those efforts.

The committee benefits from the contributions of the following individuals:

  • Johanna Wissing, Lloyds Bank
  • Daniel Rymer, Mizuho Bank
  • Adeline De Metz, UniCredit
  • Farah Shaikh, Crown Agents Bank
  • Geoffrey Wynne, Sullivan & Worcester UK LLP

The following fintechs joined the ITFA since early 2017 (in alphabetical order) and feed into the committee activities:

  • CCRManager – redefining trade finance infrastructure
  • Interlinkages Online – democratising trade finance
  • INTIX – the data management fintech
  • Levantor Capital – enable sales to grow
  • LiquidX – the largest electronic marketplace for trade finance assets
  • Mitigram – the global trade finance collaborative platform for corporates, traders and financial institutions
  • Toredo – new e-trading platform for specialised trade credit insurance
  • TradeAssets – the first Trade Finance e-marketplace of its kind for Banks
  • TradeIX – rewiring trade finance
  • Tradeteq – the trade finance market network
  • TrustBills – the true sale auction platform for domestic and international trade receivables

We look forward to welcoming and promoting additional fintechs in the future!

About Casterman Advisory

André Casterman is the founder of Casterman Advisory, a Fintech advisory firm dedicated to transaction banking.

Casterman Advisory builds on 16 years of IT experience (1982-1997) as well as 21 years of business experience (1998-2018) in designing and rolling out technology innovations in inter-bank payments, corporate treasury, trade finance and capital markets when active at SWIFT (1991-2015) and Euroclear (2016-2018).

In 2011, André established an institutional partnership between SWIFT and the International Chamber of Commerce (ICC) and created the first digital trade settlement instrument known as the Bank Payment Obligation, which was adopted by 20+ banks and 100+ corporate clients. Roll-out of SWIFT’s multi-banking standards for documentary trade (MT 798) occurred in parallel and attracted most of the top50 banks as many of their top clients.

In 2017, André joined the ITFA as chair of the ITFA Fintech Committee which helps trade originators automate trade finance flows and establish the business as an attractive asset class through use of fintechs in data management, analytics, communications and trading platforms, and artificial intelligence.

Focused on helping financial institutions take advantage of the so-called “Fintech” propositions, Casterman Advisory provides its clients with a broad understanding of the Fintech landscape in cross-border payments and trade finance. He advises financial institutions on the best strategy and roadmap for adoption.

André holds a master’s degree in Applied Economics from ICHEC Brussels Management School and two master’s degrees in Computer Sciences and in Management from the Vrije Universiteit Brussel (VUB).

Casterman Advisory represents various Fintechs (INTIX, Tradeteq, Mitigram) as highlighted on LinkedIn: