Singapore's CCRM launches digital platform for trade loans
Fintech startup aims to foster efficiency and transparency in secondary market
MAYUKO TANI, Nikkei staff writer
SINGAPORE -- Banks and investors can now buy and sell trade loans digitally, using a Singaporean Fintech startup's new platform, CCRManager.
Backed by funding from the city-state's financial regulator, the Monetary Authority of Singapore, CCRM aims with its digital trading platform, to make the secondary market for trade-finance assets more efficient and transparent. The company says this will enable banks to lend more to underserved importers and exporters around the world.
Banks often sell off trade-finance assets, such as trade loans and supply-chain finance loans to other investors to offload risk and free up capital for new lending. But the secondary market for trade-finance assets has been low-tech up to now. Most transactions were conducted over the phone and the process was paper-based. On CCRM's web-based platform, the entire process, from listing a loan for sale, to negotiating with potential buyers, to managing documentation can be done digitally.
The platform offers increased efficiency and productivity, to clients, CCRM says, as well as real-time information on market conditions and price transparency. The platform also provides users tools such as data analytics, market benchmarking and pricing indexes.
Five founding members, including Bank of China, DBS Bank and ICICI Bank, helped develop the platform and began using it in early May. Another 11 global financial institutions, including three Japanese mega banks, HSBC, and Bank of America Merrill Lynch, signed a letter of intent on May 16 to join the platform within the next few months. CCRM aims to increase the number of members to create a critical mass for its marketplace. Its target is to sign up 30 institutions in its first year.
Trade finance is an important part of Singapore-based banks' business because many companies in the city-state are active in trade.
"This tool is like an exchange, and it could potentially allow us to access a wider pool of investors", said Lim Him Chuan of DBS Bank. "By putting the process on the digital platform, [we] can improve its efficiency and reduce the transactional workload by up to 50%," Lim said.
CCRM Chairman Tan Kah Chye, who founded the company in January 2016 with a team of former bankers, said the industry has been waiting for digitization for a long time. Tan said it is now possible because the cost of the technology is lower, and the changing attitude of banks means they are "much more ready to work collaboratively."
The size of secondary market for the trade-finance assets, which is about $1.7 trillion worldwide, is set to grow, Tan said. With banks facing stricter regulations regarding the health of their balance sheets, they must sell down riskier or less profitable assets. The new platform will help the market grow and "help increase the supply of trade finance globally," CEO Man Ka Kit said.