This article originally appeared in
French in “Banque & Stratégie” of February 2020
The
Trade Information Network (TIN) was founded in
2018 as a response to the financing gap in the early stages of the supply
chain, from the issuing of the purchase order to approval of the invoice. TIN
aims to fill this gap and strengthen the relationship between buyers and
suppliers by making it easier for the latter to obtain financing from their
bank or other banks in the network.
TIN: a worldwide communication network
TIN
is a network allowing companies to communicate their transaction data –
purchase orders, invoices and shipment information – simply and securely, and
to share this information with their banks when they request financing. TIN
will create a new industry standard in trade finance, transforming the global
trade landscape.
As
network members will have direct access to the trade information provided by
clients of banks on the platform, TIN will reduce the risk of double financing
and fraudulent trade information across the industry. This will enable banks to
better assess risks and to provide trade financing earlier in the supply chain
– including for small and medium-sized businesses, which have traditionally
found it difficult to access trade finance.
TIN
has open architecture and standardised connectivity based on a governance model
similar to the Swift network, to encourage adoption by the industry. Companies
will use a simple one-time registration process to connect with their partner
banks on the network.
TIN and BNP Paribas’ strategic vision
Evolving
client expectations, maturing new technologies and efficiency targets are
driving banks to invest in partnerships with industry and to join forces with
other banks to tackle the digitalisation of the entire supply chain ecosystem.
Clients
expect open, data-driven ecosystems that provide a frictionless transaction
process, with banks fulfilling their role as trusted advisors.
Procurement
processes themselves have undergone structural change with the convergence of
physical flows, data and financial information, made possible by new
technologies. Emerging solutions and strategic adjustments are coming together
throughout the value chain.
BNP
Paribas’ vision in this area is articulated around three pillars – Connect,
Provide and Move Up – with the aim of meeting clients’ expectations, being
agile and anticipating market needs.
BNP
Paribas wants to make it easier to connect with its clients and their
ecosystems. To this end, TIN provides an efficient, open, transparent platform
allowing ERP (Enterprise Resource Planning) integration via APIs (Application
Programming Interfaces), which will mean banks can offer financing solutions
earlier in the supply chain.
How information flows
An independent structure
TIN
was set up based on analysis of businesses’ requirements. Developing this kind
of solution is a long process as it covers a complex area and involves many
stakeholders. The platform build phase was completed in September 2019, with
banks and participating companies ready to move into the test phase.
TIN
is now a separate legal entity, incorporated as an independent company, Trade
Information Network Limited, which owns and operates and will continue to
develop the platform. This ensures it will remain independent of its founding
banks.
It
has now entered a pilot phase involving the founding banks and their clients.
This is an important milestone, confirming that the project has reached
maturity. Initial feedback has been extremely positive. Test transactions will
be carried out in the first quarter of 2020, and live transactions are expected
in the second quarter.
TIN
has no competitors. It is a platform for sharing trade data – purchase orders
(PO), invoices and logistics data. Unlike other solutions, no financial data
will transit through TIN, which will only report the status of each event:
order status (new, approved), invoice status (new, approved), PO financing
status and invoice financing status (requested, approved).
The
goal of connectivity also sets it apart from other industry initiatives.
Next steps: interoperability, utility
The
whole industry is showing real interest in TIN, as it focuses on
interoperability and aims to connect different industry initiatives. Clients
are clearly keen to simplify their trade flows and gain access to a full range
of services on a single platform that offers more than financing. This is what
banks need to move towards.
Discussions
are under way to connect TIN to other logistics solutions which will provide
more visibility on the physical supply chain aspect, and to Procure to Pay
platforms, which need PO or invoicing data for their transactions. The goal is
to make TIN an industry utility which companies can easily log onto to access a
comprehensive range of services.
The
founding members include BNP Paribas and five other banks: ANZ, Deutsche Bank,
Citi, HSBC and Standard Chartered Bank. These members work closely together and
the group is expanding to include new partners. Around 50 banks have shown an
interest in the project. In September, two new banks were about to join the
pilot phase: Lloyds Bank and Standard Bank of South Africa.
