We.trade was developed with the goal of delivering a standardised way for SMEs to large corporates to make fast, easy, safe and compliant trades. Beginning as a multi-bank collaboration, the we.trade project has evolved into a stand alone company supported by a growing number of banks spread across Europe which now includes Nordea, CaixaBank, Deutsche Bank, Eurobank, Erste Group, HSBC, KBC, Natixis, Rabobank, Santander, Societe Generale, UBS and UniCredit.
By using enhanced blockchain technology to add an extra layer of trust and eliminate the unknowns that can occur when two parties buy and sell from eachother, the launch of we.trade is expected to have a strong positive effect on increasing the potential for trade to occur. The platform simplifies the trade process by allowing companies to find commercial counterparties, create trade proposals and purchase orders, set payment conditions and request related services from their banks, which can be agreed upon and executed in a secure space.
Patrik Zekkar, Global Head of Trade & Working Capital Management at Nordea, says: “We have been making multiple tests of the platform and adjusting it in response to customer input received during the pilot phase. This launch marks a super interesting milestone for the project and we are excited to see how things will develop. Every step has been a new step and I look forward to this very much. I think this stage will be fun but also quite demanding because even though we’ve planned a lot, we need to stay alert and be quick to readjust and adapt if required.”
“Customers of any of the partner banks can now use the platform. It’s a requirement and secures that whoever you do business with on we.trade is screened by one of the banks.”
Customers of any of the partner banks can now use the platform. It’s a requirement and secures that whoever you do business with on we.trade is screened by one of the banks.
From weeks to minutes
With counterparties quality assured by their bank, one of the advantages of the new we.trade platform is the turn-around time it will then take for a company to make a trade.
Patrik Zekkar continues: “If you compare the trading process with a traditional letter of credit, it’s actually a completely new world. The trade transactions we have completed so far took on average 38 minutes for the end-to-end process, including the buyer and seller, and we are aiming to take it down to 23 minutes. These are all live transactions, with real purchases and sales between parties. Companies can replace the way they make regular purchases from suppliers and now just make them on we.trade. We want to facilitate the maximum amount of free trade so you can actually make an order on the we.trade platform under a common rule book. We have also enabled a whole range of European languages so that the buyer and supplier can read agreements in their own language and then confirm them. The whole trade cycle happens on we.trade.”
The we.trade platform should also enable companies to increase the scope for discovering new trading partners and doing business with those that they might have considered too risky in the past due to incomplete information.
“My hope is that companies will connect on the platform and find and define new business partners and enlarge business opportunities. This Includes of course to bring their existing business partners onto we.trade as they appreciate that it’s a safe environment and easy access to risk, sales support financing and working capital solutions from the supporting banks. There is a rule book and legal framework which you can trust and rely on rather than for example just sending an order to Italy and hoping that it works and then trying to figure out how to handle the payment later. The legal framework and rule book are very important because you have easy access to trade in a legally safe environment. Also, in particular when talking about the SME segment, the conversion of documents into multiple languages removes any potential language barriers that may be preventing a trade taking place and a business opportunity being lost,” adds Patrik Zekkar.
If you compare the trading process with a traditional letter of credit, it's actually a completely new world. The trade transactions we have completed so far took on average 38 minutes for the end-to-end process, including the buyer and seller, and we are aiming to take it down to 23 minutes.
Making it work
Nordea joined the we.trade project at the end of 2017 and has been working intensively with development so that the platform is now ready to launch just one and a half years later.
“It’s been a huge effort to build and launch a platform at such an extremely fast pace. The level of security requirements that need to be put into place in order to channel billions of Euros should not be underestimated. Now we need to monitor the scale-up of this launch in stages. A change of behaviour always takes time, both for us and the customers, and everyone has been operating in the classical manner for many years,” says Patrik Zekkar.
“The first step is to grow users by onboarding as many customers as possible from every bank involved to build a critical mass and secondly to make sure everyone understands the convenience that the platform brings to enhance volumes. For us at Nordea, I would like to see one thousand existing Nordea customers coming on board over the next 12 months. We expect to see a strong uptake from SMEs, and we are also already discussing the possibilities with some large corporates who want to utilise this for their SME suppliers. So it can either be a pull or a push on that side.”
Being part of such a large European-wide collaboration of banks has also created some valuable insights into how to make it work.
“If you don’t really have a clear problem statement from the beginning and answer the question ‘what problem are you going to solve?’ then you will get nowhere. That needs to be really crisp and clear. Then of course it’s about understanding we work a little bit differently and finding a common denominator that transcends differences in culture, language or other habits. The platform is managed by IBM and the we.trade company has also been on a journey to become a more or less standalone company, which I am happy about. The company is able to operate this utility platform to become the second line of support to the banks who are the first line of support to their customers.”
Flowrox from Finland were one of the first companies to use the we.trade platform:
It’s been a huge effort to build and launch a platform at such an extremely fast pace. The level of security requirements that need to be put into place in order to channel billions of Euros should not be underestimated.
Its all about the ecosystem
A steadily growing number of we.trade partner banks have ensured that a trading ecosystem is now in place across Europe and a proof of concept has already been conducted to connect we.trade to Asia via the Hong Kong Monetary Authority’s platform eTradeConnect. All efforts are currently focused on going live with we.trade at full scale across Europe.
“This is a new infrastructure for society to conduct trade in an easy and safe way. That of course takes away hurdles for companies to grow and aspire. From our side we have an ambition to expand our offering to customers to move from traditional trade finance to completely facilitating a large part of the trade supply chain. That will include combining payments, financing and risk with things outside of what we have traditionally been doing. There are enormous possibilities to expand our offering to become more of a one stop shop for our customers to support them in facilitating trade. Either we do it ourselves or with partners, but Nordea has to have a strong offering and is the bank you go to in the Nordics if you are conducting either domestic or international cross border trade,” concludes Patrik Zekkar.