Trade information network: a new industry standard for trade finance

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.