LiquidX partners DBS; ramping up expansion plans in Singapore

Singapore

NEW York-headquartered trade finance marketplace LiquidX has managed to get DBS, South-east Asia's largest lender, onboard its network - the first bank here in Singapore to do so.

It was revealed on Tuesday that DBS has successfully completed a primary receivables transaction worth US$16 million with one of its undisclosed key relationship clients via the LiquidX network in the second quarter of 2019.

The collaboration enables DBS' clients to tap into a digital network of global participants - comprising major corporations, banks, institutional investors and insurers - for access to a broader spectrum of trade financing options.

In essence, LiquidX's one-stop platform connects corporations around the world to digitally transact with financing companies, such as DBS, to fulfil their supply chain, working capital, trade finance and trade credit insurance needs.

Globally, the platform saw trading volumes reach US$2.7 billion in the second quarter in 2019, including a record volume of US$1.5 billion in June. Since it was launched in 2016, it has handled a transaction volume of over US$21 billion.

On Tuesday, LiquidX's Asia head, Rohit Goyal, told The Business Times that the fintech startup is also in the process of getting another five banks with a presence in Singapore to join its network in Asia.

In addition, it has also been adding corporates based across Singapore, Hong Kong, China, India and United Arab Emirates, he added.

Started in July 2018, Singapore is LiquidX's Asia's headquarters, and is seen as the launchpad for the startup's growth in the region.

"Singapore has a vast and vibrant fintech community, which coupled with governmental support for trade and commerce makes it a strong hub for our business," he noted.

To drive its strategy forward in Asia, Mr Goyal said that the startup intends to hire seven more employees to join the origination, legal and product teams by early next year. This will add up to a total of 13 staff in Singapore.

The platform aims to address the various painpoints faced by corporates when it comes to trade financing - a process often plagued by multiple inefficiencies and a lack of transparency.

Firstly, it provides a single framework for corporates to deal globally with over 40 banks and asset managers, with a single interface to manage multiple working capital products on a single screen.

Secondly, for Singapore-headquartered multinationals with extensive trade ties around the world, finding a single financial institution that can finance working capital in these countries is often a "tough task with high search cost", he said.

Instead, LiquidX enables corporates to leverage on its global network to finance their working capital needs, said Mr Goyal.

And in an industry that is still heavily reliant on paper and manual processes, LiquidX is tapping on its blockchain technology to digitise manual processes and optimise workflow, transforming the transaction landscape for trade finance.

The benefits to corporates are not lost on DBS Group head of global transaction services trade product management Sriram Muthukrishnan.

He noted that corporate clients are increasingly seeking "bank-agnostic solutions" and are transiting towards a multi-bank strategy.

"We see a growing trend of corporates moving towards bank independent third-party platforms such as LiquidX to help connect with their preferred banks and to digitise their overall physical and financial supply chains," he said.

Now, corporates can gain access to a "greater diversity of working capital solutions" and attain the best available pricing for their receivables without engaging multiple banks bilaterally, said Mr Muthukrishnan.

"This laissez faire approach also helps to generate traction for less liquid receivables, developing the secondary market for the asset class," he added.