After the hype, the reality
The dotcom bubble bursting, unstable economies, and of course the terrorist attacks in the US, have all helped to strip out much of the glitz and veneer from the corner of the market that promised so much and attracted so many: the world of trading trade finance assets electronically. Philip Carter discovers who's survived the year and who hasn't.
The international trade finance market is a several trillion-dollar a year business and is generally regarded as one of the least advanced markets from a technology perspective compared to say the equity or bond markets. No wonder so many firms felt there were big opportunities to bring internet-based technologies to bear, hoping that through these technologies they could drive up liquidity, improve efficiencies and open the asset class to a far wider range of investors and traders.
The live few
But so much for the good intentions, how many companies are offering the market and corporate sector the opportunity to find these efficiencies in trade finance. In fact, there are just a handful of companies active - or close to being active - in this business now. And all have suffered to some extent from the internet crash, the negative perceptions this created of e-businesses and also the uncertainty introduced by the September 11 terrorist attacks in the US.
"The market is large and, while experience elsewhere suggests that consolidation is bound to come, there is certainly room for more than one player," says Tara Kimbrell Cole, founder of Global Trade Finance Network (GTFNet).
Singapore-based GTFNet is another ambitious platform seeking to become a force in internet-based trade finance. When it is launched, GTFNet is intended to be a global platform for the distribution international trade debt receivables. GTFNet claims its services will allow financial institutions market to enjoy liquidity comparable to that experienced in other major financial markets. "GTFNet continues on its steady and determined course, albeit slowed in these recent months as all business has been due to fallout from September 11," says Kimbrell Cole.
Paradoxically, the events of September 11 may have a beneficial effect
for internet trade finance platforms. "Awareness of the importance
of the growth of trade for the stability of the world has expanded
in these last few months," says Kimbrell Cole at GTFNet. "This
sets a favourable stage in 2002, for GTFNet facilitates trade by removing
barriers to the financing of exports between all countries and it provides
economic advantages to all users by opening access to new markets and
opportunities."