Yesterday, Nordea a private Nordic bank announced that it would open its blockchain-powered trading platform to more clients. According to the bank, the platform, named “we.trade” will now be open for its clients running small and medium-sized businesses (SMEs).
Nordea made this announcement through a press release. The bank’s head of business banking, Magnus Montan said,
We see more and more small and medium sized companies getting involved in cross border trading. There are some common challenges that they face. The biggest one is related to trust in their overseas trading partners. we.trade is not only about providing trade finance, it is something much bigger than that. It is about enabling trade and with we.trade we are creating an ecosystem for the global trade, where trust is an integral part,
we.trade Poised to Address Trust Issues in Cross-border Trades
Per Patrik Zekkar, Nordea’s global head of trade finance and working capital management noted that we.trade would help reduce trust issues in the cross-border transactions made by SMEs. He went on to explain that approximately 60 percent of Nordic SMEs said they have to make advance payments. Zekkar believes that this move shows that there is a sense of insecurity in cross-border trades. As a result, this lack of trust may cause firms to stop trading thus inhibiting growth.
Through we.trade, the bank streamlines the order and contract processes for traders. The platform controls trade through a set of rules, which add security to the activity. we.trade also offers traders flexibility as they can select which events will trigger payments.
Nordea conducted a survey and found that its clients had three needs that were instrumental in the first commercial version of the platform.
- Event-driven payments should satisfy the need for automated payments.
- A guarantee by the bank should meet the need for secure payments if the buyer does not have enough funds.
- The seller should be in a position to sell an invoice to the bank to get earlier access to payments.
we.trade is created on IBM’s blockchain platform. It is jointly developed by 12 banks. These include Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Santander, Société Générale, and Unicredit. we.trade started its live operations in June last year. Nordea joined this project in 2017 and launched the project to select clients in April this year.
Nordea Has an Anti-crypto Stance
While Nordea is bullish on the blockchain technology, the institution does not have the same sentiment on crypto. According to a report, the bank prohibited the owning of BTC by its employees. The bank also closed the account of Bitmynt AS, a Norwegian crypto exchange in December 2017. The exchange sued the bank but lost the case.
Do you think Nordea introducing we.trade to its SME clients will help the blockchain reach mass adoption? Let us know in the comments below.