The digitalisation of trade finance – a slow burn, Pedram Tadayon, CEO, Mitigram

By Robin Amlot

Mitigram offers a platform for corporates and banks to manage trade finance. IBS Intelligence speaks to the firm’s CEO Pedram Tadayon, about the outlook for modernisation in the trade finance space

Marking the recent anniversary of the Electronic Trade Documents Act in the UK, Pedram Tadayon, Chief Executive Officer of Mitigram, commented on the limited progress the new regulations have had so far: “The legislation is there, but I’ve seen very little impact. There’s a lot of discussion… but it’s an industry that moves slowly. However, we have seen also that there are other countries, including France and Sweden, that have kicked off work on similar legislation and electronic documentation. We are super confident that this is going to happen, but it takes time.”

So digitalisation is transforming the trade finance industry, but it’s doing it slowly?

“If you look into Mitigram, we are currently offering software to digitalise the first bidding process for corporates where they can post their request and then get access to 300 banks. That wouldn’t be possible without digitalisation. We are also offering software to manage the entire life cycle of a letter of credit.

“We have built a whole digital document capability. [A strategic collaboration with Enigio announced in March 2024 enabled Mitigram’s capabilities in trade by offering a wide spectrum of legally compliant electronic trade documents accessible to all counterparties. It is now possible for all companies to go paperless and transform fully digital end-to-end trade flows with seamless communication, enabling faster and safer access to capital.

“We are pushing this out proactively to our corporate customers. Regulators have a role to play but I think it’s about the players in the industry who need to realise the benefits of using the digital process and the digital way of handling trade finance to simplify it.

“Once they start seeing the benefit in terms of lower costs and cheaper financing, that will really drive digitalisation. I should also mention data management as a game changer. If you run your processes in paper and Excel sheets and e-mails, etc., you cannot consolidate and centralise your data. Data is key for you to take a smarter decision and have control over your business, both for corporates and banks.

“We’ve seen that the corporates can use that data to optimise working capital. It’s about change management. You cannot go in one step from paper documents and manual processes to fully digital.”

What key trends and developments do you expect to see in trade finance over the next 6-12 months?

“I would say that the adoption of digital documents is going to continue and develop. So, we are driving adaptation to that. The use of AI and what feeds it – data – will be significant. If you don’t have data, you cannot use your AI tools. We are investing a lot in terms of helping corporates and banks consolidate their data, centralise their data, and adopting a lot of AI tools on top of that. That is a trend that we see accelerating.

“Our platform opens up the communication between corporates and banks. I am excited about API communications. We’ve seen that in the likes of open banking, where banks started opening up the API and then FinTechs and other corporates could connect and start working with the banks using the API technology.

“We sit on the largest marketplace globally for letter of credit for exporters. They can post a deal, and they can ask for pricing and quotation from the 300 banks that are involved there. Imagine a scenario where a corporate can post a deal, is connected through API to the bank, the bank can run it through its decision engine and automatically respond. That has been happening for a while in the lending space. And I think this can definitely happen in an API instead of somebody manually needing to deal with that – managing all that correspondence and relationships with banks from corporates and the digital platform and software that corporates are using straight to the bank’s decision making and its system.”

Does this mean that KYC and identity verification becomes even more important?

“KYC is a very important part. Today, if you look into the KYC process, it can take months for the banks to do KYC on the corporate side. But we believe that we already have that in our platform, supporting the key questions that banks ask to the corporates. So, that’s shortening the whole process of the KYC. If you imagine you have to do KYC every time, it’s the same type of process they have to go through. So, we start digitalising that for the corporates so they can be able to communicate with the banks in a digital way.

“Also, if you want to trade in a different region where it’s not your relationship bank, you want to be able to go there and ask for a quotation, but also make KYC much quicker in order to support that trade, which is going to happen in a month’s time or something like that.”

What’s your ambition for the company over the next 12-18 months?

“We have big ambitions; we are not going to sit around and wait for digitalisation. We are really working with our clients and the industry to accelerate digitalisation. Our ambition is to go to corporates who are maybe not using this type of instrument. We have a one-stop shop for them, the know-how, the platforms, the access to the banks. And we are onboarding corporates almost every day to start using the trade finance and other products.

“At the same time, we are building smart, digital dashboards and data tools. And I think that’s something that, again, is going to push the industry to move forward. Imagine a scenario where a CFO can get an overview on all their accounts receivable, inventory finance and trade engagements in one go, allowing them to optimise their working capital. I think that’s where we see the industry moving.”