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Trusted Payments
| 25-2-2019 | François de Witte | treasuryXL |
In any business transaction, there are risks. The Buyer wants to be sure to receive the goods or services before he makes the payment. On the other hand, the Seller wants to be sure to have his money before he releases the goods or deliver the services. The risks increase when the Buyer and the Seller are not within the same country.
In order to bridge this gap, for large overseas cross border transactions, the banks have developed specific services, such as the documentary credit, the documentary collection and the bank guarantees. Whilst these instruments prove to be reliable, they are quite expensive and paper-based, and hence are not suited for transactions of lower amounts or with small margins.
In my current company, SafeTrade Holdings, which deliver services linked to the domestic and cross-border sale of used vehicles, we were confronted with this problem, in particular for the cross-border sales of used vehicles.
At the start, the parties – who do not know each other – do not trust each other. The Seller wants to make sure to get the cash payment at the end of the sale. The Buyer wishes to avoid a risky cash transfer and ensure that the vehicle matches his expectations and that the payment will only be released once the car has been delivered.
Safe Trade has been looking for an innovative service aimed at ensuring payment security. We have discussed with various providers in the market and have found one smart solution, the trusted payment, developed by Digiteal, a FinTech which is also a Payment Institution recognized by the National Bank of Belgium.
How does it work
The trusted payment aims to establish a relationship of trust between two parties carrying out a financial transaction within the framework of a common project (used vehicle purchase-sale, real estate operation, etc.).
The process is initiated by the Seller or an Intermediary who will invite the Buyer to transfer the cash to a trusted account (segregated account), which can be compared to an electronic safe. The money can only be released once both Buyer and Seller confirm the success of the operation to release the money.
The stages of the transaction are the following:
Figure: Trusted Payment with split:
Benefits of the solution and next steps
The main benefits of the trusted payment solution are that it secures a sale transaction. Other benefits include:
The solution will be extended to other goods and services, where we are currently developing new use cases. We are also examining the possibility to provide alternatives to replace the signing process leading to the release of the funds. One could imagine that at the start of the transaction, the Buyer and the Seller agree on a specific set of documents which would trigger the release of the money through a Smart Contract. This could avoid litigation between the Buyer and the Seller.
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A beleaguered Europe shoots itself in the foot
| 21-2-2019 | ICC Consultants | treasuryXL |
This blog analyzes the international political developments that can have an impact on the financial markets and the extent to which. The vision of ICC Consultants is based on a large network within the worldwide leading research houses and 40 years of experience in the financial markets. By means of the web link at the bottom of this blog you can download multiple reports from ICC Consultants.
Global central banks are starting to worry about economic growth, slowly but surely. The Fed made an about-turn recently. It announced it would put off further monetary tightening. The ECB was already treading cautiously. Now even hawks such as the Dutch member of the Governing Council of the ECB, Klaas Knot, are becoming jittery on signs of economic weakening both in the stronger euro countries and the struggling member states. Not just the western central banks are bracing themselves. Two months before India heads for the polls, its newly appointed central bank governor implemented a rate cut, much to the surprise of quite a few analysts. From Australia all the way to the Czech Republic and the Philippines, central bankers who wanted to tighten the reins not so long ago are increasingly speaking in dovish tones
Focusing on the prospects for Europe, we see plenty of economists and analysts who mainly attribute the disappointing economic data to once-off factors that are unique to the countries in question. They claim that German growth is mainly in heavy weather due to new emission regulations in the automotive industry. Likewise, the Yellow Vest protests in France are identified as a singular phenomenon that does not have a broader fundamental-economic effect on the country’s growth potential. The UK is fraught due to Brexit, Italy’s populist government seeks the confrontation with Brussels (and France), and a looming government crisis is what is undermining Spain. And so on.
Some analysts point at these factors and argue that such growth obstacles are specific to each country while there is little reason to expect a global, structural, and intensive growth slowdown. They think the recent pessimism of many market watchers is exaggerated. This is a dubious viewpoint from a political perspective. First, we are seeing plentiful and (potentially) substantial drags on growth, precisely in several of the world’s largest economies.
Second, quite a large number of growth impediments are symptomatic for wider developments that will not disappear from one day to the next. This does not automatically imply that a recession is nigh but owing to problems in individual major economies and various cross-border trends it is unlikely that growth will accelerate to any great extent.
To each state its own problems
As to the country-specific problems, we believe there is copious cause for concern:
> The German economy has cooled significantly. Most analyses point to the weaker German automotive industry, which faces new emission standards for greenhouse gasses as well as declining export opportunities. A leading industry for decades, it is especially reliant on diesel cars. The downside of progress is that while the German vehicle manufacturers (partially) set the tone for decades, they also became complacent and are now overtaken by manufacturers from elsewhere. More often than not, the Germans are focused on survival rather than on seeking out new opportunities. We have seen something similar in German politics. The German economy has mainly profited in the past years from reforms that were introduced in the 1990s. Angela Merkel has merely been holding the fort in that sense. Admittedly, she has done so in a very capable, quiet, and decisive manner but reforms and progress have been thin on the ground. A number of influential think tanks in Germany have been warning against this situation for years. Merkel is now in her twilight years as chancellor, while her successor is not exactly known for her revolutionary fervor. In addition, the SPD (the second-largest political party) has weakened and the German political centre has eroded in general terms – as has happened in many areas. Therefore, it does not seem likely that Berlin will become deeply enamored of reform any time soon. Meanwhile, the country’s population is set to age rapidly in the coming decades, which will bring a myriad of challenges.
> It cannot be denied that the Italian coalition government has a zeal for reform but it is often aiming for the wrong type of change. Many measures that were meant to render the economy more flexible and competitive have been reversed; most economists believe these policies will backfire. Having made a lot of headway between roughly 2011 and 2014 – if we take the Ease Of Doing Business Index as our benchmark, for example – Italy is once again sliding down the ranks. Rome is not just changing its economic course in a negative direction while in terms of diplomacy, its status is also blemished. Recent examples are its refusal (as the only EU country) to recognize the Venezuelan opposition leader Juan Guaido as interim president and the embarrassing tiff with France around Italy’s support for the Yellow Vests and its attempts to nix the construction of the railway link between Lyon and Turin. Government policies in Rome are an important reason why Italian economic growth is in the doldrums – the country is in a technical recession – as it buckles under the weight of debts and deficits. Consequently, it is again on a collision course with Brussels. On top of this, the coalition has already threatened to ‘clear out’ the Italian central bank. To sum, we cannot expect a lot of positive news from Italy in the short to medium term. A recent regional election gave off worrying signals; the rightwing populist parties with entrenched Eurosceptic sentiments made big gains.
> Further to the West, Spain has been frequently held up as an example of how to tackle a crisis and implement reform. Rightly so, to some degree. Jobless rates have dropped from 27% to less than 15% in recent years, the extremist parties did not gain a substantial foothold, and growth was robust in European terms. Yet, a political crisis is now looming as the left-wing Prime Minister Pedro Sanchez has lost the support of the Catalan parties. Fresh elections appear to be in the offing. The ruling coalition is already a hodgepodge of parties and the situation will probably not improve after the elections. Plus, the tensions between Catalonia and Madrid will undoubtedly mount once the conservatives take over the baton from Sanchez. The period of relative peace and quiet in Spain is over and we suspect this will have a negative impact on growth.
> As for France, factors including the Yellow Vests protest movement have knocked back the economy. Dissatisfied French citizens have been taking to the streets on a weekly basis for months. President Macron opted for an ill-advised hard line that has created a lot of resentment. On the other hand, the French are beginning to suffer from protest fatigue. The numbers taking to the streets are not as high as before while Macron’s popularity among voters is creeping up. Nevertheless, his reform agenda has been dented by setbacks so the president will have to scale down his ambitions whereas the French economy wasn’t doing that great before, in any case.
> The other major European economy is the only one (out of five) outside the Eurozone. Soon it may even leave the EU. Of course we are talking about the United Kingdom under PM Theresa May, who maintains that she will manoeuvre her country away from the EU on 29 March. We think this is not the most likely scenario. Neither is a new referendum or notification revoking Article 50 (meaning that the UK would remain an EU-member). The most logical outcome would seem an extension of the negotiations by a few months. Meanwhile, the UK is starting to feel the Brexit pain or rather, the adverse effects of the prevailing uncertainty. Businesses are postponing investment, growth is slowing, and consumer as well as producer confidence is waning. Faith in politics is also at a nadir: just 33% of the British thinks May is doing a good job and for opposition leader Jeremy Corbyn that percentage is even more depressing at 17%. The Tories are deeply divided and Labour is led by a left-wing populist who has shown several times that his knowledge of Brexit is deplorable. The gripping Brexit drama overshadows the entire British political landscape at the expense of other important issues. It is not a coincidence that Bank of England boss Carney did sound the alarm bell last week as he warned against the detrimental consequences of a no deal Brexit. Will the British people take any notice? Many are numbed by the ongoing spectacle. Increasingly, Brexit is tearing apart the fabric of the British economy whereas a real recovery is nowhere in sight.
The report was written by Andy Langenkamp , political analyst at ICC Consultants. On the website of ICC Consultants you can download the full report.
Blockchain and big Data: A great mariage
| 12-2-2019 | Carlo de Meijer | treasuryXL
Blockchain and Big Data are among the emerging technologies that are high on many companies’ agendas. Both are expected to radically transform the way businesses and organizations are run in the upcoming years. Long-time developing in a separate way, at first sight one might assume that these technologies are mutually exclusive. But that idea is rapidly changing.
There are growing expectations that distributed ledgers will help enterprises finally get to grips with Big Data, which thus far is struggling with a number of challenges. They are both powerful on their own, however when combined they may bring a large number of opportunities. Some even say that blockchain and Big Data are made for one another.
“Big Data is an incredibly profitable business, with revenues expected to grow to $203 billion by 2020. The data within the blockchain is predicted to be worth trillions of dollars as it continues to make its way into banking, micropayments, remittances, and other financial services. In fact, the blockchain ledger could be worth up to 20% of the total big data market by 2030, producing up to $100 billion in annual revenue.” Chris Neimeth, COO of NYC Data Science Academy.
In this blog I will look at what the interception of these two innovations may bring. Could blockchain be the solution for the existing Big Data issues and challenges?
Big data and data science/analytics: present challenges
Big Data is one of the fastest growing sectors in the world. Every business wants to get insights into usage patterns of their consumers. Massive datasets are thereby analysed using advanced statistical models and data mining. These Big Data sets will become even more prevalent over the coming years.
“It’s not the amount of data that’s important. It’s what organizations do with the data that matters. Big data can be analysed for insights that lead to better decisions and strategic business moves.” Data Analytics Company SAS
“Data analytics has become the key to corporate competitive advantage because of its role in identifying emerging market trends. In turn, companies can use this information to make quicker and better decisions that help them drive profitability”.EY
The rise of Big Data has presented a slew of issues for both big businesses and everyday consumers. With the growth in data good analytics is becoming all the more problematic. Some major problems to data management and analytics include so-called dirty data, inaccessible data, and privacy issues. And as Big Data increases in size and the web of connected devices explodes, it exposes more of companies data to potential security breaches..
With the advent of Big Data, data quality management is both more important and more challenging than ever. Companies that are dealing with large datasets should ensure that the data are clean, secure and not been modified and come from an authentic source. They have to make sure that the latest version is synchronized among all of the data centres in real time. It should also be ensured that these data are accessible. For most, however, the data silos are still a major issue and a full company-wide digital transformation is still more concept that reality.
Blockchain and Big Data: two sides of the same coin
Main question is: how do both technologies relate to each other, if any? Notwithstanding blockchain has not been explored extensively in aspects of Big Data management and analytics, both technologies could and should be seen as two sides of the same coin.
While blockchain is focused on recording validating data (data integrity), data science analyses data for actionable insight, making predictions from large amounts of data (prediction). While blockchain is changing data management, the latter is transforming the nature of transactions. Or said in another way: “If Big Data is the quantity, blockchain is the quality”.
Read the full article of our expert Carlo de Meijer on LinkedIn
Carlo de Meijer
Economist and researcher