The Value of Transparency in Digital Trade Finance, with Aaron Seabrook, COO, Contour
Following the recent announcement of GLEIF’s partnership with digital trade finance network, Contour, we spoke with Aaron Seabrook, Contour’s COO, to explore why digital identity is so important to the future of global trade.
Author: Aaron Seabrook, Chief Operating Officer at Contour
In the globalized digital economy, the job of verifying the identities of trade partners is becoming more complex and costly as each month passes. GLEIF data (see related links below) highlighted that 50% of financial institutions use, on average, four different identifiers to validate each customer organization. Individual businesses, which lack both the verification skills and the resources of financial institutions, struggle even further.
In November 2021, GLEIF partnered with Contour, a global network of banks, corporates and trade partners working together to revolutionize the trade finance industry by removing barriers to entry. The partnership enables the use of Legal Entity Identifiers (LEIs) within Contour’s platform and puts digital identity at the heart of its proposition.
We caught up with Aaron Seabrook, COO at Contour, to discuss the partnership and explore why digital identity is such a vital component in creating more accessible trade networks.
What are some of the common challenges Contour’s clients encounter when trying to verify the identity of potential trading partners?
When organizations set out to build relationships with new suppliers, establishing that they are indeed who they claim to be is a vital step. We have heard from our member organizations that supplier verification processes are fragmented and inconsistently applied, particularly so following the business disruption caused by the Covid-19 pandemic. Establishing the identity of a new supplier tends to be a manual process which, of course, is very inefficient: it is prone to human error; a challenge to scale in line with business growth; and really time consuming.
Why did Contour decide to partner with GLEIF?
Contour’s vision is to create a better world for businesses by making global trade accessible, digital, and secure. Our platform’s goal is to simplify the financial workflows between banks and corporations to enable seamless collaboration in real time. By doing so, we hope to reduce complexity and optimize efficiency for all involved.
As we have grown the platform, we have encountered challenges along the way when onboarding new member organizations. Some have multiple connections into disparate networks where they may be registered under a slightly different name, others may register with us using a holding company and be using a trading company to sign into others. When we try to piece this information together, mistakes happen because we’re reliant on manual processes. Digital systems crave structure, so we decided that a unique identification system was for our platform.
We chose the LEI because it is a well-governed and widely adopted global standard.
How will Contour’s customers benefit from access to the LEI as part of this latest partnership?
The LEI is going to become a central part of the Contour onboarding system through our new role as a Registration Agent. When an organization joins Contour, they go through our automated onboarding journey. Part of this system will now include a check to see if they have an LEI. If not, we will not only register them but shoulder the cost of doing so too.
Not only will the LEI improve our users’ customer experience within Contour, but it will also have a significant impact on their overall digital trade journey. Our members have multiple connections within multiple networks. With an LEI, a company’s legal reference data is available electronically to anyone, anywhere, for free - it can be universally validated. When used in international trade and trade finance, this creates greater confidence amongst trading parties resulting in more transparent and efficient cross-border exchanges of goods and data. In addition, the LEI will also lower data reconciliation costs, reduce transaction discrepancies and improve risk management for all our clients.
From their first day of joining Contour, our members will be in possession of a globally recognized digital identifier, applicable not only within Contour but across other international systems as well. This will help them realize the benefits of digitalization more quickly.
What long-term potential do you see for ID initiatives, such as the LEI, for global trade?
We believe that the LEI holds vast potential for global trade. As part of our vision of making trade accessible and inclusive to all, this means providing companies, both large and small, with the tools to improve their access to trade finance. The LEI enables SMEs in developed and developing countries to quickly establish their credentials via a native digital identity that is recognized globally.
GLEIF and McKinsey data highlights that banks issuing trade finance could save up to $500 million every year by using the LEI for letters of credit alone. The potential for savings across the entire KYC process are therefore tremendous. Banks may also be incentivized to lend to a broader range of businesses of all sizes if those borrowers could offer up a globally recognized and validated form of organizational identity.
Businesses with LEIs are also more likely to be able to establish credit terms with international partners in the supply chain, creating further opportunities for global economic growth.
The ripple effects that can occur by equipping businesses with LEIs are remarkable. We want to ensure that Contour plays a key part in the drive to make the LEI de-facto means of legal entity ID by continuing to advocate for industry adoption.
A fairer, more open, and more efficient international trade ecosystem is in sight.
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Aaron Seabrook is the Chief Operating Officer of Contour, a leading trade finance network that is backed by the world’s largest trade banks working collaboratively to transform global trade. Aaron is responsible for defining the company’s technical, operational and governance architectures and ensuring scalability of the network. Aaron is also a Director of the Corda Network Foundation, a non-profit entity tasked with governing the Corda Network.
Previously, Aaron was delivering large portfolios for Tier 1 financial institutions and more recently was Head of Professional Services APAC at R3 where he managed multiple large-scale consortiums and deployments of Corda blockchain. Aaron holds a degree in Computer Science and has worked in the UK and India and now lives in Singapore.