UAE Trade Connect (UTC), a new nationwide blockchain platform, has officially gone live on Monday to help financial institutions combat fraud and duplication.
Co-created by Etisalat Digital, seven leading UAE banks and Avanza Innovations, the idea was first proposed by First Abu Dhabi Bank to tackle key issues in the trade finance space. The steering committee for the platform consists of the Central Bank of the UAE, Commercial Bank International (CBI), Commercial Bank of Dubai (CBD), Emirates NBD, First Abu Dhabi Bank (FAB), Mashreq Bank, National Bank of Fujairah (NBF), and RAKBANK.
Speaking at a webinar during the launch event, Zulqarnain Javaid, CEO of UTC, explained that six months of testing went into the project, and that the UTC is going to be a “game changer for the trade finance space.”
“The idea came about two years ago,” he said. “We pulled together the consortium in the middle of 2019, and began testing towards the end of 2020. The Central Bank’s fintech office also took an interest in the concept very early on. This programme was considered to be such an important part of digitisation that even during the first year of the Covid-19 pandemic, all of the banks committed their IT resources to it.”
The platform is based on blockchain and other disruptive technologies enabling data to be shared in a secure manner. Technologies such as Artificial Intelligence (AI), Machine Learning, Optical Character Recognition (OCR) and Robotic Process Automation (RPA) read invoices to identify duplications, frauds and dubious transactions within the banking trade finance offering.
The initial phase will focus on addressing the risks of double-financing and invoice fraud before turning to other key areas of trade finance, such as digitalizing bills of lading and e-invoices. UTC is aimed at driving digital transformation of trade in the UAE by enabling banks, enterprises and government authorities to collectively benefit from future technologies.
Anirudha Panse, MD and head of Trade Product Management at FAB, described the UTC as a “platform for the banks built by the banks.”
“The success of this platform will depend on many banks coming together and being part of the solution. Invoice fraud is a problem faced by many banks across the UAE. We believe that the UTC will benefit the wider ecosystem, and the idea is to make UTC a national platform for trade finance,” he said.
Reda Ezzat, SVP and head of Trade & Structured Finance at Mashreq, also highlighted how the UTC will aid SMEs in the UAE. “Globally, SMEs represent 90 per cent of all business worldwide. They contribute 40 per cent of the GDP in developing countries; in the UAE, the same data applies. A key challenge for SMEs is access to finance. The UTC will help banks in the UAE improve their appetite for risk, and this will reflect on SMEs getting easier access to finance.”
Vikas Jha, head of Trade & Supply Chain Finance at ENBD, listed several problems that banks commonly deal with, which will be tackled with the UTC. “Fraud invoicing, duplicate invoicing, incorrect pricing, and misdirection of funds are the four most common types of commercial fraud that we see. The UTC, at this point in time, detects duplicate invoicing. In the future, as banks put in more data to help with the platform’s machine learning capabilities, the system will be able to evolve and tackle other matters as well.”
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