Season 1, Episode 74
Host: Deepesh Patel, Editor, Trade Finance Global
Olivier Placca, Group Deputy CEO & Co-Founder, Tinubu Square
As the trade finance industry shifts towards more digitalised ways of doing business, new niches are opening up within the market.
Tinubu Square considers itself the leading B2B software-as-a-service (SaaS) provider for trade-related speciality insurance, namely credit insurance with short-term, medium-term, and political risk, bonds and surety, working with 60 insurers, 218 brokers and over 1000 obligees based around the world.
Founded in France in the year 2000, Tinubu Square had €115,000 in initial funding to create a cloud-based SaaS platform for credit risk management and has subsequently raised nearly €85M since.
It also makes 90% of its revenues outside of France, thanks to the input of over 150 employees worldwide, and its growth metrics are no less impressive.
In 2020, for example, Tinubu Square recorded a 58% increase in annual recurring revenue (ARR), and at present, 77% of the top 30 US surety underwriters are Tinubu Square customers.
“We are a global company with a rare combination of business expertise, technology expertise, and data expertise,” said Olivier Placca, co-founder and group deputy CEO of Tinubu Square.
“We provide mission-critical solutions for credit insurers, surety carriers and brokers to help them digitally distribute, underwrite, manage, and administer insurance products globally and across the entire chain from end to end.
“We help them reduce their operational costs, increase efficiency, and provide a better customer experience.”
Trade credit insurance – spared COVID-19 disruption
As one of the financial linchpins of global trade, the trade credit insurance market has been affected by disruptions caused by the COVID-19 pandemic.
But as Placca points out, the market’s worst fears did not come to pass, particularly in relation to exposures and premiums.
“What we have observed during the pandemic is that there has been a transfer of risk between private and public insurers – that was one thing,” said Placca.
“From a premium perspective, the overall premium has been quite stable, even if there has been a slight drop due to the slowing of global trade.
“The big fear was actually a rise in claims, but that did not happen, and our customers are quite optimistic regarding the development perspective.”
Trade finance digitalisation – proceeding unevenly
The COVID-19 pandemic may have accelerated a general shift towards digitalisation in trade finance, but that shift has not been shared equally across the industry.
As Placca has noted, trade credit insurance has been something of a laggard when it comes to digitalisation – but that is a distinction that he and Tinubu Square are working to overcome.
“There has been quite significant investment made to digitalise both trade finance and credit insurance over the past years,” said Placca.
“However, the digitalisation is not happening at the same pace for trade finance and credit insurance.
“It seems to me that trade finance is a little bit ahead, and the finance sector in general is ahead.
“But credit insurance is a more conservative industry, and it’s clearly lagging behind.”
Challenges to trade digitalisation
Last month, the International Chamber of Commerce (ICC) published a report which found that, with full digitalisation, the value of trade between G7 countries could increase by $9 trillion by 2026.
In order to realise that growth, however, micro, small, and medium-sized enterprises (MSMEs) need to have access to the right trade finance to expand their operations.
Looking at the market today, Placca said he believes that artificial intelligence (AI) and machine learning (ML) offer the most promise in this regard, thanks to their ability to handle enormous datasets in real-time, and thus connect businesses to the right type of credit at the right time.
“The opportunity is that there is more data available – open data that are captured by IoT [internet of things] sensors and during KYC [know your customers] processes,” said Placca.
“So this is providing credit insurance and surety carriers with new underwriting opportunities.
“But it requires that they have a system that can actually capture that data, and they have some problem with the obsolescence of their legacy systems that is preventing them from fully taking the benefit of these new technologies.”
With 2021 coming to an end, Placca believes that Tinubu Square has focused its efforts in the right areas over the last 12 months, and has positioned itself for a successful 2022.
One project that Placca is keen to highlight is Tinubu Square’s joint innovation lab with
Thomas Frossard, where the two companies are studying the use of advanced technologies for selected use cases in credit insurance and surety.
“What we’re doing is actually trying to develop a prototype which we’ll present to our customers, and we learn from that to inform our roadmap,” said Placca.
“An example is leveraging distributed ledger technology (DLT) for the management of coverage for infrastructure and construction projects.
“Another example is the expandable artificial intelligence leveraging machine learning, and this is for credit scoring or contra-risk assessment.”
One final area of exploration for Tinubu Square is quantum computing, which the company is experimenting with to process large datasets related to factors such as credit risk and country risk..
Tinubu in 2022
Going into 2022, one source of optimism for Placca is the competitive landscape in credit insurance, which he believes strongly favours Tinubu Square.
“I think as far as credit insurance is concerned, many incumbents are facing difficulties, facing business problems,” he said.
“They have a huge obsolescence problem with their legacy system, they have low process automation and significant technical depth.
“They have a constant pressure from customers and employees for digital enablement of self-service modern portals.”
Inevitably, this has led to greater demand for more flexible and efficient third-party SaaS cloud solutions, and a shift away from proprietary internal systems.
“We believe that it’s only a matter of time until everybody will get there,” said Placca, “so digitalisation will be ongoing.”