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Nordic Banking Giant Nordea Opens Blockchain Trading Platform to More Clients

Nordea is expanding its blockchain-based we.trade platform to small and medium-sized enterprise clients.

Nordic private banking institution Nordea is expanding its offering of the blockchain-based trading platform we.trade to its small and middle-sized business customers (SMEs),  according to a press release on May 9.

The platform will purportedly help address trust deficits extant in current cross-border trades made by SMEs. Patrik Zekkar, Global Head of Trade Finance and Working Capital Management at Nordea, explained:

“Almost 60 percent of the SME’s said that they have to make advance payments so there is obviously a sense of insecurity surrounding cross-border trade. This is unfortunate, not only from a liquidity standpoint, it may also lead to companies refraining from trading and not growing.”

Through the we.trade platform, users can select certain events within a smart contract that will trigger a payment to another party.

We.trade is a joint project of 12 different banks including Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Santander, Société Générale and UniCredit, and is based on the IBM Blockchain platform. We.trade began its first live operations in June 2018. Nordea joined the project in 2017 and soft-launched it for select customers last month.

Nordea is a major private bank in the Nordic region. As of 2016, the firm had a total equity of over 32.4 billion euro, with a net income of 3.7 billion euro that same year.

While Nordea is accepting of blockchain technology, it takes a hard line against cryptocurrencies. In January 2018, the bank banned its employees from owning bitcoin (BTC). Following the announcement of the ban, Danish finance and workers’ rights figures threatened legal action.

The bank also shuttered the account of Norwegian cryptocurrency exchange Bitmynt AS in December 2017. The founder of Bitmynt sued Nordea, but lost his case in May 2018.

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European Union Launches International Association of Trusted Blockchain Applications

The European Union announced the launch of the International Association of Trusted Blockchain Applications.

The European Union announced the launch of the International Association of Trusted Blockchain Applications (INATBA) on its official website on April 3.

According to a Cointelegraph representative who attended today’s ceremony at the European Commission in Brussels, the more than 100 members who have signed the charter include IBM, Accenture and Deutsche Telekom. Among the blockchain-related members number Iota, Ripple, ConsenSys, and the Sovrin Foundation.

Per the announcement, INATBA aims to bring together industry startups, small and medium enterprises (SMEs), regulators and standard setting bodies to bring blockchain and distributed ledger technology (DLT) into the mainstream.

During the Brussels ceremony, European Commissioner for Digital Economy and Society Mariya Gabriel noted that the EU is committed to fostering the development of blockchain. She said:

“In today’s economy, there is less and less time to build trust in the way it happened in the past. To fight cancer, to balance renewable energy, to trace the authenticity of goods, actors must be able to trust one another without meeting face-to-face. And how can we achieve this? Of course, with the help of blockchain.”

The body’s post also notes that the new organization is willing to promote the use of decentralized technologies by establishing a dedicated regulatory framework. It states:

“INATBA aims to develop a framework that promotes public and private sector collaboration, regulatory convergence, legal predictability and ensures the system’s integrity and transparency.”

At today’s ceremony, it was noted that 48 additional organizations had applied for membership on the day of the launch.

As Cointelegraph reported in January, the European Banking Authority (EBA) has recommended further research into cryptocurrency and will develop work on the sector in 2019 in a document focusing on the “applicability and suitability of European Union law to crypto-assets.”

Also in January, a member of the Governing Council of the European Central Bank (ECB) has warned that “the [cryptocurrency] bubble has already started to collapse.”

Additional reporting by Simon Chandler.

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Blockchain Lending Platforms Can Bail Out SMEs and Improve Global Economy

SMEs are the cornerstone of economic development. In most countries, they provide the platform for job creation and economic growth. Therefore, any product or system designed to encourage the entrepreneurial adventure of SMEs or simplify the business environment may as well be recognized as a solution to a global problem.

Difficulties in traditional funding

Loans and external funding are essential in the development of SMEs. However, the risk of not meeting up with the obligations of loan repayment makes it somewhat difficult for banks to do business with them.

CEO and Founder of WishFinance, Eugene Green says:

“Small businesses play a significant role in the modern economy, as they hire more people, pay more taxes, strengthen their local communities and eventually propel the growth of the economy. However, SMEs consistently report access to capital being one of the most important factors of success, as getting unsecured business loans still remains a large issue for them. In fact, SMEs are the most underbanked business category worldwide and Asia Pacific is the region with the least banked SMEs in most of the countries.”

The factors that may hinder an SME from fulfilling its loan repayment obligations may include the competition of breaking into an existing market and the inability to achieve set targets by these startups. Such factors, among other reasons, may cause banks to be reluctant in issuing loans to such SMEs.

Decentralized lending platforms

Blockchain lending platforms are becoming popular across the industry and are being embraced by a lot of small businesses. These platforms do not require the kind of strenuous processes that is associated with bank procedures, neither demand collaterals from customers.

According to Green, WishFinance is offering merchant cash advances and business loans with fair interest rates based on the company’s real cash flow, not assets. It has direct access to POS terminals infrastructure to see real-time financial transactions, which it combines with the local market data for scoring.

However, like every novel project in the developmental stage, there is still the element of skepticism among members of the public towards lending systems that exist on completely decentralized platforms.

There are always questions with regards to the sustainability and security of such programs, especially as some foul players within the community always take advantage of emerging innovations to defraud unsuspecting or desperate individuals.

The sustainability of Blockchain lending

CEO of Never Stop Marketing, Jeremy Epstein thinks that the idea of Blockchain lending platform is genuine and sustainable. However, he notes that it will be a while until people figure out how to avoid getting scammed or being downright unprofitable.  

Epstein elaborates that having a community token-based model where the credit score of loan companies is affected by the creditworthiness of the people in their network is potentially the kind of business model innovation we will see in the future.

In addition, he notes that projects like LAToken.com where you can take your illiquid assets and tokenize them will help SME find new ways to unlock capital from hard assets.

Epstein also identifies SALT Lending to give SMEs the chance to secure loans against crypto assets, giving them many more options to build their business. He concludes:

“At this point, it is difficult to bet on one single winner, but the trend is there because there is friction in the existing market and Blockchain tech helps remove the friction from intermediary-laden processes.”