Arviem Transforms Trade Finance with IoT: A New Era for SMEs
Arviem, a pioneering Switzerland-based technology firm, is redefining trade finance by leveraging Internet of Things (IoT) sensors to provide real-time monitoring of cargo conditions. Integrating this innovative technology into commercial finance, the company aims to streamline lending practices for small and medium-sized enterprises (SMEs), offering them enhanced access to financing. By gathering comprehensive data from logistics operations, Arviem is not just transforming supply chain management but also enabling financial institutions to mitigate risks associated with cargo financing.
Founded in 2010, Arviem employs advanced IoT sensors to track the location and condition of goods throughout their journey. These sensors monitor various environmental factors, including temperature and humidity, ensuring that product quality remains intact. The collected data plays a crucial role in enhancing supply chain transparency.
With the launch of its Arviem Working Capital service, the company is extending its benefits beyond logistics. This initiative empowers financiers to monitor cargo in real time, allowing them to make informed lending decisions based on actual data rather than traditional risk assessment methods. It addresses a critical pain point for SMEs, making financing accessible even while cargo is in transit—an area that traditional financing has overlooked due to inherent risks.
Stefan Reidy, co-founder and CEO of Arviem, eloquently explains the challenges banks face when financing goods in transit. Unlike physical assets stored in a warehouse, which can be easily verified, the uncertainty of cargo location poses a significant barrier. “If you are financing cargo in a warehouse, you can always check its status. When it’s on a vessel or in transit, that access is limited,” he notes.
This lack of visibility often leaves SMEs at a disadvantage, struggling to secure vital financing for their operations. Arviem’s pilot projects have demonstrated that real-time monitoring can lead to earlier financing opportunities. In one notable case, a small commodities trader involved in the transport of silver concentrates from Bolivia to Belgium received financing tied to the issuance of a holding certificate—a significant acceleration from the traditional practice of waiting until the bill of lading was issued.
The integration of IoT data into trade finance is also appealing to banks, which have been pressured to finance larger companies due to regulatory guidelines. Aidan Shilling, director of working capital solutions at Arviem, articulates this challenge, stating, “Major traders like Glencore and Trafigura have no issues accessing funds. Smaller players, on the other hand, are left out.” With Arviem’s service, smaller companies can present a compelling case to financiers, demonstrating precise tracking of their cargo and its safe condition.
In addition to improving financing opportunities for SMEs, Arviem’s innovative approach is attracting attention across multiple sectors. The company has engaged in pilot schemes with various businesses, including a Chinese supplier to a multinational retailer, enabling them to access financing more rapidly than conventional methods would allow.
For financial institutions, the real-time tracking capability presents a dual advantage. Not only can they manage risk more effectively, but they also gain a key tool for capital allocation. Shilling emphasizes this point: as cargo moves through different jurisdictions, its risk profile changes. By leveraging IoT data, banks can adjust their capital allocation strategies dynamically, making it feasible to finance a broader spectrum of businesses.
Arviem is also expanding its offerings to include off-balance sheet financing solutions for listed companies. By monitoring goods from supplier to buyer, Arviem can facilitate transactions where they assume ownership of the goods, effectively streamlining the financing process. For instance, a German client—facing inventory pressures due to trade uncertainties—benefited from this arrangement, lifting a weight from its balance sheet while maintaining a consistent supply chain.
Looking ahead, Arviem is poised to roll out more services leveraging its vast data collection. Plans include developing a risk profiling service and an on-demand insurance offering based on real-time cargo data. The ambition extends beyond mere logistics into broader operational support for businesses navigating increasingly complex environments.
The potential of IoT in enhancing trade finance is gaining traction, with other players beginning to explore similar avenues. Notably, in 2016, the Commonwealth Bank of Australia, Wells Fargo, and Brighann Cotton collaborated on a pilot transaction utilizing IoT sensors to automate the release of funds via smart contracts. Although that pilot did not advance past the experimental phase, it marked a significant step toward the commercialization of IoT in finance.
Standard Chartered is similarly investing in this space, pursuing IoT-enabled smart distributor financing for auto manufacturers in Asia. By implementing energy-efficient tracking systems, the bank aims to provide more tailored financing solutions based on actual inventory movement.
Enterprise demands in fast-paced global markets are driving the need for solutions that enhance transparency and streamline transactions. As companies increasingly seek operational efficiencies, the applications of IoT in trade finance represent not only innovation but also a profound shift in how businesses and financial institutions interact.
The future of trade finance could very well hinge on initiatives like Arviem Working Capital, which aim to bridge the gap for SMEs while providing banks with the tools necessary to navigate an evolving regulatory landscape. While challenges remain, the momentum is unmistakable, fueled by real-time data and heightened collaboration between sectors.
Arviem’s commitment to leveraging IoT technology not only serves as a model for the trade finance industry but also illustrates the potential for small businesses to thrive when given the resources and support they need.
Key Takeaways
– Arviem integrates IoT technology into trade finance, providing real-time cargo monitoring to mitigate lending risks for SMEs.
– The new Arviem Working Capital service helps financial institutions make informed decisions based on accurate, real-time data.
– Expanding access to financing for smaller companies is crucial in a regulatory environment that favors larger traders.
– Arviem plans to introduce additional services, including risk profiling and on-demand insurance, further enhancing the financing landscape.
Sources:
– GTR (Global Trade Review)
