Why food traders should concern themselves with fintech?

#techup #fintech #ODIN

Suppose you are a food trader specialising in frozen meats, exporting to China and Japan as your primary markets. Although you’ve been in this trade for ten years, each time you send your goods out, it still feels like a nerve-wrecking gamble.

As an exporter, you’d prefer to be paid before you send out tens of thousands of dollars’ worth of frozen meats. But your importers in China and Japan refuse; it’s a huge risk for them to pay for goods that have yet to be received.

The Chinese and Japanese markets are also getting increasing saturated and you’re hoping to expand to new markets. But because of the conundrum above, it feels risky – you’ve taken years to set up partnerships with your current suppliers who are credit-worthy. Would new partners be equally reliable?

Your small team is always exhausted and over-stretched from the morass of paperwork around customer orders, banking needs, changing customs policies. It’s always hard for a small company like yours to get loans from banks; forex rates fluctuate and your team needs to keep calling banks for the latest rates; forms and documents are still done on paper so they’re hard to track.

These are all challenges that small-medium enterprises (SMEs) have experienced in the cross-border food trade for decades, leading to a global trade finance gap of US$2.5 trillion in 2022, according to the Asian Development Bank (ADB), of which an estimated US$151.5 billion is related to food trade.

So Oceanus, as a food trader, decided to do something about it.

Over the past years we’ve been putting together the Oceanus Digital Network, or ODIN, a platform that finances SMEs in cross-border food trade.

It works in four parts, in a flywheel effect. First is ODIN Pay, which streamlines cross-border payments and provides payment solutions for SMEs through multi-currency virtual accounts, local collections and payouts, and provides competitive FX rates, FX Forwards and Options. Because it’s done online, it also digitises trade documents.

The digitalisation creates datapoints, which enables ODIN Finance to provides lenders with granular data and process controls to lower credit risks and provide financing solutions to the SMEs. When more SMEs are financed, more trades are conducted, and thus demand for cross-border payments increases.

To accelerate the “spin” of the flywheel, two additional components were added: ODIN Market and ODIN Warehouse Management Service (WMS). ODIN Market establishes Oceanus as the trusted agent to fulfil orders – being a listed company in Singapore, platform users are assured of credibility, proper governance and controls. This increases trades on the platform, and thus the demand for cross-border payments.

ODIN WMS leverages the power of data, too. It digitalises warehouses to track the movement of physical goods into, within and out of the warehouse. Such data helps build a more accurate picture of the physical supply chain, and when paired with transactional payment data generated from ODIN Pay, allows for better credit risk assessment capabilities for ODIN Finance.

And so the virtuous cycle spins on through the flywheel –

Better solutions lead to increased trades, increased trades generate more data; which are fed back into creating better solutions. We also have strong reason to believe that ODIN is poised to capture larger opportunities, sitting in the unique intersection of global food trade and fintech. The market size for cross-border food trade remains significant, with UNCTAD reporting a global food trade value at $1.94 trillion in 2022. The fintech sector is also growing and projected to reach $1.5 trillion by 2030, along with the expansion of the alternative financing market.

Early results on ODIN have also demonstrated we’re on the right track: in its first nine months, S$110m worth of payments and S$5.6m worth of FX Forwards contracts have been put through ODIN Pay. ODIN Finance had a similarly promising start in its first three months, seeing S$2m worth of food trades.

For SMEs trading on ODIN, the outcomes will speak for themselves: more opportunities through connections with new buying partners, a load off their shoulders because of access to financing support for growth, and most importantly, a strategic advantage in a competitive landscape. ODIN works because it’s a platform built by food traders, for food traders. If you’re an SME looking for innovative, data-driven fintech solutions, talk to us about how ODIN can support your business needs.

Scroll to Top