We need a blank-page approach to trade credit insurance innovation

A Q&A with Lode Vermeersch, head of AREA42

Everyone talks about disruption. How do you view innovation in the trade finance and credit insurance space?

Disruptive innovation does not do well in corporate environments — I have observed this over and over again in my 20-year plus banking and insurance career. Brilliant ideas do not just come to self-taught computer specialists sitting in their garages: I’ve seen many corporate employees come up with excellent ways to improve their company’s processes or create new income avenues. The difference is that in a garage, people are not burdened with legacy systems, hierarchy or company culture.

Think about all the trade finance players (banks, insurers, ECAs, etc) that have announced an innovation strategy in the past five years: how many have partnered with fintech’s, launched their own product or recruited technology professionals in the hope to lead the digital transformation of the sector? Almost all of them. And how many of these initiatives have resulted in concrete disruption? Almost none.

The trade finance sector is not good at innovating. And yet, if the banks, the insurers and the ECAs don’t modernise their systems, they risk becoming obsolete. What approach are you taking?

The economy and the trade landscape are shifting: established companies wanting more, from fixed contracts to better experience contracts, start-ups and gig workers taking more and more clout in the trade space. At the same time, customer expectations are evolving: services now have to be digital and available in real time. We need to recode trade finance for the digital era, and we need to break away from previous, unfruitful attempts at corporate innovation.

AREA42 was born of this realisation. We are the trade innovation ecosystem, a community-based effort to come up with disruptive solutions to real market needs. One of our ventures, Marjory, caters to marketplaces, offering them a catalogue of workflows with a multitude of service providers and helping them to smooth out their integration processes. This is because we believe marketplaces are one of the key business models in the future. Other research avenues include data and artificial intelligence, as well as digital ways to help SMEs and micro-enterprises manage their trade risks.

How are you positioning AREA42 to unlock long-term growth engines?

Right now AREA42 is heavily focused on growing an ecosystem of innovators eager to fundamentally fix the short-comings of trade with technology and innovation. With our Slack community and our events, we aim to be a platform for everyone to share ideas about the future of trade finance and credit insurance, allowing creativity to flow freely outside of corporate boundaries. This is the only way our antiquated sector will successfully transition into the digital era. We invite anyone interested in making this happen to join our community and look forward to shaping the future of trade and trade finance together.

About Lode Vermeersch

Lode Vermeersch is head of AREA42, Credendo’s innovation ecosystem. Having worked in banking and insurance technology and innovation for the past 25 years, Lode has first-hand insights on why it is so difficult to create disruption within a corporate environment. He also knows how important it is for the trade finance industry to modernise and start catering to new types of companies — and new types of trade. At AREA42, Lode is responsible for unlocking long-term growth engines by scouting new ideas, developing experiments and accelerating them into new products, and engaging with other experts in the sector.