Standardizing Risks in Business-to-Business E- Commerce A Presentation to UNCTAD Geneva, Palais des Nations 23 October 2001 Gamaliel C. Pascual
SMetrix Overview Specialist in B2B e-commerce consulting and implementation Finance professionals 50 man years in international capital markets – derivatives, trading, securitization Development staff Purely secure Internet applications development
Expectations Need to Be Met “ A recent survey of purchasing managers suggests that the wave of new on-line business-to-business activities is far from cresting ” – Alan Greenspan, Chairman, US Federal Reserve 28 Feb 2001 "What is lacking is a complete purchasing strategy that goes from electronic ordering to electronic back office, ” – Laurent Gampel, Vice President, American Express
SMEs – the “ last mile ” of the global supply chain Inconsistent Acctg Info Credit Rating Agency Pressure On Banks (risk assets & correspondent banks) BIS Risk Ratings Ladder Minimum Deal Size Non-scaleable Evaluation infrastructure People Intensive; Need for experience Global Supply Chain
B2B Risk Ladder AUTHENTICATION REPUDIATION LEGAL OPERATING PRIVACY TECHNOLOGY ECONOMIC LIQUIDITY All failures focused on e- commerce as a mere technology deployment issue Matters addressed by Clearinghouse
Strategic Partnering GE Global Exchange Services Global Supply Chain process and technology expertise Other Discussions Dun & Bradstreet Online Credit Score Target deployment: Q Buyer Seller Realtime info as risk is undertaken
Key Technologies Delivered by SMetrix Robust agreements engine Highly affordable and deployable PKI based digital signature process US $ 0.50 per signatory These products allow the formation of legally enforceable electronic documents
Conventional Approach to E-Commerce Front End Solution Others Back End Solution Company Bank Solutions and Products Insurance Company Products Logistics Solutions Others Solution Providers Supply ChainCustomersSupply ChainCustomers
New Approach Clearinghouse Supply Chain Community Other E-Commerce Applications E-Procurement ebXML Customer Community Front End Solution Others Back End Solution Company Banks Insurance Logistics Others Makes Digital Documents Legally Binding Allows for seamless electronic document flow Real-time delivery of information to the right party eliminates information asymmetry
E-Market Place Clearing Process TECHNOLOGY OFFERING FILLING THE NEEDS The unprecedented access to and analysis of vendor /purchaser performance is due to availability of information in electronic form; the pivotal information is dynamic credit score Counterparty Credit Score Financing L/Cs Reinsurance Collections Accounting Volume / Liquidity Increasing number of commodities traded Better pricing Operating efficiencies through increasing automation What MNCs want What SMEs need
Structure Allows for Scaleable SME Financing Infrastructure Buyer Finance DepartmentSeller Finance Department $ Investment Bank $ Investment Bank $ VISIO CORPORATION Electronic Trade Acceptance Electronic Purchasing File of consummated Purchase transactions CLEARINGHOUSE