“Digitalisation of the product does not change its fundamental characteristics”, says PrimaDollar’s Tim Nicolle
In an exclusive interview with Express Computer, Prima Dollar’s Founder & CEO Tim Nicolle shares his views on the fintech industry in India and the use of technology to scale business.
1. Kindly brief us on Prima Dollar’s business model and what problem in the current financial process is PrimaDollar looking to solve?
Trade finance is in decline as banks retrench. Shipping lines and freight forwarders are looking for ways to provide trade finance themselves. Exporters and their buyers are looking for low-cost working capital support.
The market wants a low-cost, simple, trade-by-trade product that works globally, pays the exporter on shipment, allows the buyer to pay later and takes the buyer credit risk. The addressable market is in the US$ trillions.
We are a fintech company that connects capital markets investors and credit insurers to importers and exporters via the adoption of our simple, transactional trade finance product.
- Our Trade Finance ToolkitTM allows industry players to integrate our trade finance product into their online worlds.
- Importers and exporters get low-cost trade finance delivered via our systems.
- Trades are funded in the capital markets. Risk is laid off to insurers.
PrimaDollar has been expanding its operations in India with an office set up in Mumbai. Do you believe Mumbai would be the next global fintech hub?
Mumbai is certainly a major financial centre given its role in banking, finance and trade. But we would suggest that the technology centres in the southern and eastern parts of India are more natural homes for fintech companies, given the depth of talented resources available in these locations.
What do you think is a big challenge faced by the Fintech industry today? Do you think India has the required infrastructure to combat it?
- Technology companies who have built “tech” that supports certain financial products but lack the expertise in the core products to originate them safely and fund them efficiently.
- Finance companies that have built good tech in support of their business, but remain, effectively, speciality finance companies. These companies are not fintechs – they can be good businesses but they will not build exceptional shareholder value.
So what is a fintech?
It is a company providing a financial service or product that uses technology to create hyper-scaling of its business, where costs are scaling much slower than revenues. Most fintechs that achieve this are involved in transaction processing where customer acquisition is achieved by delivering the product into channels that already own the customer … European examples from this space include Oaknorth, Klarna, Transferwise.
How do you think technologies like Data analytics, Machine Learning, and Blockchain are going to pave the way forward for FinTech?
I can only comment for our industry – trade finance. Big data, in our view, is not so relevant to our business – which involves very short term receivables (ie: financing invoices relating to cross- border trade). Machine learning can be used to make operations more efficient reducing costs – but this is a small win. Blockchain can be used to propagate a secure and trusted view of transactions to third parties like funders, importers, exporters, and insurers. But none of these technologies, by themselves, creates transformational value.
Transformational value, in our industry, is built by developing a simple, low-cost, transactional, working capital product that can be delivered to the market efficiently and integrated into the day-to-day processes that already occur between importers and exporters. Such a product has never existed before – but PrimaDollar is bringing this product to market right now.
What kind of technology is Prima Dollar using and how has it helped your business operations and model?
Our tech stack is reasonably conventional for a modern fintech, including:
- SQL Server running on Microsoft Azure for the core operational banking system, in-house built
- APIs are being developed in Java utilising a microservice methodology utilising Eureka and available through Azure (for security and JWT verified token access). These are public APIs but available only following onboarding and authentication by us.
- APIs follow a standard YAML approach to the documentation, and fully-featured error reporting to allow third-party developers to integrate quickly with our platform as they are designing and building their own UI (in their own environment).
- Separately, we are building our own Angular8 REST-based UX and will be able to provide implementation services to third parties using our own UX as a working example of how they might approach their own implementation.
In parallel, we are implementing a ledger replication of the activity across the system which can be propagated privately to funders, insurers and participants. This is built using CORDA R3.
PrimaDollar has achieved a major breakthrough in getting the right product-market fit in 2019. How does the company plan to sustain it in the digital space?
Digitalisation of the product does not change its fundamental characteristics, but digitalisation opens up the ability to access new markets via the Trade Finance ToolkitTM. It does result in some cost savings as the processes become more efficient, increased customer loyalty through convenience – and better responsiveness. These are all good outcomes.
For your nature of work, the company would be acquiring a lot of confidential data from vendors on the site. Is there a Cybersecurity plan in place that ensures data security?
Yes – we use two-factor authentication across the company and all access to our systems supported and delivered by Microsoft Azure.
What does 2020 look like for the FinTech industry and for PrimaDollar?
It is going to be an amazing year. We expect to deliver the transformation of our business from tech-enabled speciality finance company to true fintech by the end of Q1 2020. We have grown 10x in the last 18 months – and we expect to continue with the rapid growth of our assets under management as the fintech components of our Trade Finance ToolkitTM go live and start to be used by clients.
Lastly, what would be your long-term milestones?
We expect to deliver a substantial change in the way that trade finance is provided and enjoyed by importers and exporters on a global basis.