Traxia Foundation | The Why

WHY

Why was the

foundation created?

Traxia was founded with the sole purpose to make access to finance more viable to SMEs globally.
 
Recent researches show us that small and medium companies (SMEs) represent 75% of the total credit gap with over 50% of their trade finance requests rejected by banks. For comparison, bank rejection rates for finance requests initiated by multinational companies (MNCs) is a meager 7%. According to WEF, left unsolved, the trade finance

Why Blockchain?

We are technology agnostic but recent studies indicate that blockchain technology could potentially reduce banks' infrastructure costs attributable to cross-border payments, securities trading and regulatory compliance by between US$ 15-20 billion per year, by 2022 (Santander et al., 2015).

 

We must keep agnostic because regulatory uncertainties, including liability issues and the lack of interoperability of existing platforms, remain challenges that stand in the way of widespread deployment of the technology.

WHY isn't this problem being solved by banks?

Focusing on SMEs is as expensive, bureaucratic and time-consuming as an MNC with much less of a return. Banks rely on slow, non-transparent and centralized credit decisions. One of the largest banks specializing in global trade transactions reviews up to 100 million trade documents per year, which are necessary to validate letters of credit.

 

Furthermore, banks continue to argue that liquidity problems are the root cause for not financing SMEs.

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