Data as the new oil or currency is not a new concept, but the pandemic has accelerated the emphasis on data. With more and more of the commodity trading industry transitioning to a digital format, the amount of data has increased.
But the crucial questions remain. What data is being captured? What is the source? How is it being processed? And what’s next?
At a recent Reuters Events webinar “Leveraging the New Digital Commodities Trading Era,” Contour’s CEO, Carl Wegner, noted that as new data points emerge, old models of processing data must be transformed.
“Your data is much more valuable when you collaborate and coordinate with other data,” said Wegner.
Partnerships drive the new data paradigm
This is the premise that Contour was built on – to become a global network for trade where multiple databases can be shared elegantly using distributed ledger technology. All trade parties using Contour’s platform can maintain their own data, while sharing what they need securely.
“It’s a journey. And it’s going to be making legacy systems work with new systems. But partnering is going to be the key to bringing the plethora of this data in,” said Wegner.
From a bank’s perspective, the challenge is getting around the many paper-reliant processes like bills of lading, warehouse receipts and so on. While these present challenges, Citi’s Christine McWilliams also described it as an opportunity to increase efficiency.
“When we think about commodity trade financing, oftentimes the underlying commodity is the security for the transaction that helps the borrower in a bank feel comfortable, and being more digital helps the parties in monitoring the collateral real time,” said McWilliams who is Managing Director and Global Head of Commodity and Energy Trade at Citi.
Trade itself, is a complicated industry and there are many platforms that specialise in different areas. Wegner’s perspective is that it is crucial to partner other platforms to share that data.
“It’s a journey. And it’s going to be making legacy systems work with new systems. But partnering is going to be the key to bringing the plethora of this data in,” said Wegner.
The future of financing
When it comes to achieving an equitable future, there is still the million-dollar question of financing. The lack of financing is a crucial one, especially for smaller industry players from emerging markets.
Citi has been active in the commodities industry for 10 years and McWilliams said that while it comes down to having a transparent conversation about the company’s business and financial challenges, having accurate data alongside the ability to deliver data in a timely fashion is important.
Wegner agreed that the ability to assess risk better is as important and there needs to be a paradigm shift.
“The old models need to be transformed because you have new data points. I think the banks are still going to have an opportunity to have more dynamic or innovative financing, because they have the historical background, they understand that business better,” said Wegner.
The way the industry is leveraging data is evolving and Contour is uniquely positioned to connect the most important trading partners together, in a future where digital transformation is a reality.
