In our mission to make financing solutions accessible, transparent en efficient we launched a new unique initiative during the SME Finance Forum in Nairobi. Together with the Dutch-based tech-start up ‘The Things Network’, who aim at providing an integrated chain of products and services in the ‘Internet of Things’ (IoT) industry, we have developed a concept that redefines credit risk, collateral and trust in business lending. By applying IoT, we are able to register real-time events that usually trigger a pay out or collection of a sculpted credit facility
Our technology provides them with access to growth, success and realizing ambitions. We can provide a Fintech-solution which impacts the world
Let’s take the agricultural sector as an example. The first part of the credit facility will be released unsecured to enable farmers to purchase their seed- and/or planting stock. Thereafter, IoT sensors register the sowing or planting crops activity. This will be the first automated trigger for the Fyndoo Lending platform to execute a pay out, as the sowing-and planting activities require (paid) labor and probably mechanical support. The extremely cost and energy efficient IoT sensors communicate with the equally efficient IoT gateways via the LoRa network and ultimately via cloud/ internet, so that the supply chain process can be tracked on a real-time basis.
Depending on the overall production and growth period, successive pay outs can be planned to enable the farmer to purchase sufficient capacity during this process and again for the lender’s risk spreading. The condition for pay out(s), of course, is that agricultural production is still continuously being observed through IoT. If not, Fyndoo Lending will trigger a manual task for a banker to control the unusual situation and probably end continuation of this financing contract.
Harvesting will be the next trigger; this is again a labor (and thus capital) intensive activity. Based on this digital IoT observation, a new chunk of the credit facility will be made available.
The last trigger in the process will be transportation of the harvested goods. The lender will take care of the billing process, so that yet another loan security aspect is included in this concept. Finally, once the debtor has paid, the amount remaining after deduction of repayment and financing costs will be granted to the farmer.
Of course, this entire process will be facilitated by a blockchain, as all the participants keep full ownership of their responsibilities. This has a few advantages: (1) the farmers do not have to hand over trust to a coordinating party. (2) Data ownership stays with the participants as it can be signed and encrypted locally, and then send to a node. (3) For starters, the payment confirmations are included in the blockchain, but eventually the payment stream can fully move through the blockchain.
We aim to enable growth in markets where this is usually not so self-evident. This stimulates economic growth by employment and is applicable to a very wide range of supply chains.
We introduced the Supply Chain Finance initiative on this year’s SME Finance Forum – Africa edition in Nairobi, Kenya. We would like to invite financial service providers to join us in this initiative, as its value will drastically increase when this will be supported by such institutions as well.