Russia: Trade and Expert Finance 2018 - PowerPoint Presentation

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Russia: Trade and Expert Finance 2018The role of factoring in the modern trade financeMoscow, Hilton Leningradskaya Hotel25-26 January 2018

Mikhail Treyvish

2Internationally recognized as the founder of the Russian factoring market.2004-2009 - CEO of National Factoring Company. 2004-2015 - Member of the Board of Directors of International Factors Group2008-2009 - Chairman of IFG2009 – 2015 - Chairman of IFG Asian Chapter2014-2017 - consultant on factoring of European Bank for Reconstruction and Development (EBRD). Founder of UCA OmniGrade (www.omnigrade.com) - a crowdsourcing platform that for companies, organizations and projects with ambitiuos noble goals is a tool allowing to form an international group of supporters, inspired by their vision and ready to help them on an ongoing basis.Since September 2017 - CEO at Receivables Finance platform

Re:Factor.About me

What differentiate factoring from other Trade finance services:3 long term continuous service covering all deliveries to all permanent buyers of the customer; not suitable for single transactions or large amounts

4Factoring is an international industry with a turnover of 2.4 trillion* providing suppliers with: financing of their supplies, growing as sales volumes increase and helping this growth credit risk insurance other services__________* According to the international factoring association FCI

Factoring is a great thing:5 universal solution for millions of suppliers of goods and services for several decades - the fastest growing sector of the international financial industry proven low level of losses in case of proper risk management  an incredible size of potential market.

Estimation of the volume of trade receivables:6Not all countries maintain relevant receivables statistics. According to the Federal Reserve Bank of St. Louis US Federal Reserve as of March 31, 2017, the volume of accounts receivable in the US amounted to 2.8 trillion (15% of GDP).Based on the fact that the US GDP equals 24.4% of global GDP, the resulting estimate of the world's trade receivables is 11-12 trillion dollars.

But factoring is approaching a strategic dead end:7 growth rates in the world dropped to 0.35% per annum (FCI) factoring is poorly represented or not represented at all in many promising markets of Asia, Africa and Latin America (including the countries with the highest growth rates of the economy)

Crowdfactoring - a chance for the industry?8The reason is the dependence of factoring from the banking sector of the financial industry:  for independent factors – in relation to funding for banking factors – in relation to the decision-making systemCrowdfactoring (the most important part of the project Re:Factor

) allows not to come to a standstill.

Important advantages of crowdfactoring:9 It is possible to replace bank funding with financial means from millions of private investors it is possible to rely on the accumulated positive experience of the development of crowdlending.

The results of the development of international P2P lending industry (crowdlending)10P2P lending (equitable lending) is a direct lending by a mass of private lenders (investors) through various online platforms and solvency verification tools.Example 1: A P2P platform operating within one countryZopa (United Kingdom)  200 Zopians (employees)  60 thousand investors (in the Lending Club (USA) -2 million)

  the average investment amount is 13 thousand GBP  more than 277 thousand approved borrowers

The results of the development of international P2P lending industry (crowdlending)11In the UK there are more than 100 P2P lending platforms, in India - more than 30.Example 2: Zidishe is a P2P platform with investors from developed countries and borrowers from developing countries in Asia and Africa (including Kenya and Indonesia - the key markets of Re: factor) 24.7 thousand borrowers 138 thousand investors international team (CEO from USA, CTO from Ecuador, COO from Mexico, etc.)

Why crowdfactoring is more attractive than crowdlending?12 the better ratio risk - maturity - profitability  there is a repeatability (revolving) of financing for deliveries to the same debtors

Why crowd-technologies conquer the world:13 rapidly growing middle class wishes to play a new role in the development of modern civilization traditional institutions (banks, consultants, etc) do not cope with the new tasks and challenges.

Another key ideas ensuring success of Re:Factor14Use of specialized credit underwritingUse of blockchain to protect the rights of investorsUse of artificial intelligence to create an investment portfolioCooperation with development institutions

Adaption of experience in evaluating and surveying of tangible assets to receivablesLoyalty program

The use of credit underwriting:15 Credit underwriting is a mechanism for establishing an acceptable level of risk (limit) for buyers (debtors) cooperating in the projects of suppliers. The credit underwriting system is based on the unique successful experience of the team in different countries of the world and local features. Investors on the P2P platform submit applications for participation in the utilization of the limit, which are recorded in chronological order. After that, the deliveries of goods and services falling within the limit are jointly and distributedly financed by investors applied.

The use of blockchain to protect the rights of investors:16 The recording of investors' rights to the share of the limit of each debtor is done with the help of blockchain technology.  This protects the rights of investors for their share in the financed receivables and reduces the risks of loss and distortion of rights and diminishes the likelihood of claims and disputes from investors.

The artificial intelligence system for forming the investors portfolio17The estimate of the total number of debtors in the system for the fifth year of the project is about 2 million (50 debtors per supplier). Therefore, a tool to assist in the implementation of effective investment is necessary. The artificial intelligence system will generate the recommended portfolio of investments in receivables, based on:investors' expectations on profitability, timing and risk of investments

personal (including religious) beliefspreferable countries and industries.

The role of the project in the social and economic development of the targeted countries and cooperation with development institutions.18Factoring (as well as P2P factoring platform providing the same service on a larger scale): promotes the growth of small and medium businesses creates new jobs (according to the GE research in France, Germany, the United Kingdom and Italy, 601 thousand new jobs were created due to factoring) supports export growth and diversification of national economies.Therefore, we rely on the assistance of national development institutions in supporting and funding the project.The representative of the team spoke at the CEO Forum of

Association of Development Financing

Institutions in Asia and

the Pacific.

The role of the project in protecting the global banking system from the credit crises (1/2)19 According to the World Bank, the total loan portfolio of the world's banks to the private sector is about 100% of global GDP ($ 75 trillion). 3.9% of it is problematic (not working part). During the financial crises, this share increases.  During financial crises, along with the increase in the probability of defaults, the value of any collateral falls: real estate, securities, goods, etc. But only the value of receivables remains stable.

The role of the project in protecting the global banking system from the credit crises (2/2)20 Re:Factor skills: to assess the portfolio of receivables as collateral, as well as its discount and covenants to monitor portfolio quality and compliance with covenants

  to claim the collateral in case of borrower defaultwill significantly improve the quality of banks' credit portfolios throughout the world and prevent their large-scale losses.

21Re: Factor Team - internationally recognized professionals from Russia, Indonesia, the Philippines, Great Britain, Germany, Malta and Spain

Thank you for attention! e.mail:  ceo@refactor.protre_mi@omnigrade.com22