Mark Buitenhek, global head of transaction services at ING and general board member of Marco Polo Network (formerly known as TradeIX), is an advocate of innovation in the trade finance industry and payments sector. With ING at the forefront of sustainability in trade, we asked him for his views on the role that new technology and ESG-related data can play in unlocking access to finance and encouraging a move towards more sustainable practices, as well as his thoughts on the future of digital trade.
Q: Environmental, social and governance (ESG) considerations, already a key issue for trade before the pandemic, have come into sharper focus over the last few months. Can you comment on this trend and how it’s playing out in the trade space?
Buitenhek: ESG has been a big theme for quite some time. Covid-19 is certainly leading to more serious conversations about the future, such as around climate change, and trade is one area where we can make a difference.
If you look at all the components in the trade ecosystem, you have ‘good’ and ‘bad’ vessels in shipping, for example, as well as buyers and suppliers that are either carbon neutral or strong polluters. In order to create an ecosystem of ‘good’ players we need independent, reliable data points – available at a fraction of the cost that we can access them today – to be able to make a judgement. This is where we definitely see a role for open platforms like Marco Polo, which is doing things like unlocking silo data points that certification authorities, such as the Rainforest Alliance, have. These data points can then be brought onto the Network and shared throughout the value chain. The borrower then gets immutable proof that the supplier, as well as other parties involved in the trade, are acting in a sustainable manner.
What Marco Polo is also trying to achieve is to broaden the traditionally narrow scope of parties in a trade to a more holistic view of the supply chain that includes all its participants. For banks, whose main areas of focus are compliance, providing liquidity to our clients and managing their risk mitigation, this idea of bringing all the different points together to facilitate sustainable trade is one that fits very nicely into that equation.
Q: Why is sustainability-related data so important for banks when it comes to financing trade? What options could the Marco Polo Network provide in terms of facilitating sustainable trade?
Buitenhek: As banks, we’re looking at our role in making the world more sustainable, which has led to decisions around whether or not to finance things such as coal. We understand that we have a responsibility, but also that the transition takes time. At ING, sustainability is part of our DNA and part of our promise – and we’re approaching it in a responsible way.
That’s where Marco Polo comes in. When looking further down the chain, beyond the suppliers, there are clearly institutional investors that have the risk appetite and willingness to invest in the trade assets of companies that are sustainable. We’re one of them. We know that there is an SME funding gap that the banks alone cannot fill. Access to ESG-related data could have a really meaningful impact on the overall availability of funds for trade that meets sustainability criteria and could help to reduce this gap.
Q: Talk us through the bank’s involvement in Marco Polo as an investor and a potential client.
Buitenhek: From our perspective, we feel that the strong proposition that Marco Polo is building for both banks and corporates is that one single entry point to multiple parties and products. If you look at ING’s business, we’re a leading bank in the open account space, so naturally we’re looking at Marco Polo’s Receivables Finance and Payables Finance modules to spread the risk.
In general, where Marco Polo is today, it has a very strong technical foundation and the potential for scalability. It’s just a matter now of rolling out that functionality and bringing in the value-added services like the ESG-related elements.
Q: What have been some of ING’s own digitisation efforts and successes throughout the pandemic?
Buitenhek: We’ve always had a strong belief that we should be able to digitise and digitalise the entire trade space. It’s proven pretty difficult to do thus far, but Covid has certainly sped up things dramatically. For example, the bank guarantee space now permits digitally signed documents: there’s no need for physical copies. This was something that was already in the pipeline at ING before the pandemic, but suddenly it got traction everywhere. This is saving us all time, money and effort, and everybody is really pleased.
We’ve also found that corporates also want to digitise entire processes. Of course, there are still legal and risk-related challenges that prevent us from going fully digital for all trade processes – despite the big push from both lenders and borrowers.
Another factor that has really sped up investment in digitisation is the recent fraud cases that have occurred in Singapore’s commodity finance space. This is really driving the need to do things in a different way, with an immutable ledger, so that it’s clear that all the documents are safe and sound, that the right people have signed, and that there’s no potential for criminal activity.
So we are certainly seeing progress, and the industry is realising that we can make headway. During the crisis we achieved things in a week that would have normally taken three months. I’m really positive that we are going to move forward with digitisation, and players like Marco Polo are an important part of that process.
Q: What do you think is the ultimate goal for clients in terms of their engagement with the trade ecosystem, and how does that differ from the reality that we’re dealing with today?
Buitenhek: I think what clients probably want is access to one network, you may even call it a platform, that is available to all parties and for all products: letters of credit, guarantees, supply chain finance – everything. They can then tap into it and find the best solution – either doing that themselves or using an algorithm. Ideally, they’d get all the documents and the loans immediately – that would be the ultimate from a client’s perspective! The reality, of course, is that there are a number of initiatives out there, and they’re all approaching this from different angles, focusing on different trade processes and products, all of which involve different specialists and tap into different ecosystems.
When I talk to corporates about this, they say it’s all very nice that these different initiatives exist, but when do they come together? In the end they will probably all converge into a number of platforms. I don’t believe in one single platform where you can get everything; that would be too complicated. We need competition – some checks and balances – to create valuable, meaningful interactions. But I’m sure we’re getting closer to achieving that. I really hope that we keep the momentum to drive this conversation forward even after Covid is over.
Mark Buitenhek has been heading up ING’s wholesale bank transaction services since 2017. In this role Mark is responsible for the development and sales of payments, cash management, trade finance, working capital solutions and cards offering for corporate and FI clients. Both BMG – a specialised niche player on notional pooling – and Payvision – a merchant acquirer and payment service provider fall under this mandate. Both companies are 100% owned by ING but have a separate license.
Alongside his direct responsibility for the transaction banking business, he leads ING’s payments strategy efforts across the bank’s retail and wholesale business lines via the ING Payments Centre.
Prior to his current role, Mark led the product development departments of transaction banking and the payments & cash management business for wholesale. Before that he headed a.o. ING’s retail payments, savings & consumer loans product management in the Netherlands, the international payment operations department, the predecessors of ING’s Internet offering and served as a branch manager.
Over the past 30 years Mark has gained significant experience in leading small, large and transformational changes across ING and the industry in a faster than ever changing landscape. Mark is known for his drive and passion for CX, people management, innovation, disruption and has an extensive network in and outside the banking industry.
He is a member of the board of Directors of SWIFT and Marco Polo Network (formerly known as Marco Polo Network). He is Chairman of the Supervisory Board of Payconiq and the Supervisory Board of Payvision and serves on numerous (interbank) committees.
About the author
Shannon Manders is an editorial consultant and award-winning international trade finance journalist with over a decade of experience reporting and producing print and online publications on the global trade and trade finance sector. She is also the editorial director of international trade finance publication GTR, where she has been working since 2008.