Heureka: A digitised solution for small-ticket ECA finance

In times like these, innovation, digital transformation and strategically laying the path for the future of the financing industry have become the hot topics discussed by everybody active in the export finance sector: financing institutions as well as their clientele – exporters and importers (borrowers) – but also amongst supporting entities like export credit agencies (ECAs).

Last year, for example, Euler Hermes launched click&cover which enables exporters and banks to submit their applications online for transactions with contract values up to $5 million or the euro-denominated equivalent.

How it started

In the past, it has been particularly cumbersome and at times even frustrating for exporters to obtain financing offers for export projects if they were below a certain contract value. As a fact, larger banking organisations quite understandably need to allocate their staff and lending capacity in an economically sensible manner. The administrative overheads being more or less identical for smaller and larger transactions for most banks led to minimum contract values in a double-digit million range which need to be met by a project.

Many small- and medium-sized enterprises (SMEs) – but also blue chip companies with the odd delivery of auxiliary goods or replacement equipment – hence have been facing difficulties in obtaining financing solutions for their buyers. Either they would opt for more or less short-termed Letters of Credit, or would need to resort to balance-sheet burdening supplier’s credits, which the exporter is forced to keep on his own book unless he can find acceptable buyers in the forfaiting market.

In order to support its shareholder banks, AKA – as an expert institution for trade and export finance – has taken this to heart. Within a year after having received its shareholders’ mandate back in 2017, AKA has launched a digital portal that is the first component of a digital platform.

Enter SmaTiX

SmaTiX is AKA’s online solution for small ticket financing and its first foray into the realm of digitisation. As an acronym for Small Ticket Express, SmaTiX might lack an ‘r’, but may definitely be considered a ‘smart and easy way for exporters to place their small ticket financing requests’ nonetheless.

By AKA’s definition, these small ticket buyer credits are for contract values in the range between $1 and $10 million (or the euro equivalent), and one crucial element is export credit insurance. At the moment, AKA is working with Euler Hermes, who is providing comprehensive cover of 95% over loan principal plus interest. In the wake of AKA’s Europeanization strategy, however, a future cooperation with other, mainly European ECAs, is envisaged and currently being discussed.

How it works

The use of AKA’s SmaTiX portal is simple and intuitive: in only four steps the exporter gets a financing solution for his importer located outside of Germany.

For a selection of pre-approved countries, and provided that the requested financing meets the ‘triple-five requirements’, SmaTiX will even generate a real-time financing indication together with a preliminary repayment schedule, ready to be downloaded from the portal by the exporter.  

Any financing request which does not match the tightly defined criteria will be handled individually by AKA’s SmaTiX team.

Who can use it

SmaTiX can be accessed only by registered users. For the time being, exporters based in Germany may sign up for registration with AKA. Soon, SmaTiX will also be available from selected branches of AKA’s shareholder banks.

It has been a noticeable trend over the last couple of years that the decision power over who will provide the financing via buyer credits has more and more shifted towards the borrower’s side. AKA has taken this into account for the next development phase of the SmaTiX portal, and it is envisaged that importers will gain direct access to SmaTiX in due course as well.

The AKA onboarding process in itself is quick and easy, and merely requires some basic information on the applicant. The newly registered user will receive an e-mail from the SmaTiX team with a user name. At first sign-in, the users are then asked to create their own password.

Four steps from registration to indication – and beyond

Getting a financing indication from the SmaTiX portal is as quick and easy as the on-boarding process itself.

In only four steps from sign-in, the exporter simply provides information about himself, his importer, the details of his export contract as well as the desired financing terms.

Finally, there will be a summary of all the transaction data fed into the system, giving the exporter a chance to correct or add any further information he deems necessary. It also goes without saying that he can save his application during all four stages of the process and access his draft at any given time to continue working on it.

If the importer is satisfied with the financing indication and agrees to the terms and conditions contained therein the transaction will follow the established route of the approval process. After having been mandated for the financing, AKA will start working on the loan agreement.

Speaking of which: the SmaTiX loan agreement has been designed to reflect the agility of the overall process.

A highly standardised, lean model, boiled down to no more than 10 pages – which has nothing to do with the heavy loan documentation known from larger, customised transactions.

Agility in the approval process comes with the bonus that even KYC/AML checks and the identification process have been digitised, thus providing a smooth front-to-end process without media disruption.

AKA’s digital readiness can be felt in every step of the process: Thanks to a bi-directional API (Application Programming Interface) between SmaTiX and the click&cover portal of Euler Hermes, the exporter may choose to have his transaction data transmitted via a secured interface directly into the online application form for supplier’s credit cover. Or vice versa – if he started with the click&cover application and discovers he also still needs a financing indication.

Either way – the feedback obtained from our users has been positive throughout, and the number of deals signed so far speaks for itself. AKA will be delighted to support many more happy clients by finding the right solution for their specific financing problems – simply contact our SmaTiX team and go digital!

AKA's Sabine Vigneron will be speaking on small-ticket ECA finance at TXF Germany in Frankfurt this week