Alvantia held the third edition of its annual Working Breakfast with the Spanish Factoring Association (AEF) on November 27th at the Puerta América Hotel (Madrid). On this occasion the event looked at disruptive innovation and data protection in the Trade Financing sector and focused on three particular areas: Blockchain, Machine Learning and the latest GDPR developments and new Spanish Data Protection Act.
This third edition was attended by nearly all the financial entities that are members of the Spanish Factoring Association, as well as representatives from the rest of the companies that operate in the Spanish Factoring and Confirming market.
Carlos García, Chairman of the Spanish Factoring Association and moderator of the Working Breakfast, gave a speech to open the event in which he reviewed the “Sector’s positive results despite the fact that the economy is showing clear signs of fatigue.” He highlighted an above 12% growth had been achieved in the third quarter, and stated that the growth rate that had been maintained for the last 2 years.
Julio Faura, Chairman at Alastria, a semi-public consortium of Blockchain, was the first guest speaker and he addressed the interesting topic of the first Blockchain applications in the financial industry and Blockchain’s potential in the field of Factoring and Confirming. Mr Faura compared the current model, in which financial systems are not designed to be interconnected, with a Blockchain proposition of a system with a single ledger and a distributed database for all the intervening parties, where everyone can operate but only the relevant agents can intervene. He illustrated this with a case study on international payments where this technology would allow treasurers to check any balance sheet changes in real time.
This would result in a much more resilient system as well a reduction in critical systems because as they are distributed in nodes, the failure of one or several nodes does not imply a whole system crash. The emergence of Blockchain Smart Contracts, distributed programs that modify distributed database data with very simple programs, is also noteworthy. For example, prepaid card funds would be controlled with a Smart Contract consisting of data (card balance) and code (to take money from the payer and give it to the beneficiary).
“Blockchain implies a conceptual change in our way of working as we change to a collaborative model”, said Carlos García, opening a debate among members of the Spanish Factoring Association about the possible setting up of a Working Group commissioned by Alastria.
Belén Villeya, Senior Legal Counsel and Data Protection Officer at Equifax, spoke next about Security and Technology developments in the field of Data Protection since GDPR and the new Spanish Data Protection Act came into force. Ms. Villeya shared best practices for security breach notifications, accountability (proactive responsibility in demonstrating compliance with the GDPR), the preparation of Impact Assessments or PIAs, data pseudonymization (a security technique for replacing sensitive data with realistic fictional data), the use of Big Data, Profiling and Cloud Computing, new contracts and co-responsibility with service providers and credit information systems.
José Antonio Garrote, Business Manager at Alvantia, continued with a presentation on how Machine Learning could be the differentiating factor among Trade Financing competitors. He stated, “Financial institutions invest huge amounts of time and money in campaigns to promote registration and advance payments as well as in back offices that review the submitted documentation. Machine Learning is emerging as a new alternative to support these actions, enabling this work to be carried out much more effectively.”
According to Mr. Garrote, classification, anomaly detection, regression, clustering and learning reinforcement algorithms allow us to detect trends or patterns from the data available and as a result optimize company processes, provide cost savings and improve marketing.
Roberto Gutiérrez, CEO at Alvantia, closed the event by presenting the Spanish Factoring Association with a commemorative plaque in recognition of its 30th anniversary and in appreciation of its contribution to the promotion of Factoring and Confirming.