Investors in Financial Technologies

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Investors in Financial Technologies
Trade Finance Technologies
James C. Hale BAFTs 11th Annual Trade Finance
Conference October 25, 2001
www.FTVentures.com
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Why Trade Finance Technology is Relevant

• Banks, brokers and insurers are all part of a
  complex payment and settlement system
• Significant value-added by parties ready to stand
  in for unrelated business partners
• Cost is directly related to complexity and
  digitization lowers cost

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Why Trade Finance Technology is Relevant (cont.)

• Current system paper intensive
• Needs to be precise and secure
• Coordination between flow of documents, good
  services, and payment
• High volume and recurring transactions
• Many parties to track
• Rules-based procedure-based

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FTVentures Role
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FTV Limited Partners
GE Capital
617 Million in commitments from 39 leading
financial services companies
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FTV Represents a Slightly Different Model

• Close to its market with 39 Limited Partner
  relationships
• Independent of the industry and able to support
  breakthrough technologies and infrastructure
• Unique structure provides stronger idea
  generation with lower risk
• FTVs strategy is designed to add value
  throughout the investment life-cycle

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FTVentures Network
Brokerages
Insurance
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FTVentures IT Outlook

• Worldwide financial services IT expenditures will
  be approximately 300 billion in 2001
• FTV Limited Partner 2001 IT expenditures will
  average 1.6 billion per institution and will
  represent 16 of total non-interest expense
  (range 100 million to 5.5 billion total over
  100 billion)
• 2.4 IT expenditures growth rate from 2001 to
  2002
• FTV Limited Partners comprise a major part of
  aggregate IT spending (over 100 billion annually)

Source Gartner Group 2001 FTV Technology
Questionnaire
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3 Reasons to Focus on New Technologies

• Cost reduction
• Strengthen relationships
• Expand markets
• Security is an overriding issue in all of these

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Cost Reduction

• Standardized documentation
• Developed with market leaders and the industry
  association
• Outsourced document due diligence service
• Efficient and reliable asset authentication
  process
• Centralized and standardized document custody,
  clearing and settlements process

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Cost Reduction (cont.)

• Electronic workflow
• Consolidation of business rules in an electronic
  environment
• Electronic marketplace for purchase/sale of trade
  related assets
• Market pricing and credit research information
• New tools vehicles to enable investors to
  participate in a new blended rated trade
  finance risk
• Elimination of redundant staff and resources to
  perform letter of credit processing

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Strengthen Relationships

• Finance/factor/forfaiting/barter
• Insurance placement
• Settlements
• Trading and logistics
• Bundled products and service offerings (one-stop
  shopping)

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Expand Markets

• More cost-effective than ever before to reach and
  communicate
• FTV owns companies which can track, monitor sales
  effectiveness with technology
• Creative forms to alleviate credit risk in
  dealing with unknown suppliers and buyers
• Better able to handle and coordinate logistics

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Adoption Barriers to Overcome

• Regulation
• Legacy system integration
• Learning new processes overcoming
  organizational inertia
• Multiple conflicting standards
• Cost

• Precise secure
• Compatible
• Scalable
• Compatible
• Cost effective

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FTV Investment Criteria The Top Ten

• Generating revenues
• Limited technology risk
• Financial product or financial institution
  customer base
• Referenceable customers
• Quality management team and Board of Directors
• Clear exit strategy and timeframe
• Reasonable valuation/return metrics
• No conflicts of interest with Limited/Managing
  Partners
• Barriers to entry
• Board participation

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Value Chain
Centralized Trade Finance Technology
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Competitive Landscape (selected)
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Competitive Landscape (selected)
NewMarkets International
www.newmarkets.com
Provider of an online FOREX payment service for
FIs corporations.
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Competitive Landscape (selected)