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Antwerp
By Marc Goldstein
Regardless of one’s opinions about the future of the diamond industry globally, the least that can be said about Antwerp is that there’s not one month that doesn’t see new endeavors from the Antwerp diamond community in their quest for a better future. On February 23, the new initiative launched by the Antwerp World Diamond Centre (AWDC) attests to that fact. The issue of providing banking services to the industry remains crucial. And with today’s “Uberization” of the economy, the AWDC staff identified some start-ups already active in other fields that could supply a specific category of banking services at a better cost and a faster speed. According to a recent press release announcing the initiative, AWDC Chief Executive Officer (CEO) Ari Epstein said, “The international terrain on which the Antwerp diamond industry does business means that we, as the industry’s representative organization, are always searching for new technologies and ways to distinguish ourselves from our competitors. Last autumn, we organized a Diamond Equity Investment Symposium, together with Morgan Stanley, with the objective being to promote transparency to institutional investors that are considering investing in the diamond industry. Today we announce that this has resulted in a concrete cooperation agreement with two FinTech companies: Uphold and FX4BIZ.”
Both companies are now in the process of gathering test panels of diamantaires to fine-tune their custom-made services. AWDC is working on a unique program with Uphold to educate their community of traders on new, alternative technologies for global transactions. Uphold spokesperson, Diana Biggs, vice president, head of growth and partnerships, U.K. and Europe, the Middle East and Africa (EMEA), explained that the Uphold platform would allow members to transact across currencies, countries and banking systems — at a fraction of the cost and time required by traditional banking. It is understood that the company’s members can also hold value in multiple currencies, conduct instant currency conversions at very competitive rates, make flat-rate payments and send any value to another member instantly and for free. Biggs stressed that Uphold’s advantage lies both in the fee aspect as well as in the speed features. “With traditional banks, international transactions can take days to clear, but transactions on Uphold are instant. Compare this to the fact that banks typically charge conversion fees between 2 percent and 10 percent, plus added service fees that widely vary in price. This means businesses that consistently send money internationally have fees that can quickly add up to millions. Also, banks will hang on to money as long as possible to make money from the float. International transactions can take days to clear, but transactions within our platform are instant.”
Patrick Mollard, chief financial officer (CFO) of FX4BIZ, spelled out his company’s advantages. “In 2015, $48.3 billion worth of diamonds were imported to and exported from Antwerp, which means the players in this industry are in need of international payment services. We provide our clients with easy access to these services — bank accounts, FX liquidity and payment infrastructure — at a competitive pricing. The innovative aspect of our company lies in the fact that it has gathered in one single technology, accessible through the open web or an application program interface (API), three departments of a typical street bank that are involved in handling international payments. These include: the corporate team, in charge of client relations; the investment banking arm, which will provide the currency, and the retail arm, which will handle the actual payment. Our cost structure is therefore much lower.” Mollard offered an example to illustrate how the use of such services would translate financially: “If a diamantaire is to transfer $1 million abroad, the standard banking fee attached to the transaction is about $250. If the same operation is carried out via our company, the cost drops down to somewhere between $50 to $100. Having said that, one of the most interesting features of such a system is that it turns out to be much more adapted to those who need it most, smaller and medium-sized companies. since larger companies are often better served by their banks and could work at lower rate fees.” All models have their limitations. Mollard pointed out: “As a Payment Service Provider (PSP), licensed and regulated by the National Bank of Belgium, our services are limited to payment-related transactions. That means that we are not able to provide credit-related banking products nor can our clients use their bank accounts with us as a deposit account and hold their funds without any payment activity, which is the main difference between our payment licenses and a bank license. We do not aim to be a substitute for a client’s bank. Our objective is to be at least complementary and, if possible, become a dedicated one-stop shop for international payments over time.”Article from the Rapaport Magazine - April 2016. To subscribe click here.
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