By Sara Miller, NoCamels -
In our modern, globalized society, cross-border trade plays a major role in the revenue of many businesses, which also find themselves having to foot the bill for moving between one currency and another.
Economic think tank Global Trade Research Initiative said in April that world merchandise trade is today worth $24 trillion, something that US multinational finance company JP Morgan estimates costs some $120 billion in administrative fees every year.
And small and medium-sized businesses (SMEs) see these banking expenditures taking a bite out of their profit margins.
Which is where okoora comes in. The Israeli fintech startup uses AI to help SMEs manage their global transactions in an affordable way, with a range of services that it says used to be the exclusive domain of the banks.
“In essence, we help [companies] conduct their foreign trade in every respect that has to do with exchanging, sending, receiving foreign currencies,” okoora’s VP Strategic Advisory Assa Drori tells NoCamels.
This is especially the case in Israel, Drori explains, where almost all goods either come from or are sold abroad. In fact, the World Bank says Israel’s exports of goods and services is currently some 30 percent of its GDP and imports just over 25 percent.
“My shirt is imported, my computer is imported, the gasoline I put in my car is imported,” Drori says. “Also the main driver of the economy is our exports, so everyone deals with foreign currency.”
But Drori says that in Israel in particular, banking is expensive, slow and not very friendly to small and medium businesses, and, crucially, not tech savvy.
“You can’t do anything automated with an Israeli bank, unlike Europe or the US,” he explains.
“You can’t hook your systems up to the bank; you can’t give the bank automatic orders whether to exchange currency or send your suppliers money – things which in Europe are pretty mainstream.”
The only way to achieve smooth international financial transactions, he says, is by purchasing very expensive banking systems already in place.
SMEs are the lifeblood of the global economy. According to the World Bank, they represent about 90 percent of all businesses, accounting for more than 50 percent of employment worldwide. And in the Organisation for Economic Co-operation and Development (OECD), which has 38 member countries, SMEs account for more than 95 percent of companies and up to 70 percent of employment.
And according to okoora, its Automated Business Currency Management (ABCM) is the sole cloud-based platform for managing an SME’s entire foreign currency transactions, including sending payments to and receiving them from abroad.
“What we offer our clients is something rather unique,” Drori says. “We take care of their currency-based activities when they conduct cross-border business, all in one place.”
ABCM, he explains, is an online environment for okoora’s small and medium-sized clients, which lets them connect their accounting systems to the platform.
It also allows very small clients to automatically input invoices from abroad simply by taking a photo or scanning them with optical character recognition (OCR), which electronically converts images of text into actual text.
“It does everything you need to do, regulatory wise, to send a payment,” he says.
ABCM users can also open virtual accounts in multiple currencies. The platform offers services in some 100 different currencies.
“[These are] things that the banking system in Israel cannot do,” Drori claims.
But the platform does not work just in Israel: the company recently began operating in Europe – which the European Union says is responsible for approximately 14 percent of all world trade in goods – after a lengthy process that involved navigating through the demands of multiple regulators.
“It’s taken us a lot of time and effort to get ourselves regulated, to be able to accept European clients,” Drori says. “But as long as we take the brunt of it and save our clients in trouble, it’s worthwhile.”
The Bnei Brak-based company was established in 2021, when its founders realized that the financial system for foreign trading in Israel was suited to very large companies, SMEs were being left in the cold.
“So we thought to ourselves: why don’t we automate it and make it more accessible to everyone?” Drori recalls. “And that’s how okoora was born, conceptually.”
ABCM is available through a subscription, after which clients pay no additional fees. Part of this is because okoora created a kind of ad hoc network, enabling transactions in a range of countries.
“If we have to send money to Bangladesh on the same day, we can use some of our vendors in order to facilitate that,” Drori explains.
“There’s one vendor for Bangladesh and another one for Kenya and another one for Argentina. And when you put all of that together, you get something which gives a lot of value to small companies at a fraction of the costs of using the banking system.”
Today okoora has around 15,000 clients, not just SMEs, but also private individuals who also wanted to take advantage of the unprecedented services it offers, such as people who are interested in buying property abroad and therefore must conduct their purchase in a foreign currency.
In fact, Drori says, the last year alone the system has processed more than 10 billion shekels (approx. $2.7 billion).
So what do the banks think about this new competitor?
Drori describes it as a “sort of a mutual relationship” in which they are competitors but are also reliant on liquidity that partially comes from Israeli banks.
“I often liken it to the little fish that hang onto the back of a whale,” he says with a smile.
