Switzerland’s fintech startup FQX seeks to revamp how companies around the world access finance by using blockchain and tokenization to make promissory notes transferable, cross-border and more cost-efficient.

Promissory notes, are financial instruments that contain a written promise by one party to pay another party a definite sum of money. In German, they are called “Wechsel” or “Eigenwechsel”.

Businesses can sell their eNotes in a practice similar to invoice factoring to get cash before the settlement dates as means to improve cash flow. eNotes can also be used by companies to obtain short-term financing from banks or other corporations.

“Traditionally, promissory notes were paper-based (and still are printed on paper in some countries as of today). FQX is bringing about a revolution by digitizing it,” FQX co-founder and co-CEO Benedikt Schuppli told Fintech News Switzerland.

These so-called electronic promissory notes (eNotes) are issued and traded in real-time on a blockchain-based infrastructure, enabling improved liquidity and risk protection for both trading partners.

Financial institutions can participate directly via the eNotes platform or tap into FQX’s integration solutions.

By digitizing promissory notes, Schuppli said his technology can help solve small and medium-sized enterprises (SMEs)’ historical credit constraints, while providing institutional investors with the opportunity to finance the real economy.

“Many companies around the globe, especially in developing markets do not have sufficient access to liquidity, as banks don’t provide access at all or if they do, it’s at a prohibitively high cost,” Schuppli said.

“FQX targets this problem by really changing the way credit works and actually posing an alternative infrastructure for credit that is blockchain-based, cross-border, freely transferable and at a low cost.”

Within the next five years, Schuppli said he hopes to build FQX into “the PayPal for eNotes” by leveraging its first-mover advantage.

“FQX is the first market-ready solution for eNotes, which is built on a banking-grade blockchain – Swiss Trust Chain – with a unique, patent-pending authentication mechanism based on regulated and qualified electronic signatures provided by Swisscom Trust Services,”

Stephan Meyer, FQX’s further Co-Founder and Co-CEO said.

“When compared to other financing options, our eNotes as negotiable instruments outperform through their financial steering capabilities and transferability.”

New legislation and national acts covering distributed ledger technology (DLT)-tokens are paving the way for players like FQX to reimagine trade finance and boost adoption of innovative business models, Meyer said, adding that with its live and running eNote infrastructure, FQX is well placed to become “the leading tech company at the epicenter of a pivotal and exponentially growing market.”

“If you think about it, just two years ago, eNotes were not on the agenda of most finance players,” Schuppli said. “Since then, leading countries such as Singapore, the UK, the US, and the UAE (supported by UNCITRAL, ICC, BAFT and ITFA), have made a blockchain-based solution for trade finance and money markets a top priority, enacting or initiating legislations that are supposed to govern electronic promissory notes.”

FQX, which just recently launched commercially, has already signed prominent clients and partners including Instimatch, Metalshub, OFX, a Swiss Tier 1 bank, and “a Swiss Champion,” Schuppli said.

Moving forward, he said the team will focus on the rollout of its product with existing clients and partners, and lay the foundations for international expansion.

FQX won the 2021 Swiss Fintech Awards in the Early Stage Startup category, and is in the short-list for the 2021 Fintech Germany Awards. In June, it raised US$4.7 million in a seed funding led by Earlybird with participation from SIX Fintech Ventures, the non-strategic corporate venture arm of SIX, and unicorn Hybris Software co-founder Carsten Thoma.

Featured image credit: FQX team